UK Government Announces Proposals for an “Opt-Out” Collective Competition Damages Action

By on March 8, 2013
Posted In EC Developments

by Philip Bentley, QC, Veronica Pinotti, Wilko van Weert and Philipp Werner

On 29 January 2013, the UK Government’s Department for Business, Innovation & Skills announced new proposals designed to improve the ability for consumers and businesses to bring collective damages claims against competition law infringers.

The new proposals contain novelties that should make it easier for consumers and businesses to claim damages for loss arising out of competition infringements.  While this may increase the financial exposure of the infringers, it could also introduce a greater degree of clarity as to the procedural rights of both sides, and provide infringers with the possibility to settle matters quickly and with limited publicity.

The UK Government’s new proposals, which were preceded by extensive public consultation, would

  • Extend the jurisdiction of the Competition Appeal Tribunal (the CAT) so as to include “stand-alone” claims and the ability to grant injunctions
  • Introduce an “opt-out” form of collective action for competition damages claims, subject to a number of safeguards
  • Promote the use of Alternative Dispute Resolution (ADR) in competition damages actions
  • Ensure that any developments in the area of private damages actions complements the public enforcement regime.

An Increased Role for The Specialist CAT

The new proposals seek to make the CAT—which is a specialist tribunal—the jurisdiction of choice for all private damages actions in the United Kingdom.

First, the CAT would be given jurisdiction to try stand-alone claims in addition to its current jurisdiction to try “follow-on” claims.  Follow-on claims are those made after the European Commission or the UK Competition Authority has determined that an infringement exists, and so the only issues before the CAT are those of causation and the amount of damages to be awarded.  In stand-alone claims, on the other hand, the CAT itself will have to determine whether an infringement exists.  At present, stand-alone claims can only be brought before the High Court in England and Wales (or the Court of Session in Scotland).

Second, the limitation period for bringing stand-alone and follow-on claims before the CAT would be aligned with that for the High Court in England and Wales, namely six years, and that for the Court of Session in Scotland, namely five years.

Third, the CAT would be empowered to grant injunctions in proceedings in England and Wales and Northern Ireland, but not interdicts in Scottish cases.

Fourth, a fast track procedure would be instituted for simple cases before the CAT, with a cap on costs set on a case-by-case basis by the CAT at its discretion.

Finally, where appropriate, it would be possible to transfer cases from the High Court or the County Court in England and Wales to the CAT and from the CAT to the High Court.  In Scottish cases such transfers would be possible between the corresponding Scottish courts and the CAT.

The Introduction of an Opt-Out Collective Actions Regime

The new proposals would create a new form of collective action—an opt-out competition damages action—designed to avoid the shortcomings of the current system of collective redress, notably representative actions or group litigation orders.

Under the new proposals, a collective action could be brought on behalf of all UK domiciled consumers and/or businesses injured by the anti-competitive practices, with the possibility for individual consumers or businesses to “opt-out”.  Non-UK domiciled consumers and/or businesses would have the ability to opt-in to participation in the collective action.  This new form of collective competition damages action would fall under the exclusive jurisdiction of the CAT and could be brought as either a stand-alone or a follow-on claim.

The new collective action would be subject to strict judicial scrutiny:

  • There would be no recourse to treble or exemplary damages. Contingency fees (i.e., fees fixed as a percentage of the damages award) would not be allowed.
  • Standing would be limited to the injured consumers or businesses, or their genuine representatives such as trade associations.
  • Collective actions initiated by third party funders, special purpose vehicles or law firms would be strictly precluded.
  • The “loser pays” principle would be applied in granting awards for costs and expenses.

Damages would be assessed and payable to all consumers or businesses that had not opted out.  It is proposed that any sums that remain unclaimed will be paid into the Access to Justice Foundation, the objective of which is to provide pro bono assistance to litigants with insufficient means.

Comparison With Collective Actions in Other Member States


The French legal system does not provide for class actions currently.  Certain authorised consumer associations may, however, bring actions to defend a collective interest, provided that such collective interest is distinct from the individual interests of its members.  In such a case damages are awarded to the association.  Such associations can also bring actions on behalf of individual interests if each individual who wishes to be represented grants an express mandate to the association.  In this case, any damages awarded will be paid over to each claimant represented by the association.

A draft law to introduce a form of collective action in France was submitted recently to the French Senate by some of its members.  If this draft law were adopted, class actions would be limited to authorised associations only and would be exclusively opt-in.  Consumers who opted in would be awarded damages calculated on the basis of their individual injury.  In parallel, the French Government also plans to submit a draft law on collective actions to the French Parliament next Spring.


There are no substantive provisions for class actions under German law, but actions on behalf of multiple claimants have been brought successfully by combining the ability to bring actions of behalf of another party with the provisions for consolidating similar claims with the same factual and legal cause.  In addition, qualifying associations may also obtain “skim-off” of any economic benefits that have not already been taken into account by the imposition of fines or the award of damages.  The “skimmed-off” benefits are paid into the federal budget.


While the regime is of an opt-in nature, as in Germany, it does provide expressly for class actions.  This enables consumers or consumer organisations to bring claims for damages, and allows other potential claimants to opt-in, within a deadline established by the judge.  The final judgment is binding only to those who opt-in.  Consumers who did not opt-in may, however, still bring individual actions before the competent courts.  After the expiration of the deadline to opt-in, any further class action based on the same facts and against the same company is precluded.

The Promotion of ADR

The new proposals would seek to encourage parties to have recourse to ADR.  The proposed opt-out collective action would be complemented by the introduction of a voluntary opt-out settlement mechanism.  This proposal draws its inspiration from the Dutch collective settlements procedure under the Wet Collectieve Afhandeling Massaschade (Act on Collective Settlement of Mass Claims, or WCAM) of 2005.  Under the WCAM, parties to an agreement to settle may jointly request a binding declaration of the settlement by the Amsterdam Court of Appeal (ACA), which has exclusive jurisdiction in these matters.  The settlement agreement must have been concluded between the party or parties alleged to have caused the injury and one or more associations or foundations acting as representatives for the injured parties.  Following the granting of a declaration, the settlement agreement is deemed to be binding on all those who are covered by its terms unless they decide to opt out, following public notification, within the time frame specified by the ACA.

Under the UK proposals, the CAT would first consider whether the case was suitable for settlement before proceeding to assess the substantive merits of the settlement to ensure that it was “fair, just and reasonable”.  Following the approval of a settlement, the CAT would issue directions specifying the procedural and mechanical parameters of the settlement, notably the publicity requirements, and the time limits for those wishing to opt-out.

Striking the Right Balance between Private Damages Actions and Public Enforcement

The new proposals intend to ensure consistency between the activities of the CAT and those of the Competition and Markets Authority (CMA), which will succeed the Competition Commission and the Office of Fair Trading in April 2014.  The CAT would be required to notify the UK Competition Authority when private damages claims were initiated, thus giving the CMA the opportunity to intervene in private damages actions as amicus curiae.  The CAT would also be given the power to stay private damages actions if the alleged competition infringement was under investigation by the CMA.

On the question of access by litigants to leniency documents, the UK Government decided not to legislate on this matter, considering that it was best left to the European Commission to take the initiative, but this could be revisited if there were significant delays on the part of the Commission.  The UK Government’s proposals  place particular emphasis on the importance of not undermining the UK and EU leniency programmes, and also state that any legislative proposal put forward by the Commission should not be so broad in scope as to lean heavily in favour of  leniency applicants in collective actions for damages.

Areas Where Reform is Not Considered Necessary

The UK Government decided that reform was not necessary on the following issues:

  • Loss: There will be no introduction of a rebuttable presumption of loss in cartel cases as, in the Government’s view, the introduction of a presumption of loss would shift the balance too far in favour of claimants and amount to a departure from the basic tenet of English law that loss must be proven.
  • Passing-on defence: In relation to the passing on defence, the Government felt that “the fine details of its application would be better addressed through judicial case law rather than via legislation”.

Louise Aberg, associate in the Paris office; Robert Bäuerle, associate in the Brussels office and Samuel Buyoya, trainee in the Brussels office, contributed to this article.





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