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The UK Consumer Rights Act 2015: A New Advance in Private Antitrust Enforcement

On 1 October 2015 the UK Consumer Rights Act 2015 (CRA 2015) entered into force, bringing with it a raft of changes pertaining to consumer protection law and competition law litigation. These changes were discussed in an article featured in our most recent issue of our flagship publication, International News: Focus on Tax (Issue 3 2015).

The CRA 2015 sets the scene for the future proliferation of competition damages actions in the United Kingdom and consolidates the country’s reputation as one of the most advanced competition regimes in Europe.

The new rules introduce a series of significant changes to facilitate claims, including the establishment of a fast-track procedure for simple claims, the introduction of a collective settlement regime, and an extension of the limitation period for actions before the Competition Appeal Tribunal (CAT), the United Kingdom’s specialist competition law tribunal.

Arguably the most controversial and high-profile measure is the introduction of collective proceedings before the CAT which, subject to the CAT’s discretion, can be brought on an opt-in or opt-out basis for both follow-on and stand-alone claims.

The CAT will certify claims that are eligible for inclusion in collective proceedings. In this regard the following three conditions must be met. There must be an identifiable class; the claim must raise common issues; and it must be suitable for collective proceedings, taking into account, inter alia, whether or not collective proceedings are an appropriate means for the fair and efficient resolution of the common issues, the costs and benefits of the collective proceedings, and the size and nature of the class.

If the CAT decides that collective proceedings are appropriate, it then determines whether the proceedings should be “opt-in” or “opt-out”.  The CAT will take into account all the circumstances, including the estimated amount of damages that individual class members may recover, the strength of the claims, and whether it is practical for the proceedings to be brought on an opt-in or opt-out basis.

If appropriate, the CAT will also authorise an applicant to act as class representative.  The representative must not have, in relation to the common issues for the class members, a material interest that is in conflict with the interests of the class members, and must be someone who would act fairly and adequately in the interests of all class members.

In order to prevent the rise of a “litigation culture”, certain safeguards are included. For instance, the CAT may not award exemplary damages in collective actions, and contingency fees, i.e., damages-based agreements whereby the lawyers are paid a proportion of the damages obtained, are not permitted in opt-out collective actions.

There will no doubt be considerable up-front litigation surrounding the issue of class certification before the first cases get off the ground. It is likely, however, that the mere threat of class actions before the CAT will represent a powerful weapon in the hands of the claimant when negotiating a settlement.




Significant Changes to UK Competition Regime Now Effective

by Andrea Hamilton, David Henry, Aiste Slezeviciute

The Enterprise and Regulatory Reform Act 2013 took effect on 1 April 2014. Increased efficiencies and deterrence are the main drivers of this reform.

As of 1 April 2014, the Enterprise and Regulatory Reform Act 2013 (ERRA) brings about significant substantive and structural change to the United Kingdom’s competition regime. As part of a more general overhaul of this regime, the recently created Competition and Markets Authority (CMA) becomes fully operational, a revised criminal cartel offence enters into force, and the merger control regime becomes more robust. These changes bring in their wake a swathe of new investigatory and enforcement powers and penalties for failure to comply. Businesses are therefore urged to take note of these new changes and to be alert to compliance risk. This On the Subject summarizes some of the key aspects of the reforms.

To read the full article click here

 




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

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 [...]

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