JJB price-fixing case prompts calls for group action revamp
Senior litigation lawyers have called for major revisions to the UK's group action regime following a low-key outcome to the pioneering JJB Sports price-fixing case. The case, which settled last week (9 January), saw the sports retailer set aside more than £100,000 in compensation for consumers who had suffered as a consequence of illegally fixing the prices of replica football shirts. The groundbreaking claim, which was pursued by consumer group Which? and legal adviser Clyde & Co, marks the first successful action brought under new powers that allow 'representative claims' on behalf of consumers.
January 17, 2008 at 12:57 AM
4 minute read
Senior litigation lawyers have called for major revisions to the UK's group action regime following a low-key outcome to the pioneering JJB Sports price-fixing case.
The case, which settled last week (9 January), saw the sports retailer set aside more than £100,000 in compensation for consumers who had suffered as a consequence of illegally fixing the prices of replica football shirts. The groundbreaking claim, which was pursued by consumer group Which? and legal adviser Clyde & Co, marks the first successful action brought under new powers that allow 'representative claims' on behalf of consumers.
The claim, which was heard by the Competition Appeals Tribunal, saw the group use powers available under the 2002 Enterprise Act.
Despite the consumer group's success in securing a settlement, the level of the award and the difficulty of signing up individuals to the group actions have led many lawyers to call for changes to the UK's regime for group actions. The system currently requires consumers to 'opt in' to an action, which forced Which? to find individual claimants. This is in contrast to the US system where eligible individuals are automatically included in an action unless they opt out.
David Greene, head of litigation at UK group action specialist Edwin Coe, said: "This case has shown the failings in the system and that it is not an effective way of enforcing rights for consumers as it is currently constructed. Opt-out is not an absolute answer by any means, but would certainly make the representation easier."
Lovells litigation partner Nicholas Heaton agreed: "The case highlights the difficulties involved in representative consumer claims. This case shows the value of an opt-out system."
To surmount these hurdles, Which? launched an advertising campaign in regional papers, which signed up 500 consumers who had bought an estimated 900 replica shirts. The consumers are eligible for compensation of £20 per shirt under the settlement.
In addition, the sum put aside by JJB means anyone able to prove they bought a replica shirt from the sports retailer during the 2000-01 and 2001-02 seasons will be able to claim £10 in compensation from any branch until 2009.
However, the award pales in comparison to the multimillion-pound fine that JJB faced in 2003 from competition regulators, which concluded that the company had operated a cartel with other sports retailers to fix prices.
Gibson Dunn & Crutcher partner Philip Rocher said: "[Finding claimants] was always going to be a struggle. The sums awarded against JJB demonstrate the difficulty of creating a class claim where each plaintiff has to opt in."
Nevertheless, the success of Which? in securing a settlement has been welcomed as a step towards using group actions for consumer redress and will be watched closely at a time when litigators are sizing up new models for litigation, including group actions and third-party funding.
The case will also be seen as a feather in the cap of Clydes, which fielded a team under partner Julian Connerty, with Matrix Chambers' Rhodri Thompson QC and Kieron Beal instructed as counsel. JJB was represented by DLA Piper competition partner Martin Rees.
Connerty hailed the results as a "great victory" for Which? "This is a very successful outcome for their first use of consumer representation powers," he said.
A key issue for legal advisers now will be the impact of the settlement on private enforcement in competition cases. The European Commission and the Office of Fair Trading both last year publicly backed the concept of private enforcement in competition claims in a stance that is expected to see both bodies support moves to make it easier to bring group consumer claims.
Clifford Chance competition partner Elizabeth Morony commented: "This is a neat solution, satisfying both the individuals that signed up to the claim and those willing to go along to collect their £10. However, I am sceptical that this decision will change the face of competition law."
With the JJB settlement failing to deliver a clear indication of the future direction of group claims, litigators are now looking to upcoming claims such as the Cohen Milstein Hausfeld & Toll-backed price-fixing action against Virgin Atlantic.
In the meantime, Lovells' Heaton summed up the views of many litigators: "The JJB case can be viewed as a success in the sense that it will result in all consumers being able to get compensation. It is an interesting and mixed outcome."
Talkback: Is JJB the future of group claims or a damp squib? Click here to have your say.
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