Government consults on class action-style competition reforms
The Government is considering introducing 'opt-out' collective actions to enable consumers and businesses to more easily reclaim losses resulting from anti-competitive behaviour. The proposal, which could bring the UK's regime more in line with the US class action system, is part of a consultation launched by the Department for Business Innovation and Skills (BIS) yesterday (24 April).
April 25, 2012 at 11:51 AM
2 minute read
The Government is considering introducing 'opt-out' collective actions to enable consumers and businesses to more easily reclaim losses resulting from anti-competitive behaviour.
The proposal, which could bring the UK's regime more in line with the US class action system, is part of a consultation launched by the Department for Business Innovation and Skills (BIS) yesterday (24 April).
The exercise will also see BIS consult the UK business community on widening the jurisdiction of the Competition Appeal Tribunal to establish it as a "major venue for competition actions in the UK".
However, some lawyers have warned that an opt-out regime could see companies face multibillion-pound claims brought by just one claimant, as the system rests on an assumption that every other purchaser of one product is also behind the claim unless they actively opt out.
Clifford Chance antitrust disputes partner Luke Tolaini said the consultation is ducking the issue of which party – the claimant or defendant – will pick up costs in such cases, warning that the Government must prevent cases being brought without good legal justification.
He said: "BIS is playing with fire if they are determined to push matters in this direction. There are two points in particular on which they need to be extremely careful and that is to guard against frivolous claims and to avoid gaming the system heavily against the defendant."
"The other point to consider is that if we get this system in this area, it may only be a matter of time before it moves into other areas of claims."
Norton Rose competition partner Peter Scott (pictured) added that it will be essential to avoid the excesses associated with the US class action system, saying: "In this respect, it is encouraging that BIS has drawn on the experiences of Canada and Australia, which have opt-out models with greater safeguards than the US system.
"Nevertheless, the focus of the consultation to extend the compensation regime will be on how best to achieve the right balance between facilitating access to justice for SMEs and consumers, whilst avoiding abusive litigation."
Click here for the full consultation.
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