Britain to review competition class actions

The British Government has launched a review of the system that allows class actions to be taken on behalf of consumers who have been suffered losses due to anti-competitive behaviour.

The Department for Business and Trade said that the opt-out collective-actions regime had now been in operation for around ten years and had “developed significantly” during this time. 

It noted that the caseload had grown significantly since 2015, with “tens of billions of pounds” in damages claimed and “hundreds of millions of pounds spent” on legal fees. 

“This is far higher than estimated in the original impact assessment, which estimated the total cost to business to be Stg £30.8 million per annum,” the department stated. 

‘Stand-alone’ cases 

It added that the type of case being brought before the Competition Appeal Tribunal (CAT) under the system had developed in “unexpected ways”. 

In 2015, when the regime was introduced, it had been expected that most cases would be ‘follow-on’ – coming after a finding of anti-competitive behaviour by British or EU competition authorities. 

The department said, however, that around 90% of the current caseload was made up of stand-alone cases, where no regulatory probe had started or concluded. 

It also said that there had been “limited precedent” set on key issues such as damages and distribution, as most cases had been settled outside court, with only one reaching judgment at the CAT. 

Burden 

“In addition to examining potential improvements to opt-out collective actions, this review work will also consider alternative routes consumers could use to seek redress,” the statement said. 

“Having the choice to bring a private action is an important legal right. However, we believe that there may be other more appropriate routes that may reduce the burden on both consumers and businesses,” the department stated. 

The deadline for submissions to the review is 14 October. 

Level playing field 

The Law Society Gazette of England and Wales quoted David Greene (co-president of the Collective Redress Lawyers Association) as saying that the opt-out regime was taking time to bed in. 

“The regime is not perfect, but it seems to be early to be reviewing it from a business perspective, as the CAT and the Court of Appeal are working their way through the process and a body of law is developing,” he added. 

Jeremy Marshall (chief investment officer at Winward Litigation Finance) told the Gazette: “Class actions and litigation funding level a playing field that is naturally leaning towards very big businesses – those with influence, power, and money. 

“It is no surprise that the defendants are seeking to do the industry down because they are aware that they cannot continue to have it their own way.”