The Consumer Rights Act
("CRA") has now received Royal Assent, marking an important move to enhance the powers of the Competition Appeal Tribunal ("CAT"). Schedule 8 of the CRA extends the CAT's powers to improve access for claimants to obtain redress for cartel and other competition infringements. Despite its name, the CRA introduces collective redress, collective settlements, injunctions and fast track procedures for both consumers and businesses harmed by anti-competitive conduct.
Standalone claims before an infringement finding
The CAT will no longer be restricted to "follow-on" claims based on a regulatory infringement finding. Claimants will have the option to bring "stand-alone" proceedings independently and/or alongside an investigation.
Injunctions
For the first time, claimants will be able to apply in the CAT for an injunction to restrain abuse of dominance or other anti-competitive conduct. Injunctions may also be granted without the traditional need for an undertaking in damages, making this a more accessible option.
Collective actions— "Opt in" and "opt out"
New provisions will enable actions to be commenced on a collective basis on behalf of a class of claimants affected by the same conduct and whose claims involve the same or similar issues.
Opt-in
Under the existing regime there has been only a very restricted option for collective proceedings, which could only be exercised by the Consumers' Association and had only been used on one occasion. Under the new regime, "opt-in" proceedings may be commenced by a class representative, being either a claimant member of that class, or an appropriate representative entity. This will mean that bodies such as trade associations will be able to bring an action on behalf of a class of claimants affected by a cartel, who will each have the option to opt-in to the claim where previously an individual claim would not have been viable.
Opt-out
For the first time, the CRA also introduces "opt-out" collective proceedings. An appropriate class representative can apply in the same way to bring a claim on behalf of the class on an opt-out basis. Class members will be bound by the ultimate judgment unless they choose to opt-out and pursue their own claim separately. This mechanism will be particularly helpful where there are very large numbers of claimants affected by a cartel.
"Up until now, UK consumers
and SMEs were consistently denied a mechanism that allowed them to
seek redress and challenge
anti-competitive behaviour in Courts. The CRA will change all of
this.
Anthony Maton, Managing Partner
Collective settlements
Importantly, the CRA introduces for the first time a collective settlement regime for both "opt-in" and "opt-out" claims. The CAT may make an order approving a settlement on behalf of a class of claimants if it is satisfied that the terms are "just and reasonable", including an understanding of the potential number of claimants, how the compensation will be distributed and notification provisions for opting in or out of the settlement. The settlement provisions may be attractive to defendants as a means of dealing with potential large numbers of individual claims.
Fast-track procedure
Pre-CRA a major obstacle in recovery of damages by small businesses was the cost of the prospective damages proceedings. New provisions will allow claims to be considered for fast-track and with the benefit of rules on cost-capping.
EU Damages Directive
The new powers under the CRA are due to be further enhanced next year with the implementation of the EU Damages Directive. This Directive is designed to facilitate competition damages claims and will introduce a presumption of harm in cartel cases and ensure access to disclosure necessary to quantify damage. This together with the new CAT regime makes key strides in meeting the European Commission's stated goal of facilitating claimant redress.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
