UNITED KINGDOM – A significant reform to the litigation of competition damages claims in England and Wales was finally approved by the House of Commons on 9 March 2015. The House of Commons accepted the House of Lords’ proposed amendments to the Consumer Rights Bill (after some back and forth on provisions unrelated to competition litigation). The Bill is now expected to receive Royal Assent in March 2015 and to come into law later this year.
The Consumer Rights Bill will introduce a new “opt-out” collective action for competition law claims for UK-domiciled claimants to be brought before the Competition Appeal Tribunal (the “CAT“). An opt-out collective action is brought on behalf of a defined class of claimants, unless those claimants specifically opt-out of the collective action. The result of this is that unsuccessful defendants will have to pay damages calculated in respect of all the potential claimants in the defined class of claimants set out in the collective proceedings order, and not only those claimants who actively bring an action for damages.
The opt-out provisions will only apply to UK domiciled claimants, and non-UK domiciled claimants will still be required to opt in to collective actions.
It will be possible to bring both stand alone and follow on claims in the CAT; a consultation on the procedural rules to apply to collective claims and settlements before the CAT began on 6 February 2015 and will close on 3 April 2015. The CAT will be empowered to order that two or more claims are combined into a collective action by making a collective proceedings order but only if:
(a) the party who brought the proceedings is a party whom the CAT could authorise to act as
a representative; and
(b) the claims raise the same, similar or related issues of fact or law and are suitable to be
brought in collective proceedings.
Any party is able to act as a representative, whether or not that party is a claimant themselves, if the CAT considers it “just and reasonable” for that party to act as a representative. In practice, this is likely to be a claimant or a representative body, such as a trade association.
In assessing damages for collective actions, the CAT is not required to undertake an assessment of the amount of damages recoverable in respect of each represented claimant, but can consider the damages suffered by all of the claimants as a whole. The CAT is not permitted to award exemplary damages.
In an opt-out collective action, when the CAT makes an award of damages it must make an order providing for all of the damages to be paid to the representative (or such other person as the CAT thinks fit). Any damages not claimed by claimants within a specified time period must be paid to charity.
Where a collective proceedings order has been made in relation to an opt-out collective action, the representative and the defendant must apply to the CAT for approval of any proposed collective settlement. The CAT can only make an order to approve the proposed collective settlement if it is satisfied that the terms are just and reasonable. If the CAT approves the proposed collective settlement then it will be binding on all potential claimants falling within the class of persons on behalf of whom the claim has been brought, unless they have opted out, and on all non-UK domiciled claimants who have opted in to the collective action.
Please see our Global Guide to Multi-Jurisdictional Competition Litigation if you would like to read more on competition litigation issues at http://www.bakermckenzie.com/GlobalGuidetoCompetitionLitigation.