Driving with the Handbrake On: Competition Class Actions under the Consumer Rights Act 2015

DOIhttp://doi.org/10.1111/1468-2230.12191
AuthorAndrew Higgins
Published date01 May 2016
Date01 May 2016
bs_bs_banner
LEGISLATION
Driving with the Handbrake On: Competition Class
Actions under the Consumer Rights Act 2015
Andrew Higgins
This paper examines the new class action procedure for competition cases established by the
Consumer Rights Act 2015. It examines whether the legislation and the procedural rules for
the Competition Appeal Tribunal address the failures of previous procedures, focusing on three
issues in particular i) the treatment of conflicting interests amongst class members ii) the rules
on certifying collective proceedings; and iii) rules on funding. It argues that while the Act
is a considerable improvement on what preceded it, the safeguards adopted will act as a drag
on meritorious and unmer itorious claims alike, and as such there is likely to be continued
under-enforcement of competition law.
INTRODUCTION
In March 2015 the UK parliament passed the first opt-out class action procedure
in English law, specifically for competition cases before the Competition Appeal
Tribunal (CAT or the Tribunal). The procedure is set out in Schedule 8 of
the Consumer Rights Act 2015 (supplemented by new rules of procedure for
the CAT1), which amends the relevant parts of the Competition Act 1998
and the Enterprise Act 2002.2The Act contains several features considered
essential if victims of competition law breaches are to obtain collective redress.
It permits opt-out damages actions to be brought directly by an (alleged)
victim of a competition law breach, on behalf of similarly situated persons,
either to establish liability or in a ‘follow on’ action where an authorised body
has already made a finding of liability. It also permits the Tribunal to make an
aggregate damages award to the class, ie to award damages without undertaking
an assessment of damages recoverable by each individual class member. Despite
strong opposition to class actions amongst business lobby groups, and concern
about the spectre of ‘US style’ litigation, the Government pressed ahead with
the reforms partly because it considered ‘the current system of collective redress
does not work’.3On the other hand, the Government introduced ‘safeguards’
Associate Professor in Civil Procedure,Faculty of Law and Mansfield College, University of Oxford.
The author would like to thank Adrian Zuckerman and the two anonymous referees for their
comments on this article. The usual disclaimers apply.
1 Competition Appeal Tribunal Rules 2015, Part V, ‘Collective Proceedings and Collective Set-
tlements’.
2 Consumer Rights Act 2015, sched 8 ‘Private Actions in Competition Law’. All references in
this article to ‘the Act’ are references to the Competition Act 1998 as amended.
3 Department for Business Innovation and Skills (BIS), Private Actions in Competition Law: A
Consultation on Options for Reform: Government Response (London: BIS, 2013) at [5.12].
C2016 The Author.The Moder n Law Review C2016 The Modern Law Review Limited. (2016) 79(3) MLR 442–467
Published by John Wiley& Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA
Andrew Higgins
into the new class action procedure,4including a strong certification process,
a prohibition on exemplary damages and a prohibition on damages based
agreements in opt-out class actions.
The design of the new procedure reflects the Government’s desire to balance
the need to make collective redress available and viable in a wider range of cases
and avoid abuse of the system.5The legislation has been called a ‘third genera-
tion’ statute designed to incorporate the lessons learnt from other jurisdictions
with opt-out class actions including the United States, Australia and Canada.6
A number of aspects of the new class action procedure merit detailed review
including the role of alternative dispute resolution, and how the Tribunal should
exercise its power to award aggregate damages. However, this article focuses
on three issues: the treatment of conflicting interests between class members,
the certification criteria for class actions and the rules on funding. The article’s
central claim is that while the new procedure is a welcome improvement on
existing mechanisms, the success of the reforms will require a change in judicial
attitudes as to the types of disputes that are suitable for collective resolution,and
would benefit from further legislative refinement. The procedure is ambiguous
on the treatment of class conflicts that proved fatal to previous procedures,
and the ‘safeguards’ built into the system are likely to deter both meritorious
and unmeritorious claims. In this regard it is unfortunate that some of the key
lessons of Lord Justice Jackson’s landmark costs review in 20097have not been
incorporated into the design of the new procedure.
BACKGROUND AND MAIN FEATURES OF THE NEW CLASS
ACTION PROCEDURE
The value of collective action in litigation is generally well understood. Joining
forces with others in the same predicament can lead to much more effective use
of resources and economies of scale, and help provide individuals and businesses
with effective redress for claims that would not otherwise be viable. Effective
private enforcement can complement public enforcement, thereby promoting
greater levels of compliance if one accepts the empirical assumption that com-
pliance rates are at least partly influenced by the probability of enforcement of
the relevant standard. As the Office of Fair Trading stated in its submission on
the Government’s Consumer Rights Bill:
If a greater number of well-founded opt-out actions are brought, incentives to
comply with competition law will be increased, which would strengthen the role
of private actions as a complement to public enforcement (which cannot deal
4ibid at [5.13].
5BIS,Private Action in Competition Law: A Consultation on Options for Reform (London: BIS, 2012)
30-31.
6 Presentation by Professor Rachael Mulheron, ‘Consumer Rights Act 2015 - The UK Class
Action: A Reaction’ at the British Institute of International and Comparative Law, 21 April
2015.
7 R. Jackson, Review of civil litigation costs: final report (London: TSO, 2009).
C2016 The Author. The Modern Law Review C2016 The Modern Law Review Limited.
(2016) 79(3) MLR 442–467 443

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT