Should the UK collective action regime be extended beyond competition?

As Parliament debates legislation to expand the scope of collective actions and to mitigate the impact of the Supreme Court’s PACCAR ruling, The House of Lords is currently considering two amendments to the Digital Markets, Competition and Consumers Bill that could significantly expand the scope and impact of collective actions in the UK.

The first, would allow consumers to bring opt-out class actions in the Competition Appeal Tribunal (CAT) for breaches of unfair commercial practices law. The second, would reverse the effect of the Supreme Court decision in PACCAR that limited the use of damages-based agreements (DBAs) by litigation funders in the CAT. Both amendments could have profound implications for businesses operating in the UK, especially those in the digital sector.

In preparation of this feature Rob Harkavy of CDR spoke to a range of legal experts, including Hausfeld Partners, Luke Streatfeild and Lucy Rigby, who shared their experience in the CAT. Luke acknowledges that the CAT “got off to a steady but not a fast start, but I think we are seeing really great progress in some areas”. He continues: “We’re seeing the access to justice that everyone hoped would occur.”

When it comes to legal instruments available for the consumer, Lucy Rigby explains: “If I get cheated out of GBP 300 by a price-fixing cartel, I stand a decent chance in theory of getting my money back because there could be an opt-out claim for redress. But if I’m cheated out of that same GBP 300 due to a breach of consumer law if, for example, a product was mis-sold, there’s no opt-out mechanism available to me, so the chances of my recovering that GBP 300 are much more limited.”

Whilst there has been discussion around a collective action system that sits somewhere between the UK and US approach, Luke disagrees, and believes that “the CAT is doing what it’s supposed to do”. He continues: “Certification in the US has become a very onerous test, and what that effectively means is that there is a mini trial at certification. It’s very expensive and the parties invest a lot of money; and what tends to happen is that if one gets through certification, the case is more likely to settle because a lot of the issues have already been dealt with.”

Overall, the scope of collective proceedings in the UK is bound to increase but – with just two courtrooms and a justice system that is still coping with the Covid backlog and creaking under the pressure of under investment – there seems little doubt that any expansion needs to be accompanied by a commensurate increase in resources.

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