The Supreme Court’s decision in Merricks: a revolution in the making

In 2015, the legislation introducing a UK collective litigation procedure for competition claims came into force – enabling consumers and small businesses to seek redress for the anti-competitive behaviours of price fixing and abuses of dominant power. Five years later, and such a collective action has yet to be allowed to proceed. 

In a landmark judgment today the Supreme Court has given the green light for such actions to be brought on a straightforward and easily understood basis. It paves the way for millions of consumers and thousands of small businesses to bring collective actions against those who have breached competition law. For Hausfeld specifically, this means actions against the biggest banks in mis-selling foreign exchange, the train companies for mis-selling fares and the big tech companies who have misused their dominant market position.

“This decision is a revolution in the English law, and an area where the English Court clearly demonstrates that it is the pathfinder for other European Jurisdictions.” – Anthony Maton, Global Vice-Chair, Hausfeld

To date, such claims have been limited to competition claims but combined with another landmark decision to be heard next spring – Lloyd -v- Google - the Supreme Court will look at whether collective claims can be brought in other areas by claimants acting on a representative basis, so that companies who took insufficient action to remedy data breaches such as Marriott International or misused data such as YouTube – two actions Hausfeld is bringing - can be brought to book for their actions.

“In its decision today, the Supreme Court puts the UK at the epicentre of the European revolution on collective actions and positions the UK as the ‘go to’ jurisdiction for collective consumer claims in Europe.” – Anthony Maton, Global Vice-Chair, Hausfeld

Only two weeks ago the European Parliament adopted the EU Directive on representative actions for the protection of the collective interests of consumers in the European Union. This directive - much watered down by big business lobbying – only allows claims to be brought on an “opt in” basis: so that each consumer has to elect to join the action to bring the claim.

Whilst they provide comfort in numbers, history and experience tells us that opt in collective actions lack power to bring redress for corporate wrongdoing. Consumers simply do not join a legal action in sufficient high numbers for opt-ins to succeed – a hurdle clearly overcome by an opt out procedure. Opt out allows a claim to be brought on behalf of all affected consumers or businesses by a representative - those who don’t want to be part of an action can “opt out”. Opt out actions put very real pressure on corporate wrongdoers to provide redress to consumers and allow claimants meaningful recovery where otherwise none would be possible.

The Merricks decision – although specific to the procedure of competition collective actions – clearly sets the tone around the wider framework of collective redress in the UK. A revolution in the making.