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Reinforcing the class system: new procedural rules for collective competition claims introduced to pave the way for a big claims future!

26 March 2014

As part of the on-going reform of the UK competition litigation landscape, on 10 March 2014 the Competition Appeal Tribunal (CAT), which has become the new central forum for anti-trust cases, published draft rules for collective actions. 

Collective actions are those brought by representative bodies on behalf of a class of claimants affected by, say, a cartel. 

The rules set out a procedure to bolster a system of 'opt out' collective litigation.

Whereby, instead of representative actions being brought only on behalf of those members of a claimant class who volunteer to take part in it, only those who actively elect not to participate will be excluded from any assessment of damages or, if the matter is resolved prior to final judgment, in an approved settlement. 

This vastly expands the potential level of exposure for cartelists and other competition law infringers as well as the incentive for representatives to come forward and instigate class actions.

In regards to how this system will work in practice, the following aspects of the draft rules seem particularly notable:

  • the CAT will only authorise a collective action where the various claims are suitable to be brought together, because they raise common issues and the claimants together constitute an identifiable class of people. A register of class members must be kept. Any individual claimant who already has commenced an action relating to one or more of the common issues in the collective action will only be entitled to participate if it withdraws that claim or applies to have it stayed
  • a collective action will have to be brought by issuing a claim form explaining who the representative is and why a collective action is considered likely to succeed. This claim form also serves as an application for a Collective Proceedings Order (CPO), which a defendant may wish to oppose but does not have to oppose (or even acknowledge) prior to any hearing to determine it. To note, if a defendant does choose to defend a CPO application this will not waive any of its rights to contest jurisdiction over the action
  • the CAT will authorise collective actions to be brought by representatives it considers can justly and reasonably bring the case. This means the representative, which cannot be a law firm or specially set-up litigation company, must be deemed:

    - likely to act fairly and adequately in the interests of the class
    - suitable to manage the proceedings, if that representative is also a member
    - as having a viable plan for how to commence the action and a process for it to be governed and for how members of the claimant class will be consulted in key decisions in the case
    - free from any material interests that conflict with those of the class
    - able to pay the recoverable costs of the defendant in any action and, if an injunction (which the CAT now has power to grant) is sought, any cross-undertaking in damages (ie to compensate the defendant in case an interim order to do or refrain from doing something later proves to have been made unjustly)
  • the CAT can appoint additional representatives for identifiable 'sub-classes' within a claimant group, who share common interests in their claims that are not shared by all the members of the class.

The new rules will put into practice a reformed approach to class litigation, which aims to encourage better representation of and participation by class claimants and better incentives for infringers to settle cases and provide voluntary redress to compensate for their wrongdoing.

It is also hoped that the potential scale of 'opt out' collective actions may provide a sterner deterrence to anti-competitive conduct, particularly cartels and so-called 'exclusionary' abuses by dominant firms, which will buttress public enforcement by the regulatory authorities (ie in the UK, from April 2014, the Competition and Markets Authority).

This article was written by Rory Ashmore.

For more information please contact Rory on +44 (0)20 7427 1031 or rory.ashmore@crsblaw.com