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One of the areas most likely to see the introduction of new forms of collective claim is the field of antitrust damages claims. On 2 April the European Commission published a white paper setting out concrete proposals to make antitrust damages claims easier to bring. The Office of Fair Trading (OFT) also published its own recommendations to the UK Government on this topic at the end of last year. An important part of both proposals are changes designed to introduce more effective forms of collective claims.
Some EU member states already have some form of collective or representative action for antitrust claims. In England representative actions by designated bodies can be brought in the Competition Appeal Tribunal on behalf of identified consumers once the OFT or the Commission decide that there has been an infringement of competition law. However, ‘opt-in’ representative claims of this kind have not been a great success. Only one representative claim has been brought in the UK. This was a claim by Which? relating to the price fixing of replica football kits, which settled earlier this year. The problem was that Which? was unable to generate sufficient interest among consumers to get more than a few hundred to sign up to the claim and – as the amount lost by each consumer was only around £20 the damages claimed were very small.
Both the Commission and national competition authorities in member states want to find a more effective form of collective claim to ensure that victims of anticompetitive behaviour can obtain compensation, but also because they realise that the threat of large collective claims could play an important part in deterring infringements and enforcing competition law, just as they do in the US. However, the Commission and the OFT have been at pains to point out that they do not wish simply to import the US opt-out class action system, which is seen as contributing to the excesses of the US system.
The Commission's white paper proposes that two different kinds of collective claim should be permitted in antitrust cases: a representative action for damages brought by qualified entities and an opt-in collective action.
The white paper does not discuss when such claims will be allowed, but does open up the possibility of something more akin to an opt-out class action, in which a claim is made on behalf of a class of the victims, unless they optout. Damages, which the Commission says must be compensatory, would be paid to the representative body, but the white paper does not deal with how they should be assessed in cases where the victims are not identified. Equally, it does not deal with the difficult issue of how damages should be distributed or used in those circumstances, although it raises the possibility of the damages being used for related purposes rather than being paid directly to victims.
The second kind of collective claim that the Commission wishes to see adopted is an opt-in collective action. In these claims individual victims could choose to combine their claims and bring them together in a single action. Each victim would remain a party to the proceedings and be paid damages in respect of their individual loss.
The white paper's proposals appear to be intended to apply equally to businesses and to consumers. It is also assumed that the claims contemplated could be brought whether or not there had already been an infringement finding by the Commission or by a national competition authority, but this has not been made clear in the white paper.
The recommendations that the OFT made in November 2007, were more detailed. The OFT proposed that representative actions should be possible, again brought by designated bodies. The OFT recommended that, in appropriate cases, the court should be able to permit those claims to be brought on behalf of consumers or businesses at large, ie to be an opt-out claim.
The ambiguity in the Commission's proposals means that it is difficult to know whether they go as far as the OFT's proposals towards allowing opt-out claims. Given the potential impact of opt-out claims on businesses operating in Europe, it is important that the Commission should clarify its stance.
It could well be that apparent differences between the representative claim proposed by the Commission and that recommended by the OFT are simply differences of emphasis. It must be remembered that the Commission has to sell its proposals to all 27 member states, whose legal systems. Whatever the position proves to be, as the Commission's proposals are only intended to set a minimum standard, the UK would be free to implement the OFT's measures even if they go further in this regard. It seems likely, therefore, that the UK will see the introduction of opt-out collective claims in antitrust cases and may well lead reform in this area in Europe.
Nicholas Heaton is a partner ain the competition dispute resolution team at Lovells