Cohen Milstein drops dairy price-fixing action

US Class action law firm Cohen Milstein Hausfeld & Toll has given up on its ambition to make the supermarkets and dairies price-fixing case its first collective action in the UK.

As reported by The Lawyer last year (24 September 2007), the firm was hoping to claim around £270m for consumers after the Office of Fair Trading (OFT) estimated this was how much customers had lost due to supermarkets and dairy processors colluding to fix the price of products such as milk and butter in 2002 and 2003.

However, after assessing the possibility of taking the case forward, Cohen Milstein confessed that it was not viable, as funding the claim was an issue.

Anthony Maton, a dispute resolution partner in the firm’s London office, said: “Consumer class actions for small claims of £5 or £10 are not possible in the current climate, and being a class action law firm putting our hands up to this is saying something.”

The essential problem in this case, said Maton, was that funders tend not to look at putting money into a case that is worth less than around £10m as they would not get back a big enough slice.

“The UK’s current system needs claimants to opt in. We’d have to find a million people who’ve lost £10 to find a funder. The cost of the publicity and notices for us means it’s not viable,” said Maton.

LawAssist, a legal expenses insurer that is in the midst of setting up a commercial litigation funding company, believes class actions are increasing and succeeding in the UK, albeit outside the competition arena.

LawAssist executive chairman Brian Raincock said his firm had successfully concluded two class actions, including the Equitable Life pensioner claims with law firm Clarke Willmott, with after-the-event insurance.

Raincock warned that this was not possible in competition class actions such as the dairy case.

“When looking at competition actions, little account seems to be taken of the huge administrative burden that’s present when assembling the group and then satisfying the court as to the veracity and strength of a potential claim,” said Raincock.

He agreed with Maton that for the time being competition class actions on a small scale are simply not possible.