From October 2015, new rules are making it easier for claimants to bring antitrust claims in the UK.
These changes are the final piece of the Government’s wide-ranging reforms to UK competition law, which began in 2010. The latest reforms comprise four key elements.
Until now, claimants have tended to bring private actions before the High Court. The High Court had wider jurisdiction and allowed cases to be launched sooner. Under the new regime, the Competition Appeal Tribunal (CAT) will become the principal venue for competition cases. It now has the power to hear standalone claims as well as follow-on actions. It can hear collective actions. It can award injunctive relief. And cases launched in the High Court can now be transferred to the CAT.
Collective actions are intended to facilitate redress for victims of competition infringements whose individual losses are otherwise insufficient to justify a claim.
A collective action allows a representative to bring and settle claims on behalf of a class of claimants whose claims raise “the same, similar or related issues of fact or law.” Collective proceedings may be brought on an opt-out basis (all potential claimants are included unless they decide not to) or an opt-in basis (only those claimants who actively agree to participate), although claimants not domiciled in the UK will always have to opt in.
Under the new procedure, the CAT will decide whether to allow collective proceedings, and whether they should be opt-in or opt-out. It will also consider the suitability of the representative bringing the action. The representative need not be a class member but the CAT has to be satisfied that it is “just and reasonable” for that person to act as representative, including whether the representative has conflicts of interest with class members and its ability to pay the defendant’s costs if ordered to do so. Further, claimants cannot use damages based agreements (contingency fees) to bring opt-out collective proceedings.
New CAT rules of procedure and a new guide to proceedings have also been published. These broadly align the CAT’s procedure with the Civil Procedure Rules that apply to High Court cases and set out the process for bringing collective proceedings. There are three other key points of interest
A six year limitation period will apply to most private actions. Previously, the limitation period for follow-on claims before the CAT was two years from the date the relevant infringement decision became final. In collective proceedings, the limitation period will be suspended while the CAT is considering the application to bring proceedings on a collective basis.
The rules introduce a fast-track procedure for SMEs. Cases under the fast-track procedure will proceed to substantive hearing within six months and the amount of recoverable costs will be capped at a level to be determined by the CAT. Also, under the fast-track procedure, the CAT may grant an interim injunction without the usual requirement for the applicant to provide an undertaking as to damages, or with a cap on the amount of any undertaking.
The rules introduce provisions similar to Part 36 of the Civil Procedure Rules, setting out procedures for making formal offers to settle with defined costs consequences, called a “Rule 45 Offer.” Rule 45 Offers cannot be made in collective proceedings. Parties in collective actions are limited to making Calderbank offers, ie, offers made without prejudice as to costs.
Finally, the CMA and other UK competition authorities will have the power to certify voluntary redress schemes proposed by firms found to have infringed competition law. The CAT will take any voluntary redress scheme into account when determining a claim for damages, and when considering whether to allow collective proceedings. Firms offering a voluntary redress scheme may also benefit from a 20 per cent reduction in any fine imposed by a UK competition authority.
These reforms have the potential to alter the landscape for private competition enforcement across Europe. The UK’s decision to introduce an opt-out class action regime marks a watershed moment for private enforcement in Europe. There will be a strong desire among potential claimants and their advisers to establish the UK regime as a model for securing redress for smaller and dispersed victims, and to encourage other Member States to adopt similar mechanisms.
Sunil Gadhia, partner, Cleary Gottlieb Steen & Hamilton. Cleary counsel Paul Gilbert and associate Paul Stuart assisted with this article.
