OFT says ‘yes’ to private competition enforcement

The Office of Fair Trading (OFT) has set out to encourage private actions in competition cases.

The OFT will today release a discussion paper, which will set out why representative actions should be made more broadly available, and will also encourage the settlement of cases without going to court.

OFT chairman Philip Collins said: “A more effective private actions system would promote a greater culture of compliance with competition law and ensure that public enforcement and private actions work together to the best effect for business and consumers.”

The consultation has been anticipated since the European Commission published a discursive “Green Paper” in December 2005, which sought to encourage debate about private actions.

Collins exculsively told The Lawyer this morning that the 56 page document was intended to raise awareness about private actions, the framework of such already exists.

He said that the OFT welcomed ideas and proposals and will hold a public workshop, likely in September. Collins said that it was likely that the OFT would intervene more in court cases, particularly at the appeal level.

The discussion paper also floated the idea of introducing a competition ombudsman akin to the financial services ombudsman.

In June last year, Collins said: “I believe that as a public body responsible for enforcing the competition rules in the UK, we have an obligation to encourage private enforcement which complements our public work.”

Consumer group Which? is bringing the first-ever class action seeking individual damages for anticompetitive behaviour. The claim turns on a 2003 Office of Fair Trading (OFT) probe into price collusion between JJB Sports, Umbro, all:sports and others over the replica shirts, which culminated in an £18.6m fine (see The Lawyer, 19 February).

The OFT’s discussion paper has so far met with mixed reaction from the City’s competition lawyers. Head of competition at Herbert Smith, Jonathan Scott, said: “Private enforcement is all the rage and a hot topic – it improves enforcement, it saves the government money. But the question is how to achieve these objectives without the excesses of US litigation.”

Collins said that the OFT was also keen to avoid US style litigation and the principles of private action were to make sure that only the most meritous cases were brought.

Nigel Parr, a competition partner at Ashurst, welcomed publication of the discussion paper and the objectives set out within it but warned that it would not be easy to achieve them, given the costs and uncertainties of private competition law actions.

Parr said that the most effective means of redress was provided by follow-on actions (where the OFT or European Commission had already reached an infringement decision).

Parr added: “An alternative approach would be for the OFT to broker early settlements involving the payment of compensation in lieu of taking enforcement action and imposing fines.”

After a period of consultation, ending 13 June, the OFT anticipates that it will make recommendations to the government.