City lawyers cautious on fast-track scheme

City lawyers have cautiously welcomed government proposals for a fast-track procedure for smaller businesses launching private actions under competition law.

The City of London Law Society said a fast-track scheme would make bringing an action cheaper and simpler for small and medium-sized enterprises (SMEs). Responding to a Department for Business, Innovation & Skills consultation on private actions in competition law, the society added that government policy could create a ‘claimant-friendly litigation landscape’ for competition cases.

But the response said a fast-track system would work only if the rights of the defence are balanced with those of small companies.

‘There clearly need to be appropriate costs, damages and procedural incentives by making access to the courts cheaper, quicker and simpler for SMEs than under the present system.’

Great care must be taken in designing such a procedure to ensure that support for SMEs does not result in processes with an in-built prejudice against non-SMEs, the response said.

‘It is important that the fast-track procedure does not result in non-SMEs incurring significant costs, both legal and in management time, defending cases with little or no merit.’ The society’s response, drafted by the competition law committee, also calls for alternative dispute resolution to be ‘encouraged but not mandated’.

Forcing parties to take on ADR, it argued, would make the prospect of a settlement more difficult to achieve and go against government policy on other areas of law.

‘Parties should be free to insist on their right of access to the courts,’ the society added.

Last week, the Confederation of British Industry warned that proposals for ‘opt-out’ class actions for consumers could create a new ‘litigation industry’ around competition law. The government consultation closed last week, with a response from the department expected later this year.