Large scale class action litigation in competition damages cases is common-place in the US. This has brought with it pressure on directors of companies to consider whether recovery of damages is in the company’s best interests and, if so, how best to approach this.

In recent years, there has been a surge in competition litigation in the UK, although collective actions were not a popular model. However, the introduction of the Consumer Rights Act 2015 and the increased availability of litigation funding has changed the litigation landscape and cases are now being issued more regularly.

The 2015 act gives proposed claimant classes two options for bringing collective proceedings in the Competition Appeal Tribunal (CAT): opt-in or opt-out. Both require a collective proceedings order (CPO) defining the class. In opt-in actions, claimants choose to join; in opt-out actions, a claimant automatically joins if it falls within the defined class unless it opts out.

The first two CPO applications against Pride Mobility Products and Mastercard were opt-out actions which were refused by the CAT. These cases made clear that the CAT intends to take carefully scrutinise any application. In recent months, two new CPO applications have been filed in the CAT against truck manufacturers involved in the long running trucks cartel. Interestingly, both applications include an opt-in procedure, while one of the applications puts forward an alternative opt-out procedure. There would appear to be a considerable overlap in the potential classes which the CAT will need to consider in determining whether to grant either or both applications.

While time will tell if these cases move forward, they will inevitably become a part of the legal landscape for UK companies. Directors of companies need to ensure they are aware of the costs and benefits of bringing claims against companies that have harmed them. This requires consideration of whether to remain a part of an opt-out claim, whether to join an opt-in claim, or whether to take action individually.

The benefits of group actions include dispersion of costs, access to more information and potentially greater negotiating power. However, for individual companies, class actions can involve a loss of control over the strategic direction of the claim. Individual companies may also choose to join together through joint case management or formally joining claims with other similar companies in a smaller group to regain some of the advantages of group actions while retaining some control over their claims.

In making the decision as to whether or not to pursue a claim, directors need to be mindful of their directors’ duties. Those duties include, but are not limited to, the duty to promote the success of the company for the benefit of its members as a whole. This can be a delicate balancing act.

Directors may consider that the existence of funding, and therefore the de-risking around spiralling costs outweighs the potential risk around loss of control in an opt-out CPO scenario and decide that, for their company, proceeding with a claim would promote the success of the company. For others, not having control of a claim might be a step too far and not the right step for their company.

Sarah Houghton is a partner and Zac O’Brien is an associate in Mishcon de Reya’s specialist competition litigation team responsible for securing £67m in competition damages for Sainsbury’s against Mastercard, the largest award in the UK to date.