Reform of the opt-out collective actions regime for competition law should prioritise closer monitoring of defendants' costs, the Class Representatives Network (CRN) has told the government.
Responding to the Department for Business and Trade’s call for evidence on the operation of the regime, the network said defendants have a ‘perverse incentive’ to rack up costs in order to put pressure on the claimant’s funding.
The response notes that the rules require class representatives to show they have enough funding to bring the claim and also to meet the defendant’s recoverable costs if the claim does not succeed, effectively by purchasing adequate after-the-event (ATE) insurance. However, while class representatives are subject to ‘careful costs constraints and scrutiny’, defendants often have deeper pockets and, until the case management hearing in Bulk Mail Claim v IDS, defendant-side costs have not been subject to any monitoring in the Competition Appeal Tribunal.
One class representative told the network that high defendant costs had required ATE cover of £15m for the claim to continue.
The response said: ‘Defendants are therefore subject to a perverse incentive to deliberately challenge the claim at every stage and delay settlement in the hope of running down the claimant’s funds to a point where either (a) the claim fails due to lack of funds); or (b) the class representative is forced to settle for an amount which may be far lower than the defendant’s true level of liability.
‘Aggressive defendant strategies might include arguing and seeking to appeal unmeritorious points, delaying tactics, and excessive spending (for example, when dealing with disclosure) as a means of running down the claimant’s budget,' it continued. 'Improved monitoring of defendants’ costs should be the priority; it would bring the CAT in line with other civil jurisdictions in the UK.’
Announcing its review of the competition collective actions regime in August, the government said the opt-out caseload had grown ‘significantly’ since the regime’s introduction in 2015. The business department pointed out that ‘tens of billions of pounds in damages’ had been claimed - far higher than the £30.8 million per annum estimated in the coalition government’s 2013 impact assessment.
In its response to the call for evidence, the Class Representatives Network highlighted unforeseen factors affecting the regime since this ‘somewhat naïve’ 2013 impact assessment. These included the ‘underenforcement’ of competition law by the Competition and Markets Authority; the scale of anti-competitive behaviour by ‘big tech’ companies; and the effect of Brexit, which means European Commission investigations no longer cover the UK effects of anticompetitive conduct or agreements, increasing the need for more expensive ‘standalone’ private competition proceedings.
A separate report published by law firm Stephenson Harwood this month examined the potential benefits of the collective actions regime for the UK economy. It estimated that once fully mature, the regime’s annual economic impact from deterring anticompetitive conduct could fall between £12.1 billion and £24.2bn per year. However, the report pointed to a dramatic decline in new claims being issued in the CAT. Collective action filings have reduced from 17 in 2023 to just three in the first nine months of 2025. The report suggested the considerable hurdles in obtaining funding, procedural uncertainty and the ‘long shadow’ of the Supreme Court ruling in PACCAR have contributed to the drop-off in cases.
Meanwhile the International Legal Finance Association has told the government that a review of the collective actions regime is ‘premature’, with the regime ‘still at an early stage of development’. In its response to the call for evidence, it added that there was no ‘principled justification’ for not expanding the regime beyond competition law, to encompass other claims and causes of action.
The Law Society said it had made 'a very limited response just focusing on the fact that in our view unclaimed funds from settlements should be retained for access to justice purposes'. It declined to the publish the response.
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