Scrapping the collective actions regime would lead to substantial competition law infringements by multi-national companies going unchecked in the UK, the Bar Council has told the Department for Business and Trade (DBT).
In its response to the department’s call for evidence on the operation of the opt-out collective actions regime for competition law, the Bar Council warned of potential detriment to UK small businesses and consumers if the regime were revoked.
The representative body acknowledged that the number of opt-out claims has grown, with some very large. However, it pointed out that very few claims are brought without the support of regulatory decisions or judicial precedent, while the certification process in the Competition Appeal Tribunal is ‘rigorous’.
It said: ‘In our experience, many claims have been brought on the back of decisions or investigations undertaken by the EU Commission or the Competition and Markets Authority (CMA), claims brought by the Department of Justice or States Attorneys in the United States, or by regulators in the UK or other [EU] Member States… The number of entirely unheralded claims is very small (the Gutmann v Govia boundary fares case being one of the rare exceptions)…
‘Any suggestions by large businesses that the UK should revoke the CPO regime needs to be seen in this context. It would put the UK, uniquely among most developed economies, back in the position of seeing substantial competition infringements going unchecked, with small businesses and consumers going uncompensated for their loss.
‘It would drastically reduce the deterrent effect of competition law on large multi-national businesses operating in the UK. The reason that large multi-national companies have been subjected to claims is typically because they have been found by courts and regulatory authorities to have acted in breach of competition laws.’
The detailed response also addressed a government question on whether businesses should ever be protected from liability under the collective actions regime, for example because they had co-operated with a CMA investigation. The Bar Council noted that the UK already has an immunity and leniency regime in place in relation to administrative penalties, but reforming the regime to give immunity against private claims would be ‘problematic’. It noted: ‘While a more modest extension of immunity from claims conferred on the first whistleblower in relation to cartel activity would still enable claims to be brought against other cartelists, we still think it sends a strange message to would-be cartelists to have a regime which visits no consequences at all on a business that engages in naked anti-competitive conduct, such as price-fixing, bid-rigging or market sharing.
‘Indeed, in an extreme case, it might prompt Machiavellian businesses to initiate cartel activity with a less sophisticated rival with a view to then blowing the whistle and landing their competitive rivals with an unmatched liability to fines and damages claims.’
Meanwhile the Collective Redress Lawyers Association (CORLA) used its consultation response to argue for an extension of the collective actions regime.
It said: ‘For the UK economy to thrive, SMEs must be able to compete, and such competition is guaranteed and safeguarded by an effective competition enforcement regime, of which the opt-out regime is now an essential pillar, to address and deter infringements.
‘That does beg the question why the opt-out regime remains limited to competition enforcement. UK consumers and businesses may suffer the exact same harms and face difficulties in competing effectively against competitors that flout environmental and consumer protection laws, but lack the equivalent recourse to an opt-out mechanism. Extending the scope of the regime would remedy that enforcement gap, to the benefit of the rule of law and the UK economy; and bring the UK in line with other jurisdictions where collective redress is not limited to competition but extended across practice areas.’
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