Consumer Rights Act 2015 encourages private enforcement of competition law


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The Consumer Rights Bill has now received Royal Assent and the Consumer Rights Act 2015 (the “Act”) is expected to come into force on 1 October 2015. The Act will make it easier to bring claims in the UK for damages for breach of competition law.

Key changes made by the Act in relation to competition law include:

  • introducing an “opt-out” system for collective actions;
  • increasing the powers and jurisdiction of the Competition Appeal Tribunal (CAT) and streamlining CAT procedures; and
  • new powers for the Competition and Markets Authority (CMA) to approve redress schemes to compensate victims of anti-competitive conduct.

Although businesses are increasingly bringing private damages actions in the UK courts, SMEs and individual consumers affected by breaches of competition law have generally not done so, due to funding difficulties and an absence of any mechanism to allow many smaller claims to be combined. Under the new regime, UK-domiciled businesses and consumers will automatically be included as claimants in collective actions unless they choose to opt-out, provided they satisfy the CAT’s criteria for inclusion. This should make it easier for small businesses and consumers to recover damages.

The Act seeks to strengthen the powers and role of the CAT as a specialist venue for private enforcement in the UK. The Act will broadly bring the CAT’s powers in line with those of the High Court, including:

  • extending the CAT’s jurisdiction to hear both stand-alone and follow-on damages actions. Given that potential cartel claims may include both follow-on and stand-alone aspects, it is only once the Act comes into force that the CAT will be fully “open for business” from the claimants’ perspective; and
  • empowering the CAT to grant injunctions.

The Act also allows the CMA to approve a redress scheme, whereby companies who have infringed UK/EU competition law agree to pay compensation to victims of the infringement. The CMA may not approve the scheme until a final infringement decision has been adopted by the relevant competition authority. Once approved, however, the voluntary redress scheme provides effective means for enforcement by either the CMA or the party entitled to compensation, without the need for litigation.

The Act, coupled with the recent European Damages Directive, reflects a policy of encouraging private enforcement of competition law via damages actions in national courts. Companies who are found to have infringed competition law will therefore face increased exposure to claims for compensation.

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