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Suing a cartel should be easier, says OFT

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Consumers and businesses harmed by cartels and other anti-competitive practices should be better placed to recover their losses, according to the Office of Fair Trading (OFT), which launched a consultation (pdf) on changing competition rules this week.

The OFT has even pledged to give members of the public access to some of the evidence it gathers in its own investigations so they can launch their own actions. It will also allow consumers to take action in the aftermath of successful OFT cases.

"Consumers and businesses suffering losses as a result of breaches of competition law should be able to recover compensation, both as claims for damages on a standalone basis as well as in follow-on actions brought after public enforcement," an OFT statement said. "To this end, representative actions should be more broadly available."

The consultation, which the office calls "informal", is launched with a discussion paper, and is designed to help consumers gain access to redress against companies which they think have cheated them.

However, the OFT is not advocating US-style class action lawsuits.

"It is important to note at the outset that representative actions are not the same as class actions," says the OFT. "In a class action, a named claimant brings an action on behalf of a class to which he belongs and which is certified by the court. In a representative action, a body representing the interests of those harmed by an unlawful practice (the representative body) brings an action on behalf of those who have suffered loss. The key difference is that a representative action is brought by a body authorised to bring a representative claim based on pre-determined criteria."

Under the current Competition Act, specified bodies are permitted to bring representative follow-on actions but only in the Competition Appeal Tribunal. There is currently no provision for representative follow-on actions to be brought on behalf of businesses. The OFT is also proposing that such actions could be pursued through the ordinary court system. The OFT further suggests a relaxation of the strict rules on solicitors' contingency fees for competition law cases.

The OFT believes that its proposals would force companies to behave better. "A more effective private actions system would promote a greater culture of compliance with competition law and ensure that public enforcement and private actions work together to the best effect for business and consumers," said Philip Collins, chairman of the OFT.

The OFT said that competition infringements took millions of pounds from consumers at a time, and that consumers needed to have some form of redress.

"Strong competition regimes are essential for open, dynamic markets. They drive productivity and innovation and ensure the efficient allocation of resources, and are good for consumers and business," said the OFT statement. "Infringements of competition law cause significant harm to both consumers and businesses. Recent experience shows that harm to consumers may run into tens of millions of pounds in any given case. However, up until now consumers have recovered virtually no compensation. Businesses also find it difficult to recover losses and to remedy the competitive disadvantage they may have suffered from infringements of competition law."

The consultation will act as the basis for recommendations which the OFT will make to Government to clear any barriers in the law to consumers suing firms.

Copyright © 2007, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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