Consumer Rights Act 2015 "A Sea Change" for Competition Claims, says Hogan Lovells

29 September 2015 - Hogan Lovells has published a comprehensive guide to new radical changes to the way in which claims for breach of competition law can be brought in the UK.

The reforms, brought in with the Consumer Rights Act 2015 on 1st October, are intended to encourage and facilitate private enforcement of competition law, in particular by consumers and small- and medium-sized businesses (SMEs). The main elements of the reforms are:

• Introducing US-style opt-out class actions to the UK for the first time;
• Introducing class settlements and approved redress schemes;
• Changes to the specialist Competition Appeal Tribunal ("CAT") to remove limits on its current jurisdiction and to grant it additional powers to grant injunctions; and
• A new fast-track procedure in the CAT intended for consumers and SMEs.

The CAT now has power to hear class actions for breach of competition law, on either an opt-out or opt-in basis, subject to a certification process.  This is the first time opt-out class action have been possible in the UK. 

The changes introduced by the CRA15 relate only to claims brought in the CAT: claims brought in the High Court remain unchanged.  As a result of the changes, the CAT is now set to become the main forum for competition claims in the UK.

Commenting on the changes, Nicholas Heaton, head of Competition Litigation at Hogan Lovells, said:
"This is a sea change for competition claims.  We may not see 20 claims issued on day one, but looking back in a few years' time, I think we will see that the Consumer Rights Act changed the landscape for competition claims.

"From now on, there is a real chance of claims by classes of consumer and SMEs in a way which has been absent to date.  The Act also provides mechanisms through class settlements for businesses to address their exposure."

Ivan Shiu, a partner in the Competition Litigation department, added:
"The Act exposes consumer-facing companies to the possibility of opt-out class actions for the first time in the UK.  Such an action could be brought on behalf of every UK consumer that has, for example, bought a particular product

"If the CAT certifies an opt-out class action, all eligible UK-domiciled claimants will automatically be included within the class, unless they choose to opt out.  It is also open to overseas claimants to opt in to the class." 

Paul Chaplin, Counsel in the Competition Litigation department, commented:
"Given the importance of the UK as the main centre for EU-wide competition claims, all businesses operating in the EU need to consider what these changes may mean for them, whether as potential claimants or defendants.

"The introduction of opt-out class actions in particular are a new threat for consumer-facing businesses. The introduction of a power to grant injunctions after a fast track procedure will be of real concern to those with a potentially dominant position in their markets."

You can read the full guide here.

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