The OFT has even pledged to give members of the public access to
some of the evidence it gathers in its own investigations so that
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," said an OFT
statement. "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.
