“Opt-out” class action for UK competition claims a step closer to reality

On Thursday 23 January the government introduced the Consumer Rights Bill to Parliament. The Bill includes proposals for a new collective action for competition claims, together with other proposals for reforming the UK regime for competition law private actions. This follows initial publication of the government's proposals in January 2013 (see post) and the draft Bill in June 2013.

If passed by Parliament, the Bill will create a new “opt-out” collective action for competition law claims on behalf of both consumers and businesses in the Competition Appeal Tribunal (CAT). The CAT will be required to certify whether an action should proceed on an opt-in or (for UK-domiciled claimants) opt-out basis. With an opt-in action, as the name suggests, claimants need to opt in if they wish to benefit from the claim. In contrast, with an opt-out action, the claim is brought on behalf of a defined group, without the need to identify individual group members; all those who fall within the group will be bound by the result (including a settlement) unless they opt out of the case.

In terms of who will be able to act as a representative to bring an opt-out collective action, this includes any claimants (individuals or businesses) who have suffered a loss, as well as genuinely representative bodies such as trade associations. However, a person may only be authorised to act as a representative in proceedings if the CAT considers it "just and reasonable" for that person to do so – even if they are a class member. In the draft Bill the "just and reasonable" requirement applied only if the proposed representative was not a class member.

The Bill also includes a new opt-out collective settlement regime, similar to the Dutch mass settlements regime. This will allow parties to ask the CAT to approve an agreed settlement on an opt-out basis (for UK-domiciled claimants) without the need for a claim to be brought.