Consumer Rights Act passed by Parliament: new "opt-out" class action for competition claims from October 2015

The Consumer Rights Act received Royal Assent yesterday, 26 March, and is expected to come into force on 1 October 2015. The Act will make it easier for private parties, in particular SMEs and consumers, to bring damages actions for breach of competition law.

The Act introduces a new "opt-out" collective action in the Competition Appeal Tribunal (CAT), so that claims can be brought on behalf of a defined group without the need to identify all the individual claimants. The opt-out aspect will only apply to UK domiciled claimants, but non-UK claimants will be able to opt in to the claim if they wish to participate.

The regime incorporates a number of safeguards in order to avoid frivolous or unmeritorious litigation, including a preliminary merits test and a requirement for the CAT to consider whether the claim should proceed on an opt-in or opt-out basis. There will be no treble damages (as is the case in the US) and any unclaimed damages will have to be paid to the charity prescribed by order by the Lord Chancellor.

The Act also introduces a new opt-out collective settlement regime to allow businesses to settle cases quickly and easily, as well as voluntary redress schemes under which companies found to have infringed UK or EU competition rules voluntarily agree to pay compensation to those harmed by their infringement. For more information please see our competition, regulation and trade e-bulletin here.