In March 2015 the much awaited Consumer Rights Bill received royal assent and is now due to come into force on 1st October 2015. The act will provide a resolution for the challenges which arise when managing group action claims.
What does this mean?
The enforcement of the Consumer Rights Act (CRA) is good news for individuals and SMEs as it more widely facilitates parties in claims for breaches of competition law in the UK and it is hoped that it will encourage potential claimants to seek redress.
The act provides the Competition Appeal Tribunal (CAT) with greater scope and powers to deal with competition private action in the UK.
The main changes that the act will introduce are as follows:
- Opt-out regime – this will apply to consumers and businesses who will now be able to bring private actions for damages and losses suffered as a result of breaches of EU and UK competition law on behalf of an entire class of claimants. Prior to the CRA those who wished to be included in group action claims needed to take positive steps to opt-in to a class action but now those who do wish to be part of the action must expressly opt-out.
- Opt-out collective settlement regime – businesses which have competition law claims against them are able to propose an opt-out collective settlements to the CAT. This application can be made either before or after an opt-out collective proceedings order has been made by the CAT.
- There will be a new fast track procedure in the CAT for claims bought by individuals and SMEs – this means that final hearing will be within six months of a CAT order and the amount of recoverable costs will be capped by the CAT.
- New powers for the Competition and Markets Authority (CMA) – the CMA having authority to approve voluntary redress schemes. This will facilitate and encourage more out of court settlements.
As explained above the new opt-out regime will allow consumers and businesses to bring a claim for damages for losses suffered as a result of anti-competitive behaviour on behalf of a class of claimants without the need for the claimants to be identified and opt-in to the class. The new regime is faster, cheaper and better than the current system which sees viable claims fail to set off the ground due to the lack of claimants opting in.
The new regime will apply to all claims brought on or after 1st October 2015 and includes claims for breaches which would have taken place prior to this date.
When such claims are brought the damages awarded would be divided between the claimants in the class who brought the action.
Although this new regime somewhat reflects the ‘compensation culture’ in the US, it is intended that it will avoid the American style of excessive litigation by providing safeguards. This includes a certification process before the CAT which will assess the merits of cases before the opt-out regime is permitted. Further, the unsuccessful party of such claims will be liable for costs. These provisions will prevent unwarranted claims being pursued.
There is a new six year limitation period for such claims which is in line with the limitation period for the High Court as set out in the Limitation Act 1980. The limitation period will begin to run from the date on which the cause of action arose, subject to section 32(1)(b) of the Limitation Act 1980 which allows for a suspension of time when there is a deliberate concealment.
However, it must be noted that the new limitation period will only apply to claims arising on or after 1st October 2015. For claims arising before this date it would appear that the existing two year limitation period would apply from the date of any appeal final appeal decision.
Kiran Sharma is a Paralegal in the Group Litigation Department at Slater and Gordon Lawyers in London.
If you need legal advice about group action please contact our expert team of lawyers at Slater and Gordon. Call us on freephone 0800 223 0767 or contact us online and we will call you.