20 October 2015
Consumer Rights Act 2015 and Group Actions
On 1st October 2015 the new Consumer Rights Act came into effect, bringing considerable changes to consumer law within UK.
The Act makes it much easier for consumers to bring US-style group actions for anti-competitive behaviour.
What is Anti-Competitive Behaviour and What Does EU Competition Law Prohibit?
Put simply, anti-competitive behaviour involves practices that prevent or reduce competition in a market, such as businesses agreeing to prevent, restrict or distort their competition. Examples of anti-competitive behaviour include price fixing on goods and services, or limiting or preventing production or supply of goods or services.
Anti-competitive agreements cover formal and informal agreements that prevent, restrict or distort competition in the marketplace. It includes things like cartels, price-fixing, market sharing and bid rigging or limiting the supply or production of goods or services or other agreements that could disrupt free competition within the EU.
Businesses with significant market power are prohibited from exploiting their strong market positions (the rule of thumb is that if a business has a 50% market share there is a presumption that it is dominant, although proper assessment involves assessment of other elements). Businesses that assume a dominant position within the marketplace are prohibited from using their dominant market position for unfair practices, such as:
- Directly or indirectly imposing unfair trading terms, such as exclusivity or imposing unfair purchase or selling prices
- Excessive, predatory or discriminatory pricing
- Refusal to supply or provide access to essential facilities
- Tying (insisting that a buyer wishing to purchase one product must also purchase all or some of his requirements for a second product).
How Can a Collective Action be Brought for Breach Of Competition Law Under the New Act?
Under the Consumer Rights Act 2015, legal proceedings can be brought on behalf a defined class of persons who have suffered loss and damage for an infringement of the prohibition against anti-competitive agreements, or due to an abuse of a dominant market position. The group of claimants that bring the action to obtain compensation for their losses may be individuals or businesses.
An application must be made to the Competition Appeals Tribunal so that a collective proceedings order may be made. The collective proceedings order will include, amongst other things, a description of the class of persons whose claims are eligible for inclusion in the action and whether it will proceed on an “opt in” or and “opt out” basis.
If the collective proceeding proceeds on an “opt in” basis this means that each person who wishes to participate in the action must notify the representative within a certain time and manner in order to be a part of it.
If the collective proceeding proceeds on an “opt out” basis the proceeding is automatically brought on behalf of each class member, unless they have opted out or are not domiciled in the UK. The Tribunal may order for a collective settlement which will be binding on all persons within that class.
What Types of Remedies Does the Act Provide to Those Who Have Fallen Victim of a Breach of Competition Law?
Claims can be made for damages, any other sum of money or a claim for an injunction (i.e. a Court order that stops someone doing something).
The Act also provides for collective redress schemes.
What to Do You if You Think You Have Fallen Victim to Anti-Competitive Behaviour
- If you suspect that a business is acting in an anti-competitive way, report it to the Competitions and Markets Authority (CMA).
- Keep a close eye on the news – if widespread, the behaviour is very likely to be reported.
- Practical steps like locating your receipt or proof of purchase and writing down a record of what happened both before and after the purchase of the goods or services will help discern your claim (e.g. conversations between you and the company with as much detail as possible like to whom, where, when and what was said).
- A specialist group action lawyer at Slater and Gordon will also be able to advise you of your rights.
The new Act heralds a new opportunity for victims of anti-competitive behaviour to gain access to justice when otherwise they would probably not been able to right the wrongs they have been subjected to.
The ability for consumers to band together, or to be automatically included in these claims will more than likely force large, well-resourced defendants to settle claims where there is evidence of wrong doing rather than being able to ignore them knowing the consumers lacked the means to bring proceedings.
Rose Inglis is a group litigation lawyer at Slater and Gordon Lawyers in London.
If you believe that you have been a victim of anti-competitive behaviour and would like legal advice, please get in touch with our specialist litigation lawyers at Slater and Gordon.
Call us on freephone 0800 223 0700 or contact us online and we will call you back.
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