Competition Litigation in the United Kingdom: What Lies Ahead?
Renato Nazzini, Apr 16, 2013
The process of reform of private actions in the United Kingdom has been a long one. Probably, rightly so. Any reforms aimed at making it easier to bring competition law claims by definition allow claims to be brought that would not have been brought otherwise. This increase in litigation imposes a cost on society that must be justified by a genuine broadening of access to justice for claimants having a meritorious case and, possibly, wider benefits such as enhanced deterrence of anticompetitive conduct and the associated improvement in economic welfare. Balancing the need to provide the right set of incentives and safeguards for claimants in competition cases while at the same time guarding against the risk of unmeritorious or unnecessary litigation is a complex exercise.
Over the years, however, since the inception of this debate by two papers published by the Office of Fair Trading in 2007, there has been a growing agreement around some general principles while others remain controversial. Perhaps the least controversial is the desirability that a specialist court of first instance have jurisdiction to hear competition cases.
Still fairly widely accepted is the idea that civil damages are designed to compensate the claimant, not to punish the defendant. As a consequence, damages must be primarily compensatory. This does not necessarily mean that damages claims do not have, and should not have, a deterrent effect. It means, however, that the quantification of damages must be guided by the objective of compensating the claimant. This rules out the award of multiple damages as a general rule in competition cases.
More controversial is the need for an opt-out collective action regime. Opinions remain sharply divided although the desirability of a more efficient way of ensuring collective redress where individual claims are not, in themselves, of sufficient magnitude to justify the cost of the proceedings is difficult to deny.
After extensive consultation, in January 2013 the U.K. Government announced its proposal to make significant changes to the procedures whereby competition cases are litigated in England and Wales. In Private Actions in Competition Law: A consultation on options for reform-government response ('Government Response'), the Government sets out the main pillars of the new regime. Some of the changes, such as the introduction of an opt-out collective action, appear significant. Others are incremental and an improvement of the current system rather than a "revolution." However, one striking feature of the proposals is their level of generality. Much of their impact will depend on how these general proposals are actually implemented.