Recent Developments In Antitrust Class Actions in The United Kingdom

Robert O’Donoghue, Aug 10, 2010

Somewhat fitful attempts at promoting antitrust damages litigation have taken place in the EU in the last several years. These attempts have been stymied to a certain extent by a coalition of disparate, but cumulatively powerful, factors. For one thing, the EU Commission (and also, to an extent, certain national competition authorities) has sought to strike a delicate balance between competing considerations. A paramount consideration has been the jealous guarding of the Commission’s leniency/amnesty policy in cartels-a policy that has been the major source of the very large majority of Commission cartel cases in the last 15 years. Fostering a private antitrust damages litigation culture is seen by some within the Commission as potentially undermining its leniency policy; in particular, if private litigation were to lead to a risk of discovery of corporate leniency statements by plaintiffs. Allied to this is a real fear on the part of many national legal systems of importing the perceived excesses of U.S. style class action lawsuits, coupled with (a somewhat surprising) resistance in many countries to EU harmonization of national civil procedure laws (perhaps reflecting the fact that the EU law has, with very, very limited exceptions, not sought to harmonize national legal procedural laws).

On the other hand, there is also recognition that administrative fines by the Commission do not, directly anyway, benefit EU consumers, and that the political legitimacy of EU competition law could be significantly increased by consumer recovery of damages in civil litigation. At least some within the Commission also appear to accept that civil damages actions could be an important complement to public enforcement, particularly if the non-disclosure of corporate leniency statements could be guaranteed. The EU Courts, too, have recognized that there is a substantive individual right, under EU law, to compensation for damages caused by a breach of EU competition law (rather than merely a right that claims for damages under EU competition law should be effective and treated no differently, in procedural terms, to claims under national law).

For plaintiffs’ lawyers, at least, key to the success of an effective private damages action system is the need to cater for collective forms of redress. Because in many cases harm caused by, say, a cartel is atomized among a large group of purchasers and sub-purchasers whose individual losses may not be huge, the incentives of any individual plaintiff to sue (usually large and well-resourced) defendants is sometimes limited. The same may be true of small- and medium-sized enterprises affected by anticompetitive behavior.

As things currently stand, however, EU Commission reforms in this area appear to envisage a very limited form of collective action redress. In the draft of the EU Directive intended to legislate for a minimum level of common procedures for private damages actions, the Commission only provided for: (1) an opt-in collective redress procedure whereby two or more named plaintiffs could, in general, be joined in the same action, and (2) a representative action procedure, whereby certain nominated or “qualified” State bodies or not-for-profit entities would be able to pursue collective actions. While, in (2), the action could be brought on behalf of a group that did not involve individual named plaintiffs (i.e., something more akin to an opt-out action), the reservation of such actions to essentially public bodies would seriously limit its practical effectiveness. Moreover, the fate of the draft Directive remains unclear following its withdrawal and the change in EU Competition Commissioner in February 2010.

Given the somewhat schizophrenic, and uncertain, approach of the EU authorities to private damages actions in the competition arena, it will likely, in the short- to medium-term anyway, be left to national legal systems in the EU to decide to what extent, if any, they wish to promote collective redress procedures in competition law cases. The United Kingdom has long been regarded as being at the vanguard of EU jurisdictions likely to be attractive, to plaintiffs at any rate, for private damages actions. Reasons for the U.K.’s attractiveness include the availability of full disclosure of documents as of right (unlike most civil law systems where specific (or, even, no) disclosure is the norm), the use of English as the lingua franca of competition law, and the generally high quality, probity, and speed of justice in the United Kingdom. Perhaps recognizing these attractions one of the leading U.S. class action law firms, Hausfeld LLP, established an office in London for the express purpose of bringing class action law suits.

This short article examines recent developments in multi-party litigation, including competition litigation, in the United Kingdom.