There have been two recent developments in the expansion of private antitrust actions in the United Kingdom and the European Union. First, the United Kingdom continues to push toward opt-out collective proceedings for stand-alone or follow-on actions, which is a shift from permitting only opt-in collective actions and only for follow-on actions. Previously, stand-alone actions were not available in the U.K.’s Competition Appeal Tribunal (CAT) and collectives could only proceed on an opt-in basis. Second, the European Union continues to develop legislation for private actions against cartel activity.
In January 2014, the U.K. Parliament began considering the Consumer Rights Bill of 2013-14. Schedule 8 of the bill proposes amendments to the Competition Act 1998 and the Enterprise Act 2002 to provide for stand-alone collective actions, which may proceed in either an opt-in or an opt-out form. The bill also requested CAT—the court vested with jurisdiction over these actions—to promulgate rules to govern the collective proceedings. Earlier this month, CAT obliged and announced proposed rules. Both the bill and the proposed rules answer several lingering questions about the United Kingdom’s transition into an opt-out collective action regime, but several important questions remain unanswered.
The bill and rules provide for early certification as a collective proceeding. CAT’s rules identify three elements of eligibility: (1) an identifiable class of persons; (2) the claims raise common issues; and (3) the claims are suitable for collective action. Although the rules go on to define when the action is “suitable” for collective treatment and introduce the element of an “identifiable” class of persons, they do not explain or define that element. The rules do, however, contemplate that CAT could certify sub-classes where appropriate. Further, whether the action will proceed as an opt-in or opt-out collective—a decision for CAT—is left unclear because the rules list only two non-exhaustive factors: (1) the strength of the claims; and (2) whether an opt-in is “practicable,” including a consideration of estimated damages. One area emphasized during the initial discussion of collective actions was that CAT would need to make a “preliminary merits assessment.” Surprisingly, there is no mention of that assessment in the proposed rules or in the bill. Defendants may, however, move for dismissal or summary disposition before the collective is certified.
The bill and rules do provide clarity in several other areas. For instance, the bill expressly prohibits exemplary damages and the rules provide for allocation of fees and costs (for the collective representative or the defendants), thereby preserving the traditional “loser-pays” rule. The rules also provide some clarity for notice procedures, allocate responsibility for notice, and confirm that opt-out collective actions will have binding effect. Although not as clear, the rules attempt to preserve individualized defenses by allowing CAT to try separately common and individual issues, and also provide guidance for determining and awarding damages. Noticeably absent, however, is any legislative or judicial statement as to the viability of a pass-on defense, contrary to the European Union’s decision to make available the pass-on defense in legislation.
Further, antitrust actions in the United Kingdom will no longer be limited to follow-on actions; collectives may now proceed in stand-alone actions. Although the first collective proceedings are likely to be follow-on actions, as claimants will already have a finding of a violation, it is likely that stand-alone actions will follow in short order once CAT and litigants gain experience with the new procedures.
The European Union has also taken steps since last June toward expanding the availability of private antitrust litigation, and a parliamentary vote on private cartel actions is anticipated by early May. A favorable vote would allow direct and indirect purchasers to sue for damages, but it would preserve certain protections afforded to participants in the European Commission’s leniency program and, as noted above, would allow a pass-on defense. Despite the European Union’s expansion of private actions, the availability of opt-out collective actions in the United Kingdom may entice more claimants to pursue redress there, which creates the prospect of venue disputes early on in the litigation.
These developments reinforce the perception that the United Kingdom and the European Union are committed to expanding the availability of private antitrust enforcement in their respective jurisdictions. At the same time, companies and others potentially affected by such expanded antitrust enforcement should probably anticipate something of a learning curve, as the various judiciaries grapple with the implementation of these new laws and procedures.