Opt-out collective actions cross the pond

by Latham & Watkins LLP
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The Consumer Rights Act 2015 entered into force on 1 October 2015. The Act develops the law on private enforcement of competition law infringements, in a radical manner.

Previously, the Competition Appeal Tribunal (CAT) could only hear collective actions in reasonably limited circumstances, as such actions could only be brought on an opt-in basis, ie where claimants had to expressly assert class membership to be part of the proceedings. The new Consumer Rights Act introduces an opt-out procedure, which makes it easier to bring claims with large numbers of claimants claiming smaller individual losses.

Anyone who acts ‘fairly and adequately in the interests of the class members’ can act as a class representative in collective proceedings, which could potentially include law firms or third party funders. To ensure class representatives act fairly, the CAT must certify the class representative and the use of the collective proceedings procedure for the claim generally, including whether it will be an opt-in or opt-out procedure. The Competition and Markets Authority may also make oral and written observations during collective actions, with the CAT’s permission. Class representatives are encouraged to settle any collective action proceedings, and they have authority to negotiate a settlement on behalf of the class.

As noted above, the introduction of the new rules, in particular the new opt-out regime, will have a significant impact on the UK collective actions landscape.  As ever, the devil will be in the detail, and there are many unanswered questions, including how, in particular, the CAT will apply the certification procedure.  That said, given the increased focus on collective actions, both in the UK and overseas, this is likely to be a growing and developing area in the months and years to come.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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