Private actions in
competition law
Ali Nikpay, Senior Director,
Office of Fair Trading
The views expressed are personal and do not necessarily reflect
those of the Office of Fair Trading
The role of private actions
● Competition law is good for business and good
for consumers. Strong competition regimes
encourage open, dynamic markets, and drive
productivity, innovation and value for consumers
and customers
●
Anti-competitive behaviour causes significant
harm to both business and consumers
-
Hasbro/Argos/Littlewoods (£40m)
Replica Football Kit (£50m)
The role of private actions
●
To date, consumers have recovered virtually no compensation
●
Very few judgments
●
Suggests there are barriers to effective redress which have to be
addressed
●
Public enforcement cannot by itself bring about optimal levels of
compliance; need combination of public enforcement and private
actions
●
Ongoing bid-rigging cartel investigation (tenders worth £3bn)
●
Consensus view: inherent in EC Treaty/jurisprudence
-
EC Green Paper
1999 UK White Paper
Objectives
●
Key principles
●
Reform
-
Need more private actions than currently. Does not mean
less public enforcement – in fact likely to see more
enforcement as resources better focused (as a result of
reform of the past three years)
●
Avoid US style litigation culture
●
Right balance between public and private for optimal
regime
●
Consistency of policy/certainty
●
Private must not be to the detriment of public
Awareness/detection/economies of
scale
●
Collective action key
●
Currently, designated bodies have standing to bring follow-on
representative actions before the CAT on behalf of named consumers
●
This system may be too restrictive
●
Representative actions should be more widely available in stand-alone
cases, to bodies representing businesses and consumers
●
Courts should have the power to give permission to non-designated
bodies to bring a representative action in individual cases
●
But not US-style class actions (actions brought about by those with direct
financial interests)
●
“Representative” bodies that do not have pecuniary interest in outcome;
clients acting in a quasi public interest capacity; less likely to bring
speculative unwarranted claims; greater control over counsel
International elements
● In the UK, infringement decisions by UK
NCAs/EU are binding on the courts. Decisions
by other NCAs are not binding in the UK
● Providing for the binding effect of decisions of
NCAs throughout the EU would achieve greater
certainty and save costs
●
Applicable law
●
Minimum disclosure requirement in EU?
Costs and funding
●
Currently percentage increase on the normal fees if the
case is won can be no more than 100 per cent and is
recoverable from the losing party
●
Allow percentage increase of more than 100 per cent (but
to allow only the percentage increase up to 100 per cent to
be recoverable from the losing party). Any further increase
would have to be met from the damages recovered
●
Would increase incentives for lawyers to take cases on a
conditional basis without imposing disproportionate
burdens on defendants
Costs-capping orders
● Ex ante uncertainty as to the costs liability if the
case is ultimately lost may act as a disincentive
to bringing well-founded actions
● Currently courts have a wide discretion as to
costs but this discretion is exercised only ex
post
●
A solution may be a more frequent use of costscapping orders whereby the claimant’s liability in
costs is capped ex ante
Checks and balances to prevent excess
●
Policy outline above designed to avoid US style litigation
culture
●
But also note there are key differences between US and UK
●
A frequent criticism of the US system is that incentives and
rules are distorted in favour of claimants and against
defendants, giving rise to speculative claims that the
defendant is forced to settle
●
Courts in England and Wales already have strong case
management powers and are well-equipped to deal with illfounded cases, for instance by striking them out at an early
stage
Checks and balances to prevent excess
● In the UK representative action model, only
reputable and established bodies can bring an
action on behalf of consumers and businesses.
In the class action, a member of the class can
bring an action on behalf of the entire class
●
In the UK, there is no (right to) jury trial in
damages cases
● In the UK, damages are compensatory. No treble
damages
Checks and balances to prevent excess
●
In the US, if the claimant loses, he is not liable for the other
party’s costs but if he wins, he is entitled to reasonable
attorney’s fees. Here, the basic principle is that ‘costs
follow the event’
●
In the US, class action attorneys often work on a
contingency fee basis, that is, if the case is won, they are
entitled to a share of the damages. In England and Wales,
contingency fees in contentious matters are against public
policy
●
Disclosure in England and Wales is more limited than US
discovery (no depositions or interrogatories)
Optimising the balance of public
enforcement and private actions
●
With a greater number of private actions, the need to ensure a consistent
application of competition policy in the UK is likely to increase
●
A key issue is how courts considering private competition law actions
take into account the evolution of competition policy, including the
decisions of, and guidelines produced by, the OFT
●
Courts should be required to 'have regard' to UK NCAs' decisions and
guidelines when determining CA98 issues
●
Natural extension of s.60
●
-
s.60 not about primacy of EC law
Applies to Chapter I and Chapter II prohibition, that is, even where there
is no effect on trade between Member States
OFT’s main focus must remain public enforcement but greater
intervention is likely
Protecting public enforcement
●
Greater level of private actions not at expense of public enforcement
●
Leniency: leniency programme essential tool. If undertakings are
discouraged from applying for leniency due to the risk of private actions,
it is likely that a smaller proportion of cartels will be uncovered
●
We consider that two guiding principles should be observed:
-
when defending a damages claim, a leniency recipient (that is, an
undertaking which has been granted leniency by the European
Commission, the OFT or any other NCA in the EU) should, as far as
possible, be in the same position as it would have been if it had not
applied for leniency, and
those who have suffered loss should not find it more difficult to obtain
redress because one or more of the infringing undertakings has been
granted leniency
Leniency – specific issues and options
● Leniency documents (that is, any documents
created for inclusion in or to support an
undertaking's leniency application) should not be
used in court against the leniency recipient
●
Should the immunity recipient benefit from
removal of joint and several liability?
●
Or should the immunity recipient be able to
recover contributions of up to 100 per cent from
non leniency recipients on a modified basis?
Disclosure
●
Not appropriate to shift the burden of private
actions to OFT, for instance through requests for
disclosure or intervention in support of one party
-
Even in follow-on actions, OFT should act
impartially and would not act in support of one
party’s case
Private actions must not divert resources from
public enforcement
Next steps
●
We look forward to a stimulating debate
●
We will hold a hearing in September to discuss the issues
put forward in the consultation
●
We will continue working closely with DG Comp
●
Much can be done at domestic level and, based on the
outcome of the consultation, we will make
recommendations to the Government and take action
ourselves, within the limits of the legal framework in which
we operate, to address barriers to private actions and
facilitate well-founded competition claims