The Department for Business, Innovation and Skills has put forward proposals to make it easier for businesses and consumers to challenge firms they believe are acting anti-competitively.
Research by the Office of Fair Trading reveals that businesses see lawyers raising private actions to challenge anti-competitive behaviour as one of the less effective aspects of the current UK competition regime.
While this is suggested through the research, private actions can also be complex and costly for individuals and SMEs, and they are often reliant on their case being prioritised for OFT investigation.
Often the individual loss for each business or consumer is small, relative to the expense of going to court, and this can mean that even when perpetrators of a price-fixing scandal are caught, consumers and businesses may still lose out.
Business Minister, Norman Lamb said: “Our main aim for these reforms is to promote fairness and act as a further deterrent for firms behaving anti-competitively.
“Small businesses and consumers will be better equipped to represent their own interests, stop anti-competitive behaviour, and seek redress if they have suffered loss.
“Our proposals complement the changes we recently announced to the UK competition regime and will further help to boost productivity, innovation and growth for business, consumers and the wider economy.”
BIS suggest the specific proposals will make challenges easier by allowing the Competition Appeal Tribunal (CAT) to hear more kinds of competition cases and granting it additional powers to facilitate SMEs to quickly and cheaply challenge behaviour that is restricting growth.
Introduction of an opt-out collective actions regime for competition law, would also enable consumers and businesses to collectively bring a case to obtain redress for shared losses.
Elsewhere, promoting Alternative Dispute Resolution (ADR) would ensure that courts are the option of last resort, and protecting the incentives provided for companies to whistle-blow on cartels would ensure private actions complement the public enforcement regime.
Recent Government response to consultation on the competition landscape set out plans for major reform of the public competition regime, particularly the creation of a Competition and Markets Authority (CMA) and improvement to the mergers, markets and antitrust regimes.
Bruce Kilpatrick, head of Addleshaw Goddard LLP’s London competition team, said: “If adopted, BIS’s proposals would radically change the way in which consumers and small businesses who have suffered loss as a result of anti-competitive activity can claim compensation.
“The BIS proposal would reduce the up-front costs which were a significant barrier in the football replica kit case, whilst providing SMEs with a mechanism to apply for quicker redress through a fast-track to the Competition Appeal Tribunal.
“It would also promote the use of alternative dispute resolution (ADR) to ensure that the courts are the option of last resort, and to encourage businesses to provide compensation outside the court process, thereby reducing costs.
“These measures are likely to result in increased financial exposure for companies who have engaged in serious anti-competitive activity, and is a stark reminder of the need for all companies to take steps to ensure they have a culture of competition law compliance throughout their organisations.”
A consultation will run for three months, closing on July 24.