Mishcon de Reya has provided a detailed response to the Department for Business & Trade's consultation on "Swifter and Simpler Competition Redress, Regulatory Appeals and Competition Enforcement," focusing on the proposals in Chapter 1 concerning the opt-out collective actions regime for competition damages claims.
In our response, we have drawn on our experience litigating claims including Sainsbury's interchange fee claims against Mastercard through to the Supreme Court, the lead claimants in the Second Wave Trucks Proceedings, the first collective proceedings action to reach trial in the Competition Appeal Tribunal (on behalf of Justin Le Patourel), and the pending collective proceedings against Booking.com brought by Chris Warner, to the effect that:
- The prohibition on damages-based agreements (DBAs) in opt-out collective proceedings should be lifted, aligning the interests of law firms and the class, unlocking meritorious claims that currently fall below the threshold at which third-party funders are willing to invest, and increasing competition in the funding market – while third-party litigation funding should remain available alongside DBAs.
- An absolute suitability test, or a standalone statutory cost-benefit or aggregate-damages requirement, should not be introduced at certification, since the Supreme Court in Mastercard v Merricks correctly held that certification is not the stage for a merits mini-trial, and existing tools – including the availability of strike-out applications – already provide an effective and proportionate filter.
- The current asymmetry between class representatives' constrained litigation budgets and defendants' largely unconstrained spending should be addressed through updated Guide provisions on costs budgeting and disclosure of material cost overruns, together with more robust case management, rather than by amending the Tribunal's Rules.
- A simplified, presumption-based approach to CMA-directed or voluntary redress schemes should not be pursued without safeguards to ensure fair and adequate compensation, given that such schemes have to date delivered materially lower outcomes than litigation can achieve.
- The Tribunal's new webpage listing damages awards and settlements is a welcome step, and defendants should play a more active role in distribution, including by sharing customer data and making direct payments, with undistributed sums directed to charity.
Overall, we consider the regime remains in its infancy and have urged the Government to prioritise a targeted approach focused on clarifying and codifying settled practice, rather than pursuing wholesale reform – save for the introduction of DBAs, which would represent a fundamental and welcome change.
A copy of our submission to the Government can be accessed here.