The Department for Business, Innovation and Skills [BIS} has launched proposals today to make it easier for small businesses and consumers to challenge firms they believe are acting anti-competitively.
At the moment businesses can take out ‘private actions’ if they feel that they are the victim of anti-competitive practices. But they are far from perfect and the government wants to consult on how they could be improved. Private Actions have two key aims:
- To increase growth by furthering competition
- To promote fairness, by enabling consumers and businesses to obtain redress for losses they have suffered due to anti-competitive behaviour.
While lawyers believe private actions could be critical to challenging anti-competitive behaviour, research by the Office of Fair Trading (OFT) shows that business experience sees this as one of the less effective aspects of the current UK competition regime.
Private actions can also be complex and costly for individuals and small to medium enterprises (SMEs), and they are often reliant on their case being prioritised for OFT investigation.
Although the total damage caused by anti-competitive behaviour may be very large, the individual loss for each business or consumer harmed is often small, making the expense of going to court impractical. This can mean that even when the perpetrators of a price-fixing scandal are caught, consumers and businesses may still lose out.
The specific proposals in today’s consultation will make it easier to challenge anti-competitive behaviour through private-sector led challenges by:
- Allowing the Competition Appeal Tribunal (CAT) to hear more kinds of competition cases and granting it additional powers to allow SMEs to quickly and cheaply challenge behaviour that is restricting their ability to grow.
- Introducing an opt-out collective actions regime for competition law, which would enable consumers and businesses to collectively bring a case to obtain redress for shared losses.
- Promoting Alternative Dispute Resolution (ADR) to ensure that the courts are the option of last resort.
- Ensuring private actions complement the public enforcement regime, in particular by protecting the incentives provided for companies to whistle-blow on cartels.
These proposals, including examples, are described in more detail in the consultation document.
The consultation will run for three months, closing on 24th July.
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