Private enforcement of competition law: the new UK landscape Ruth Allen Euan Burrows Duncan Liddell 24 September 2015
Introduction Arriva v. London Luton Airport (Stand-alone abuse of DP) Ministry of Defence v. BA (Damages Air transport) Peugeot- Citroen v. Pilkington (Damages Car glass) National Grid & ors. v. Prysmian & ors. (Damages HV cables) Arcadia Group Brands & ors v. Visa Inc. & ors (Damages Card fees) Significant growth in private enforcement of competition law in the UK Carewatch v. Focus Caring (Stand-alone enforceability of non-compete clause) Google Redress and Integrity Platform (Damages search services etc.) Dahabshiil Transfer Services Ltd v. Barclays Bank (Stand-alone refusal to supply) Vodafone v. Infineon, Renesas (Damages Smart card chips) Packet Media v Telefonica (Stand-alone abuse of DP interim injunction)
New legislative landscape in UK UK Consumer Rights Act Royal Assent granted 26 March 2015 Enters into force 1 October 2015 Revised CAT Rules Draft rules relating to collective actions published in draft in March 2014 Consultation on full revised CAT Rules in March 2015 Final version published September 2015 EU Damages Directive Entered into force on 26 December 2014 Must be implemented into UK law by 27 December 2016 EU Recommendation on Collective Redress Published in June 2013 Recommended implementation by June 2015, but not legally binding
Key areas for discussion UK class actions: new collective actions and collective settlement regimes The new CAT: expanded jurisdiction and fast-track procedure Making amends: voluntary redress schemes Impact of EU Damages Directive Concluding thoughts: practical impacts
Reform of collective actions regime Intended to make it easier for individuals and businesses to bring a collective damages claim Class representative brings claim on behalf of (potential) claimants Damages calculated by reference to entire class of (potential) claimants New opt-out regime May not need to identify all individual claimants in advance Available in follow-on and stand-alone cases Applies to claims brought on or after 1 October 2015 Position where pending appeals/investigations unclear (CAT Rule 119)
Opt-out collective actions: safeguards Various safeguards in place to address concerns about US-style class actions Strict certification process before the CAT CAT will decide if opt-in or opt-out regime appropriate Strength of claims Whether opt-in proceedings would be practicable Opt-out only applies to UK-domiciled claimants Focus on compensation for loss: no treble or exemplary damages Costs: loser-pays rule maintained; costs payable by class representative Funding: contingency fees prohibited
Opt-out collective settlement regime Defendants may seek to settle a collective claim Negotiate with class representative New regime allows collective settlement on an opt-out basis Binding on all UK-domiciled represented persons/class members unless expressly opt out Non-UK domiciled claimants may opt-in Apply to CAT for approval of the settlement CAT considers whether just and reasonable CAT Rules list relevant factors Possible for any unclaimed balance of settlement to revert to defendants Contrast with position if damages awarded at trial
Key issues Increased risk of consumer claims in UK? B2B class actions? UK as hub for class actions? (non-uk opt-in) Funding issues? Collective settlements?
Expansion of CAT s jurisdiction CAT will be able to hear stand-alone as well as follow-on cases Will also be able to grant injunctions (including interim) Intended to make the CAT the main forum for competition law claims in the UK Significant increase in workload for the CAT Sufficient resources? More panel members/chairmen required?
Fast-track procedure Intended to facilitate access to redress by speeding up claims process and capping costs Final hearing within six months of allocation Cost-caps: level determined by CAT on case-by-case basis CAT will decide if case is suitable for fast-track Intended to be used for simpler cases with focus on injunctive relief (new CAT power) Not limited to cases involving SMEs Unclear whether mutual consent of parties required where case involves two larger companies Not available for collective actions or novel cases
Fast-track procedure in the CAT CAT will take variety of factors into account in allocation decision Whether one of the parties is an individual or an SME Time estimate for hearing: 3 days or less Complexity and novelty of issues involved Number of witnesses (including experts) Scale and nature of documentary evidence and likely extent of disclosure Nature of remedy being sought If damages claim, amount of damages sought
Key issues Will the CAT now offer a genuine alternative to: High Court injunctions? Complaints to NCAs? Will the fast-track procedure achieve its aim in facilitating redress? How frequently is the fast-track procedure likely to be used in practice? What is a non-complex competition law case? Abuse of dominance cases/contractual restrictions/antitrust infringements Will larger businesses consider using the fast-track procedure and, if so, in what type of cases? Will big business be the victim?
Voluntary redress schemes Alternative for infringing businesses who want to preempt private actions and benefit from reduced fines Up to 20% reduction in fines if offer an approved redress scheme Apply to CMA or relevant sector regulator for approval 2 main aims: facilitate redress for victims of competition law infringements enable infringing businesses to offer compensation quickly at lower cost CMA final guidance published 14 August 2015 Sector regulators expected to follow same approach
Voluntary redress schemes CMA/regulator role limited to approving schemes which comply with Regulations Specified process must be followed Scheme must include certain basic information and terms Details of scheme including level of compensation determined by independent Chairperson and Board Chairperson appointed by applicant Applicant determines key parameters of scheme and communicates these to Chairperson/Board Applications can be made before or after infringement decision issued But approval can only be granted after/at same time as infringement decision
Voluntary redress schemes: pros and cons Pros Up to 20% reduction in fine in addition to other discounts Reduce likelihood of collective damages action? Quicker process than litigation scheme approval within 3 months No requirement to pay compensation into upfront pot only pay out to those who actually claim Applications/supporting documents generally withheld from disclosure to third parties Cons Risk of fine inflation (reduction from what?) Risk of separate private actions remains not a clear-cut solution Liable for costs of operation of scheme and CMA s costs in approving scheme No specific adverse costs consequences if claimant rejects redress offered and obtains less in private action No absolute protection from disclosure of related documents to third parties
Key issues Will the 20% reduction in fines act as a real incentive to seek approval of a redress scheme? Would businesses consider setting up voluntary redress scheme without seeking formal CMA approval? How do voluntary redress schemes interact with opt-out collective settlement?
EU Damages Directive Introduces basic minimum framework in all EU Member States for antitrust damages actions Intended to encourage private enforcement by individuals and businesses Significant changes for many jurisdictions Must be implemented into national law by 27 December 2016 But does not address every important issue: Choice of jurisdiction Collective actions Costs and funding Interim injunctions in stand-alone actions
Level playing field across EU? Follow-on actions will be possible in all EU Member States Infringement decision by NCA will be binding on the national court in its home member state Principle of joint and several liability will apply in all EU Member States Minimum disclosure requirements Limitation period must be at least 5 years Suspended during investigation by European Commission or NCA Does not re-start until at least one year after infringement decision becomes final or proceedings terminated Also suspended during any consensual dispute resolution negotiations
England & Wales still a forum of choice? EU Damages Directive only provides for minimum requirements Still scope for variation between EU Member States England & Wales likely to remain a popular choice for claimants Wider pre-trial disclosure requirements Availability of funding Experienced judges and legal advisors If choice of jurisdiction available, e.g. global cartel: Use of UK subsidiary as anchor defendant Need not be an addressee of the infringement decision (KME Yorkshire v Toshiba Carrier) Jurisdiction remains seized even if settle with anchor defendant (CDC v Akzo Nobel & ors)
Key issues Relationship between Damages Directive and the UK reforms? Class actions More active CAT UK jurisdiction of choice
Conclusions Continued growth of UK private enforcement Damages actions become default consequence for EU cartels Will we see consumer/indirect purchaser claims? Damages settlements the default cost of anti-competitive behaviour Impact upon leniency applications
Contact details Ruth Allen Senior Expertise Lawyer T: +44 (0)20 7859 1193 E: ruth.allen@ashurst.com Euan Burrows Partner T: +44 (0)20 7859 2919 E: euan.burrows@ashurst.com Duncan Liddell Partner T: +44 (0)20 7859 1648 E: duncan.liddell@ashurst.com
Private enforcement of competition law: the new UK landscape These materials are for training purposes only and are not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Please take legal advice before applying anything contained in these materials to specific issues or transactions. For more information please contact the presenters or your usual contact. 44055756