OFT Consults On Encouraging Effective Redress For Competition Law Breaches

On 18 April 2007 the Office of Fair Trading (OFT) published a discussion paper on private actions in competition law and how consumers and business can get effective redress for breaches of competition law.

The aim of this paper is to enable the OFT to make recommendations to government on improving the effectiveness of redress and also to inform the OFT's response to the European Commission's forthcoming white paper on this area. The European Commission published a green paper on the subject in 2005 "Damages actions for breach of competition rules encouraged". The ultimate aim is to strengthen the deterrent against anti-competitive behaviour.

The main focus of the paper is the extension of representative actions (not class actions). Representative actions involve a body representing the interests of those harmed by an unlawful practice bringing an action on behalf of those who have suffered loss. Class actions involve a named claimant bringing an action on behalf of a class to which he belongs and which is certified by the court.

The paper makes suggestions regarding costs and funding arrangements. It also considers disclosure and the potential impact on the OFT's successful leniency programme (whereby a cartel member can betray the cartel in exchange for a reduction in fines).

The paper makes proposals regarding evidence, notably that infringement decisions by the national competition authorities of other EU Member States could be made binding on UK courts and that indirect purchasers should not be prevented from bringing actions based on competition law. If a claimant has been overcharged for a product as a result of a cartel it may have factored that higher price into its own resale of the product. The cartelists, invoking the passing-on defence, would argue that the claimant has suffered no loss and should not be compensated. The paper argues...