New Redress for Victims of Competition Law Breaches

The Enterprise Act 2002 introduces new possibilities for legal redress for parties who are harmed by infringements of competition law. This has been one of the Government's stated aims in its overhaul of the UK competition regime. The Government's objective to make it easier for third parties to bring damages claims against companies who have infringed European or UK competition law is intended to increase the role of third party litigation in competition enforcement.

There are three important changes brought about by the Enterprise Act. They are due to come into force on 20 June 2003.

A new procedure allowing for damages claims (or claims for other monetary awards) to be brought directly before the specialist Competition Appeal Tribunal (the "Tribunal") by harmed parties.

A new procedure allowing for representative claims to be brought before the Tribunal on behalf of groups of consumers.

It will also become easier to bring monetary claims in the UK courts as the Enterprise Act makes infringement decisions by the Office of Fair Trading (OFT) and the Tribunal binding on the courts.

In addition, the Enterprise Act provides for the possibility of transferring cases to and from the Tribunal. Each of these new provisions is explored in more detail below.

Broadly speaking, the result of these changes is that, where companies or consumers are harmed as a result of other companies' competition law infringements, their chance of obtaining redress is improved. On the other hand, for companies that have infringed competition law, the potential cost of such infringements is likely to increase because, in addition to the prospect of substantial fines, there will also be a greater likelihood of damages awards against them.

MONETARY CLAIMS BEFORE THE TRIBUNAL

Under the current system the Tribunal cannot hear damages claims brought by third parties. This means that such claims have to be brought in the ordinary courts where there has so far not been a single successful damages award for breaches of European competition law or the UK Competition Act (although some cases have led to settlements). This is partly due to the fact that demonstrating liability, causation and quantum of loss can be difficult when bringing an action for damages in respect of competition law infringements in the UK courts.

Bringing a damages claim is expected to become easier through the new monetary claims regime introduced by the Enterprise Act and due to come into force on 20 June. A new section 47A of the Competition Act 1998 introduced by the Enterprise Act will allow such claims to be brought directly before the Tribunal. A claim in the Tribunal should benefit from specialist competition expertise, simplified procedures and a greater flexibility in handling evidence. Also, it is possible that there will be a desire on the part of the Tribunal to encourage such claims. Claimants will be able to bring claims for damages before the Tribunal in relation to both breaches of UK competition law and European competition law.

Further, it remains an option for potential claimants to bring proceedings in the ordinary courts. A claimant will thus have an option of either commencing a claim for damages in the courts or in the Tribunal.

Liability

In determining a monetary claim, the Tribunal is bound by any OFT or European Commission decision that established an infringement1 . However, a claim cannot be brought in the Tribunal until there has been such a decision, any appeal has been decided and the time period for bringing further appeals has elapsed or until the further appeals have also been decided. (However, it remains open to claimants to bring proceedings in the ordinary courts prior to such points in time.) The infringement itself will therefore not need to be established before the...