Settlement Reached In The First Representative Private Action For Damages Under UK Competition Law

The first consumer representative damages action under UK competition law, The Consumers' Association v JJB Sports PLC, has been settled. The settlement is a mixed result. It provides consumers with compensation (up to £20 each), but because of the very small sums involved, it shows that the threat of consumer representative claims under the current rules is unlikely to be a substantial deterrent to other would-be infringers of competition law. The problems that the case highlights are, however, addressed in the recent OFT recommendations to the UK Government for reform in this area.

Background To The Which? Claim

The Competition Act 1998 allows designated bodies to bring representative damages claims on behalf of named consumers following an Office of Fair Trading ("OFT") or European Commission decision finding that the defendant has infringed EC or UK competition law.

JJB was part of a cartel involving seven companies fined over £16 million in 2003 by the OFT for fixing the price of replica football shirts in 2000 and 2001. In March last year, following findings made by OFT, the Consumers' Association, now known as Which?, used these powers for the first time and commenced a damages claim on behalf of a number of named consumers against JJB.

The Settlement

JJB has agreed to pay £20 to each of the consumers who joined in Which?'s claim. Other fans who bought one of the affected shirts, but were not joined to the case, will be able to claim up to £10. It is also understood that JJB will be making a payment in respect of Which?'s legal costs.

A Mixed Result

Competition authorities see representative consumer claims as having two objectives, consumer redress and as a deterrent to other would-be infringers. Measured against those objectives the Which? claim can be seen as only a partial success. Its success is that all consumers who were overcharged will now be entitled to receive compensation. This success has been achieved in some respects despite the current rules rather than because of them.

Under the current law governing representative actions in competition cases, the consumers on whose behalf the claim is brought have to agree to participate in the claim and have to be named (a so called "opt in" system). Which? was only able to get together a few hundred consumers, despite widely publicising the claim. As a result it could only claim compensation for those consumers. The success of the claim is that despite that limitation JJB is...

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