Office of Fair Trading
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OFT publishes recommendations on private actions in competition law
The OFT has today published recommendations to Government to improve the effectiveness of redress for consumers and businesses that have suffered loss as a result of breaches of competition law. The recommendations follow an informal consultation on an OFT discussion paper published in April. OFT's full recommendations are available on the website.
Infringements of competition law cause significant harm to both
consumers and businesses. Recent experience shows that harm to
consumers may run into tens of millions of pounds in any given
case.
However, responses to the consultation have confirmed
that consumers and businesses wishing to bring legal proceedings
continue to face significant barriers. As a result, their
prospects of obtaining redress remain remote and the incentives
for business to comply with competition law are more limited than
was intended. The OFT recommends that Government consult on a
number of proposed measures to make private actions in competition
law as effective as the Government's 2001 White Paper, A
World Class Competition Regime, intended them to be.
Philip Collins, OFT Chairman, said:
'An effective
private actions system will enable consumers and businesses to
obtain redress where they have suffered loss as a result of
unlawful agreements or conduct. Increasing the incentives of
businesses to comply with competition law will stimulate interest
in good corporate governance and encourage the development of a
competition culture, in which responsible business leaders and
boards recognise the benefits of competition in properly
functioning, open markets. This will have positive effects on the
productivity and competitiveness of the UK economy.'
NOTES
1. The OFT recommends strengthening the private actions
regime by:
- changing procedures to allow representative
bodies to bring actions on behalf of consumers and businesses,
irrespective of whether a competition authority has previously
taken public enforcement action,
- modifying restrictions
which limit the funding of actions, to ensure that claimants can
find lawyers willing to represent them,
- encouraging the
courts to consider limiting risks of claimants having to pay the
other side's costs in appropriate cases,
- ensuring that
funding is available for meritorious cases which would not
otherwise be brought,
- requiring UK courts to pay close
attention to competition authorities' decisions and guidance,
and
* safeguarding the effectiveness of the leniency regime
for cartel investigations by excluding the use in private actions
of certain documents provided by whistleblowers and limiting their
liability in certain cases.
2. HM Treasury stated in its 2007 Pre-Budget Report that the Government intends to consult on, among other things, measures to reduce the barriers preventing those suffering loss as a result of anti-competitive behaviour from obtaining redress, through the courts where necessary, without encouraging ill-founded claims. The OFT's recommendations will inform the content of the Government's consultation. The OFT will also respond to the European Commission's forthcoming White Paper on damages actions for breach of the EC anti-trust rules.
3. The OFT published its discussion paper in April 2007. See http://www.oft.gov.uk/news/press/2007/63-07. Responses to the consultation are available at http://www.oft.gov.uk/advice_and_resources/resource_base/consultations/private.
4. The following recent examples illustrate the impact that cartels and other anti-competitive practices have on consumers in the UK. In the Hasbro/Argos/Littlewoods case, a leading toy supplier entered into agreements to fix prices with major retailers. The OFT estimates that if the cartel had not been brought to an end by the OFT's intervention, consumers would have been overcharged by over £40 million as a result. In a separate case price fixing agreements to increase the price of replica football kits would, the OFT estimates, have cost the consumer over £50 million had they not been brought to an end. During the OFT's current bid-rigging cartel investigation, 57 companies have been raided, and 37 companies have applied for leniency. As a result of the investigation, the OFT has uncovered evidence of bid rigging in thousands of tenders with a combined estimated value approaching £3 billion.
PUBLIC enquiries: 0845 7224499 enquiries@oft.gov.uk
OFT
reports and consumer information leaflets are available free
from:
OFT, PO Box 366, Hayes UB3 1XB 0800 389 3158 oft@ecgroup.uk.com
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