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Government’s competition law proposals risk introducing litigation culture to the UK - CBI

Government proposals to move towards “opt-out” class actions for consumers could spark a new litigation industry around competition law and deter inward investment and growth, the CBI said yesterday.

Responding to a Department for Business consultation on private actions in competition law, the CBI warned that by grouping potential claimants together without naming individuals, opt-out class actions will magnify the total amount of potential claims and fuel a culture of litigation.

The CBI says that it is absolutely right that businesses that have caused significant loss to consumers should be required to provide compensation. However, this should be done through Alternative Dispute Resolution, which offers a quicker, cheaper form of redress and better outcomes for consumers, rather than the “big stick” approach of opt-out class actions.

Matthew Fell, CBI Director for Competitive Markets, said:

“At a time when the unrelenting focus must be growth, the Government should set out a strong message that the UK is open for business, not open for litigation.

“The Government is in danger of importing a number of features of the US class-action system into the UK, including opt-out arrangements, awarding of aggregate damages and a distribution of surplus funds.

“Victims of competition law breaches must receive proper compensation, but this should be delivered in a cost effective way, with litigation a last resort. The best way to achieve this is through Alternative Dispute Resolution methods, which are increasingly being used by business, and often result in a better outcome for both parties.”

Notes to Editors:

The CBI is the UK's leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. With offices across the UK as well as representation in Brussels, Washington, Beijing and Delhi the CBI communicates the British business voice around the world.

Download "CBI private actions response July 2012" (386kb)

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