162/07    26 November 2007

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.

Download Private actions in competition law: effective redress for consumers and business - recommendations (pdf 209 kb)

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 press release 63/07). Responses to the consultation are available in the consultations section. 

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.