On 1 October 2015, the UK introduced a collective action regime (i.e. a class action regime) for competition law, which allows classes of victims to claim losses suffered as a result of breaches of competition law. The regime was introduced by the Consumer Rights Act 2015 (“CRA”) and claims are brought in the Competition Appeal Tribunal (the “Tribunal”).
Any such damages action “must be commenced by a person who proposes to be the representative in those proceedings”. The Tribunal then decides whether to authorise the person to represent the class and make a collective proceedings order (“CPO”) to allow the claim to go forward as a collective action. The Tribunal will only issue a CPO if it is persuaded that the proposed class representative meets the various requirements of the Competition Act 1998, the Competition Appeal Tribunal Rules 2015 (the “2015 Rules”), and the guidance in the Competition Appeal Tribunal Guide to Proceedings 2015 (the “2015 Guide”).
The class representative does not have to be a member of the class, and does not even need to be a natural person. It can be a company, either a pre-existing one such as an industry association, or one formed specially to bring the claim.
The Tribunal may authorise a person to act as the class representative (i.e. through the granting of a CPO) only if it considers that it is “just and reasonable for the applicant to act as a class representative”. The factors that the Tribunal is to take into account in determining whether it is just and reasonable for a proposed class representative to act include:
In this article, we focus on the first criterion. To address the second and third factors briefly, however:
The factors the Tribunal must take into account when determining whether a class representative would act fairly and adequately in the interests of class members include:
In considering the suitability of an applicant, the Tribunal will consider whether the proposed class representative is:
Scott+Scott are currently advising proposed class representatives in two separate collective actions before the Tribunal. In both proceedings, the decision was taken to establish special purpose vehicles (“SPV”) to serve as the class representative, (i.e., a new company specially for the purpose of bringing the claim). Among other things, establishing an SPV “future-proofs” the claim, as it means that the claim can carry on even if the natural person running the SPV has to stop doing so for some reason (such as ill health). It also helps to prevent any one person from exposure to any financial risk which might be associated with bringing the proceedings.
Full control of the decision making of the SPVs lies in the hands of their respective sole directors. As illustrated below, these individuals have extensive experience in the relevant markets affected by the respective anti-competitive conduct, the skills to manage the proceedings and the profile to engage actively with the members of the proposed classes for the benefit of the claims.
We await with interest the first granting by the Tribunal of the first CPO and with it a clear indication of the rules and guidance as they apply to the authorisation of a proposed class representative.
Author: Belinda Hollway + James Hain-Cole
Scott+Scott UK LLP
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