Out-Law / Your Daily Need-To-Know

First opt-out collective action lodged with Competition Appeal Tribunal

Out-Law News | 27 Jun 2016 | 9:38 am | 2 min. read

The first opt-out collective action seeking damages for breaches of competition law has been lodged with the Competition Appeal Tribunal (CAT), following changes to the law in October 2015.

Dorothy Gibson of the National Pensions Convention (NIC) pensioners' lobby group is seeking a collective proceedings order permitting her to act as the class representative for those who purchased a new Pride mobility scooter in the UK between 1 February 2010 and 29 February 2012. If successful, the case would combine follow-on actions for damages arising from an Office of Fair Trading (OFT) finding of illegal resale price maintenance (RPM) by Pride in 2014.

Introduced by the 2015 Consumer Rights Act (CRA), the opt-out collective action rules will enable damages actions to be brought on behalf of groups of individuals in certain circumstances, regardless of whether they have actively 'opted in' to the claim. Previously, collective actions could only be brought on an 'opt in' basis, and by a listed "representative body".

"The introduction of 'opt-out' collective actions is a hugely significant step for the UK and so people are watching this case very closely to see how the whole process will operate in practice," said competition law expert Ben Lasserson of Pinsent Masons, the law firm behind Out-Law.com. "Whilst the CAT will obviously be rigorous in its approach to certification, there is perhaps a sense that the CAT will be looking to certify the class if it can justifiably do so in order to show that the new regime works."

Opt-out actions must have the permission of the CAT before they can proceed, which must also be satisfied that it is "just and reasonable" for the proposed class representative to act on behalf of those affected. Gibson's application states that her role within the NPC, which exists to "promote the welfare and interests of all UK pensioners and older people in need", suitably qualifies her to do so, as well as the legal support she will receive and her "considerable experience of representing large groups of people". In addition, Gibson herself would not be entitled to damages if the claim is successful, meaning that there would be "no conflicts of interest" in her role.

According to the application, collective proceedings would be particularly suitable in this case because the sums at stake are "far too low" for any one consumer to bring proceedings individually. In addition, due to their age those affected by Pride's anti-competitive behaviour are "likely to be particularly vulnerable". The applicants have also argued that it would be "highly impractical" to bring proceedings on an opt-in basis, given the sums at stake and the vulnerability of those entitled to damages, according to the application.

In its 2014 decision, the OFT found that Pride and eight of its retailers had engaged in illegal RPM by entering into agreements to prevent the sale of certain models of mobility scooter below the recommended retail price online. The agreements lasted for different periods between 1 February 2010 and 29 February 2012. The OFT did not impose fines in the case because the parties' respective turnovers were under the thresholds set out in the 1998 Competition Act.

If Gibson's application is successful, the CAT will be asked to determine "whether the infringements, and the common practice of Pride that underlay them, were effective in raising prices for consumers, and if so by how much", according to a summary published on the CAT's website.