Price fixing companies forced to repay consumersConsumers to benefit from simpler collective redress rules
29 January 2013
Consumers who are ripped off by companies found guilty of price fixing will find it easier to get their money back, under new proposals published today.
The Department for Business, Innovation & Skills (BIS) has proposed to change the rules for collective redress on competition cases.
This means consumers who lose money to companies found guilty of competition abuses will be more likely to get their money back.
Which? has welcomed the new rules, which we hope will act as a deterrent to dishonest firms and will make it easier for consumers to get redress.
Which? executive director, Richard Lloyd, said: ‘This will give consumers more power against unscrupulous businesses.
'In the small number of cases where this will apply, collective legal action and settlements will automatically include everyone who has been affected, so more people should get redress and sooner.
‘This is good for consumers, responsible businesses and the wider economy.’
Collective redress changes
The proposed changes will mean that trade bodies and consumer groups - such as Which? - will be able to seek redress on behalf of all those who've lost out following a breach of competition law.
This means companies involved in price fixing will generally have to offer redress to everyone affected, not just those who make a claim for redress.
Consumers will automatically be included in such a claim unless they specifically opt out.
Under the current system, consumers have to opt-in to collective redress and participate in the case. This is not always easy or attractive for consumers and makes it more difficult for a claim to be brought.
What is collective redress?
Collective redress is where redress is sought on behalf of a group of individuals in a single action rather than each bringing their own individual claim.
Under the new proposals, collective redress can only be sought by a representative body - such as Which? - not by law firms or other commercial entities acting on behalf of a group.
In 2008, Which? launched a collective action against sports retailer JJB Sports after it was found guilty of price-fixing on replica football shirts.
As Which? was operating under the opt-in system, the number of consumers opting in was very low.
Had the collective redress system been based on opting-out, the case would have made a greater financial impact.
- Need to complain to a company? Don’t be left out of pocket
- Find simple ways to solve your everyday consumer problems
- Keep up to date with our campaigns, from finance to technology