Which? response to government consultation: Swifter and Simpler Competition Redress, Regulatory Appeals and Competition Enforcement

It is positive to see Government’s continued commitment to the Regime. Which? supports Government’s ambition for collective redress to be swifter and simpler as consumers’ benefit from the Regime has been disappointing to date. We agree that there are improvements that can be made now. We note, however, that the Regime is still in its relative infancy and outcomes from multiple advanced claims over the next two to five years will provide essential evidence to evaluate the Regime’s true effectiveness.

In this context, we welcome several of the proposals in this consultation - such as presumptions on funder returns, increased oversight of defendant budgets, and extending the Competition and Markets Authority’s (CMA) powers to mandate redress for competition infringements - but favour allowing jurisprudence to develop in other areas such as distribution and the settlement approval process.  

We are also excited by the opportunity to be designated (as the Consumers’ Association) as a specified body to receive undistributed damages. As an independent champion for UK consumers with seven decades of experience, such funds would be reinvested into work that tackles consumer harm, improves market outcomes, and advances consumer protection, allowing us to scale (and potentially broaden) work that is already delivering impact for millions of UK consumers. 

On proposals to amend the operation of the Regime, Which?’s response highlights the following: 

• Costs and delays: current proposals do not go far enough to reduce the very high level of costs and delays experienced under the Regime, and some proposals are likely to introduce more cost and delay. As a result, Government’s ambition for redress to be swifter and simpler will not be fully realised. We encourage Government to build upon current proposals by exploring additional measures to bring down costs and reduce delays: allowing without-notice approval of funding arrangements, better use of precedents/standardisation, rebuttable presumptions to streamline expert evidence in collective proceedings, greater resourcing for the Competition Appeals Tribunal (CAT) and active costs control.
• Certification: Which? is opposed to changes to the statutory certification test at this time. We consider changes to the suitability test unnecessary - Evans v Barclays already provides for an elevated merits assessment. Further, introducing an "absolute suitability” standard ignores the stark information asymmetry proposed class representatives (PCRs) face during certification. Changing the statutory test at this juncture will also introduce uncertainty and inevitably trigger costly and time-consuming satellite litigation and appellate appeals, creating a chilling effect likely to deter investment in the Regime.
• Distribution & redefining “Benefits”: the cost benefit analysis of claims at certification must extend beyond estimated direct take-up to include indirect benefits, deterrence, and future market benefits. As for distribution, there is only one example to date which is widely recognised as a poor precedent for future outcomes. Insights from upcoming distributions will be vital in testing and assessing what works and shaping future approaches. Rules around distribution must remain flexible to accommodate different case dynamics and take-up rates. Government could also proactively support distribution by providing funding and resources for initiatives that engage and increase trust among class members, and encourage take-up on distribution.
• Rule 45 offers: whilst Which? supports Government’s aim to facilitate more settlements, it opposes introducing Rule 45-style offers into collective proceedings. Due to finite budgets and adverse costs/After-The-Event (ATE) insurance constraints, class representatives (CRs) are vulnerable to tactical, lowball offers. Whereas the nature and size of claims under the Regime also means that defendants’ exposure to indemnity costs is unlikely to create sufficient disincentive to encourage them to settle. Strict safeguards must be implemented if this proposal is taken forward.
• ADR and redress schemes: Which? supports in principle the CAT encouraging mediation to drive more settlements, as well as the extension of CMA powers to better enable public enforcement to deliver redress for consumers. Both offer potential routes to outcomes, and are therefore complementary to, not mutually exclusive of, the ability for private enforcement to end in a final judgment.
• Scope: it has long been Which?’s position that opt-out collective proceedings should be widely available, including for consumer law breaches. Whilst not taken forward in this consultation, Which? welcomes the Law Commission's project to explore a consumer class actions regime. Creating a consumer class actions regime will improve access to justice, offer consumers a clearer and likely simpler path to vindicate their rights (as some claims in the Regime might otherwise or in the alternative be brought as a consumer law claim), and could be more cost-effective.

Which? looks forward to engaging with Government as this work progresses.