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Will the Government ‘class action’ regime really help consumers?

Until now claimants have had to “opt-in” if they wanted to be part of a collective litigation action before the Competition Appeal Tribunal (CAT), which would deal with such claims as those alleging unfair pricing amongst utility companies. However, the Government reforms herald the introduction of ‘opt-out’ collective actions. Under the opt-out regime, claims would be brought by a defined group without there being a need to specifically identify individual group members. In other words, those falling within the group would automatically be bound by the decision unless they opted-out.

CAT has power to consider appeals of decisions made by the Office of Fair Trading, Competition Commission, Civil Aviation Authority and others – which are few in number when compared against the total number of claims that the courts deal with each year. Consequently, whilst much has been made of the reforms and their wider impact on commerce, it is unclear what material difference will result for consumers. It is worth noting however, that even the Government accepts that the proposals could lead to frivolous and unmeritorious litigation”.

The underlying rationale for the reforms, introduced by the Department for Business, Innovation & Skills, is ostensibly to promote fairness and growth of small businesses. However, some commentators (for example, this morning’s Yorkshire Post article, in which this blog is quoted) see this as an obvious attempt by the Government to reduce the drain on the public purse – with the likely consequence that individuals with genuine and unique claims risk being left out of pocket.

No right-minded individual would suggest that “frivolous and unmeritorious litigation” is a step in the right direction. Indeed, the Government feels confident that it can introduce sufficient safeguards whilst, at the same time, increasing access to justice for those who are most in need. The Devil is in the detail and the real test will be in the implementation of the reforms before the CAT – something which consumer groups, trade associations and the Rt. Hon. Dr. Vince Cable MP will need to keep a careful eye on in the coming months.

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