The future of collective competition actions: Last chance to comment on key DBIST consultation - practical points for (potential) defendants

"Yes to strong enforcement… no to excessive cost [and] undue complexity". 

Following a preliminary consultation, the Department for Business, Innovation, Science and Trade (formerly the DBT) has endorsed the continued role for the UK's competition opt-out collective damages regime before the Competition Appeal Tribunal (CAT), but is proposing changes to improve its operation. Those with an interest have until 25 September 2026 to provide their comments. 

Claimants (i.e. class representatives and their legal teams) as well as funders will be paying close attention to proposed reforms to authorisation of class representatives and certification, as well as to the proposal to permit damages based agreements which should open up greater possibilities for smaller claims. Proposals to accelerate settlement processes, to provide greater visibility of defendants' costs and to provide greater certainty about pay-outs following a successful claim are also likely to be of interest. 

From a defendant's perspective, the questions raise a number of significant issues. Key points to consider include: 

• Conditions for certification (questions 4-6): These points are finely balanced, even for defendants. A higher bar for certification is in both parties' interests if it properly screens out claims that would go on to fail at trial. But Chapter II (abuse of dominance) claims are notoriously hard to dismiss on an interim basis, prior to disclosure and evidence, so more intensive early scrutiny may simply serve to add cost. However, the proposals to assess suitability for aggregate damage and (in particular) cost/benefit are more clearly useful as a screening mechanism at an early stage of proceedings.
• Proposal to legislate to accept Damages Based Agreements (questions 7-9): While there is some objective merit in a measure that is likely to allow more modest claims to be brought (currently claims tend to secure funding only where valued at over £500M), defendants are unlikely to actively support this change (turkeys don't generally vote for Christmas…). Within the competition collective action regime, funding arrangements of this kind have to be disclosed, which gives defendants better information than in a non-collective private action. 
• Costs budgeting (questions 13-14): Obligations on both parties to provide costs budgets following certification will place a greater burden on defendants than is currently the case. Realistic information about likely defendant costs is important for ensuring that class representatives have adequate ATE insurance in place. For purely monetary claims, greater visibility of costs should assist with making informed settlement offers, including if (as is proposed) an equivalent of CAT rule 45 (itself the equivalent of CPR Part 36) is introduced. However, a development of this kind should not be used to limit defendants' ability to defend themselves effectively. Measures to increase the cost predictability of proceedings in the Tribunal would assist with managing the level of costs: for example, the current informality around the making of applications (which does not require a formal application notice or payment of a fee) and the circumstances in which a hearing can be convened are both issues that can drive up costs. 
• Mandating ADR (questions 15-17): From defendants' perspective, key impediments to settlement remain unrealistically high damages estimates and claims which have implications for ongoing conduct (something which is true of many of the Chapter II proceedings that have been brought by way of collective action in recent years). Imposing obligations to mediate in the presence of these factors is likely to drive up cost. While mediation has a somewhat higher prospect of succeeding after expert reports in some cases, it is critical that any obligation to mediate, or penalty for refusing to do so, is supported by a lengthening of the typical timetable between final expert reports and the start of trial. Typical timelines currently see joint expert reports being filed little more than a month before trial in many cases. A rushed process is unlikely to be productive. 
• Settlements (questions 18-21): Introducing an equivalent of rule 45 would be a positive development; experience suggests that for actions where access to funds is not an issue (which at least in theory should not be the case for a certified collective action) unrealistic offers do not unduly affect parties' incentives to settle. Requiring claimants to update damages assessments would further assist with settlement. Given the paucity of settlement decisions so far, the rules on approval should be revisited once more cases have reached this stage.
• Redress schemes (questions 22-27): In follow-on cases, redress schemes can benefit defendants provided they help avoid costly litigation. To date, such schemes have been used primarily in CMA investigations where conduct affected the NHS (essentially a monopsony buyer), rather than a large number of private companies or consumers. As the consultation indicates, the current requirements for establishing a scheme are onerous; a more proportionate framework could involve the use of a monitoring trustee. Where such schemes are accepted, damages claims should be ruled out not only for entities which claim, but for all those entitled to claim under the scheme. However, the potential one-size-fits-all approach of setting an assumed level of overcharge which is undifferentiated across markets is likely to result in unfairness. Updating rules for voluntary redress scheme appears a proportionate step; the impact of any such change should be assessed before any move to mandate redress schemes. 
• Involvement of regulators (questions 31-32): The proposal to give additional regulators visibility over proceedings may well be unwelcome to defendants (and potentially to both parties), as it could easily add cost and complexity. A more proportionate approach would be to give the CAT permission to forward key information about a claim to a relevant regulator where it considers that it would be of material assistance to the just disposition of the claim, having heard from the parties before making any such ruling. 
• Introduction of fees (questions 38-40): The CAT is currently anomalous among UK commercial courts in not requiring payment for starting a claim. Having said that, PCRs already have to conduct extensive work (including in relation to obtaining funding) before lodging a claim, so requiring payment to start proceedings is unlikely to affect the number of claims being lodged. As noted above, stipulating that interim applications have to be brought more formally, potentially including payment, could impose greater discipline on parties once a claim is underway. 

Alongside the questions focussed on opt-out collective actions, the consultation also covers a proposal to move certain regulatory appeal functions from the CMA to the CAT (see Chapter 2) and changes to the CMA processes when enforcing the competition rules (Chapter 3). 

View the consultation details here.