Why the UK's opt-out collective proceedings regime must be allowed to succeed

The UK opt-out collective proceedings regime was introduced in October 2015 – but with a new regime and the inevitable number of interlocutory appeals in the early cases, it is only now that we are finally seeing cases reach conclusion and secure meaningful redress for consumers.

The first successful judgment in an opt-out claim last year in Kent v Apple illustrates the scale of harm the regime is capable of addressing with a £1.4bn award by the Tribunal against Apple in relation to excessive pricing on its App Store. Without an opt-out mechanism, claims of this nature would be unlikely to be brought at all, and unlawful gains would largely remain with infringers and anti-competitive behaviour will often continue unconstrained.  In the last 12 months we have also seen settlements reached in relation to unlawfully inflated interchange fees imposed by MasterCard (Merricks) and price fixing in relation to transport costs for new car deliveries (McLaren – Ro-Ro Claims). The regime has also seen the first awards of undistributed damages to the Access to Justice Foundation.   

This point is often lost on detractors of the regime, which is subject to continued lobbying, notably by the US Chamber of Commerce, and is currently subject to a review by the Department of Business and Trade. Those lobbying against the regime suggest that opt-out actions are anti-growth, unfairly impose costs on defendants and have a potential negative impact on foreign investment and growth. This ignores the importance of competition law in ensuring a fair playing field for businesses and that compensation awards correct the balance between infringing companies and harmed parties, with over half the collective actions which have been filed also including SMEs. 

Market conduct and litigation funding

Beyond individual compensation, opt-out collective proceedings serve a wider function within the competition enforcement landscape. By aggregating dispersed harm, they help ensure that breaches of competition law do not become economically rational simply because individual losses are too small to pursue. This function complements public enforcement by regulators and supports wider market confidence. It also ensures fair and competitive markets consistent with the government’s growth agenda.   

Against the above background, the Government’s recent announcement of its intention to legislate to reverse the effects of the Supreme Court’s decision in PACCAR Inc v Competition Appeal Tribunal, which held that certain damages-based litigation funding agreements (LFAs) constituted damages-based agreements, is a welcome and necessary development. Clarifying the enforceability of LFAs is critical to ensuring that the collective proceedings regime both in the CAT and other cases can function as Parliament intended. 

Public support and procedural legitimacy

Hausfeld recently commissioned a poll in relation to public views on collective actions. The results send a clear message that the public wants strong, well-understood opt-out mechanisms that protect consumers, support competitive markets and ensure misconduct has real consequences. 

The poll, which was carried out in order to genuinely gauge public attitudes towards competition collective actions, provides a timely lens in considering why the opt-out regime remains a necessary and proportionate response to mass competition harm. Polling the public sheds light on whether or not the regime is supported by public expectations about access to justice and redress. On that point, the findings are instructive. 

Respondents were presented with a clear explanation of the distinction between opt-in and opt-out claims – in other contexts we have seen results of polling which blur the distinction between opt-out and other forms of group and opt-in actions, which require individual consumers to bring claims in their own name. There was a clear preference in favour of automatic inclusion, particularly where participation was cost and risk-free and did not require claimants to take proactive steps themselves to instruct lawyers individually. Indeed, where individuals are required to take proactive steps to participate in proceedings and engage directly with lawyers and funding/insurance, then engagement drops sharply.   

This is not surprising. The data aligns closely with the legislative premise underlying the regime: that opt-in mechanisms systematically fail to secure meaningful participation and result in under-compensation, even where wrongdoing is well-established. 

Far from cutting against the UK’s approach, the polling reinforces the logic that led Parliament to conclude that opt-out proceedings were necessary in certain cases to ensure access to justice, to hold those infringing competition law to account and ensure a fair and level playing field for businesses.

Looking ahead

The future of the opt-out regime will ultimately be shaped by statute and case law rather than opinion surveys. Nonetheless, the polling demonstrates that the core premise of the regime - that automatic inclusion is necessary to deliver effective redress for certain forms of mass competition harm - remains aligned with both legislative intent in introducing the regime and public expectation.

As debate around collective redress continues, including through the Department for Business and Trade’s current review, the more pressing question is not whether opt-out proceedings are appropriate, but whether the existing framework is allowed to operate as Parliament intended: as a proportionate, carefully controlled response to systemic market harm, or whether it is reshaped under sustained lobbying pressure from those for whom effective collective enforcement poses the greatest commercial risk.  With proposals from the review due in the coming months, it is hoped that the government will not restrict a regime that is only now starting to meet its aims.