UK’s first ‘opt-out’ collective action begins

20 Jun 2016 | by Claire Alderman

The Consumer Rights Act 2015 introduced a new procedure for bringing ‘collective actions’ for damages for breaches of competition law. Claims can be brought by a claimant acting as representative of a class of persons (such as consumers who bought a particular product) who are alleged to have suffered losses as a result of the breach. Such claims can now be brought on an ‘opt-out’ basis, so that, for example, everyone who purchased a particular product during a particular time period will be part of the proceedings unless he or she actively chooses to ‘opt out’.

In order to bring an opt-out collective action, the claimant must seek a ‘collective proceedings order’ from the Competition Appeal Tribunal. The defendant is not required to file a defence unless and until such an order has been granted.

Press articles in March 2016 announced that the UK’s first opt-out collective action proceedings had been begun by a Ms Dorothy Gibson (the General Secretary of an unincorporated association calling itself the National Pensioners’ Convention) against Pride Mobility Products Ltd (‘Pride’). At that time, however, no proceedings had actually been issued, though Ms Gibson’s solicitors had sent Pride a pre-action letter.

The claim has now been issued: it was issued on 25 May 2016 and served on Pride’s solicitors on 14 June 2016.

Pride is an Oxfordshire-based distributor of mobility scooters. In May 2014 the Office of Fair Trading (‘OFT’) issued a decision finding that Pride and eight of its retailer customers had infringed the Chapter I prohibition in the Competition Act 1998. They did so by agreeing that the retailers would not advertise below-RRP prices on the internet for certain models of scooter. Pride advised the retailers that they should instead state on their websites, “Call for best price”. Pride had been concerned about the promotion of heavily discounted prices on the internet undermining the viability of ‘bricks and mortar’ stores and their ability to offer buyers of mobility scooters pre-sales physical assessments and after-sales support; but the OFT found that the way Pride had gone about trying to address that concern was unlawful. No penalty was imposed on Pride, and Pride did not seek to appeal the OFT’s decision. The decision did not include any finding as to whether consumers had suffered any financial losses.

The claimant Ms Gibson (who did not herself purchase any mobility scooter) is claiming damages on behalf of everyone who purchased a Pride scooter in the UK during the period covered by the infringement. If the Tribunal grants her the collective proceedings order she is seeking, she would then need to advertise the claim so that any consumers who did buy a scooter in that period could exercise their right to ‘opt out’.

Pride has today filed its Acknowledgment of Service stating that it intends to contest the application for a collective proceedings order and also to defend against the claim in full. The Tribunal is likely to list an initial case management conference in the near future at which it will then set a date for the hearing of the application for a collective proceedings order.

These proceedings will be followed with great interest by UK competition lawyers. As this is the first claim of its kind in the UK, the Tribunal will need to consider novel questions as to the principles it should apply when deciding whether or not to grant a collective proceedings order. As part of that consideration, the Tribunal may choose to draw on the jurisprudence of other common law countries that have a longer history of operating class action procedures.

If the claim is allowed to proceed beyond that stage (i.e. if a collective proceedings order is granted), then the Tribunal would need to go on to grapple with complex factual and economic issues concerning the identification and quantification of consumer losses flowing from vertical arrangements relating to how goods are advertised online. This is a topical area in light of the recent focus by competition regulators in the UK and across the EU on online sales restrictions of many and various forms.

Monckton barristers Alan Bates, Michael Armitage and Jack Williams are instructed on behalf of Pride.