A new report suggests the UK’s opt-out collective action regime could deliver billions of pounds in economic benefits. In fact, according to the analysis, the regime boosts the economy by up to £10.5 billion a year.
And that makes sense. Because – as well as the spending generated within the economy — for example on legal services, economic analysis and claims administration, competition claims also help keep markets fair by discouraging companies from breaking the rules, and this can lead to more competition and a fairer market all round.
Why competition claims matter for consumers
Opt-out collective actions were introduced in the UK in 2015 under the Consumer Rights Act. They allow competition law claims to be brought on behalf of large groups of consumers who may have been affected in the same way.
Typically, these cases involve allegations such as companies:
- Overcharging customers
- Abusing dominant market positions
- Entering agreements that restrict competition.
In situations where millions of people are affected, individual losses may be relatively small. But when added together across the entire group, the impact can be very significant.
Collective actions make it possible to challenge these issues in a single case.
The economic impact
The real economic value of the opt-out regime may lie in its deterrent effect.
When companies know that anti-competitive behaviour could be challenged through collective actions, the incentive to engage in that behaviour may be reduced. In other words, the existence of the system can influence behaviour even before a case is brought.
If markets operate more fairly, consumers benefit through lower prices, greater choice and better competition overall.
So, while discussions about collective actions sometimes focus heavily on the legal costs involved in bringing cases, that does not always give the full picture.
If collective actions discourage anti-competitive behaviour, the long-term benefits to consumers and markets may significantly outweigh the costs associated with bringing cases.
A growing role in the UK legal landscape
The UK’s opt-out regime is still relatively young compared with similar systems in other countries. However, the number and scale of cases brought before the Competition Appeal Tribunal has increased in recent years.
Several claims now involve millions of consumers and potential compensation worth billions of pounds.
As the system continues to develop, understanding the impact of collective actions is becoming increasingly important.
