Summary: focus on improving procedure and distribution of damages
1. Opt-out collective actions in the UK are assailed by challenges to their funding and questions about their legitimacy. The former are fuelled by the Supreme Court’s ruling in PACCAR and ongoing litigation; the latter from a long campaign by certain large business groups designed to show they are ‘anti-business’ and ‘anti-growth’, now reflected in the premises of the Government’s current ‘call for evidence’.
2. The premise of the Call for Evidence is the idea that the interests of business and consumers no longer balance, and if so, the Government should now re-balance them, to promote ‘economic growth’. The right premise, however, would have been to recall what competition law is for, and why it was considered necessary to facilitate its private enforcement.
3. The correct question that would follow is: what should now be done to make competition private enforcement in the UK cheaper, more efficient, better at distributing damages to claimants and faster in reaching resolution. It is for the courts (and not the Government, or certain business lobby groups) to decide, backed by their ability to award adverse costs, whether any case has merit.
4. The Government might usefully consider reforms aimed at encouraging wider take-up of damages when they are awarded to opt-out classes; to clarify what funding agreements can or cannot provide; to reform CAT procedure to facilitate better costs management and transparency on both claimant and defendant sides and more broadly to encourage early disclosure on both sides to help evaluate merits; and to promote alternative dispute resolution, including mediation.
The funding challenge
5. In our last article (The CJC Review of Litigation Funding) we discussed the CJC’s Review of Litigation Funding, which recommended legislation to reverse the Supreme Court’s PACCAR ruling. In that article we argued that the CJC’s objective here would be vitiated by its recommendation 21, which would have the practical effect of substantially limiting the cases that might be brought.
6. We note the Government has not yet responded to the CJC. Given the Call for Evidence, and the overlapping issues, that makes sense. The post-PACCAR funding litigation, where the Court of Appeal in July 2025 wholly rejected four sets of competition defendants’ attempts to invalidate their respective class representatives’ funding arrangements (see: Victory for Access to Justice as Court of Appeal Backs Funding Agreements – Harcus Parker), is still subject to potential challenge at the Supreme Court.
The legitimacy challenge
7. The introduction of opt-out collective damages in the UK was controversial. On the one hand, the Government wanted to facilitate private enforcement of competition law. Private enforcement was patchy, and this was a problem, because public enforcement could only ever be limited (and may become more so, following the Government-steered changes at the CMA). Underlying the argument was the premise that competition law served an important supporting function in economic policy: it was pro-consumer, pro-business (in the sense of pro-business efficiency). On the other hand, siren voices warned of creating a ‘litigation culture’ (whatever that means, precisely); of perverse incentives on lawyers; of spurious, vexatious or unmeritorious litigation imposing burdens on ‘business’ (as opposed to ‘businesses’).
8. The controversy finds new expression, ten years after the Consumer Rights Act 2015, in a call for evidence framed in terms of understanding and potentially correcting this ‘balance’.
The premises of the Call for Evidence are flawed
9. Four features of the call for evidence illustrate its flawed premise:
a. The idea that it is the ‘right time’ to review the regime’s ‘operation and impact’;
b. The role of ‘economic growth’;
c. The idea that the debate should be framed in terms of ‘balance’; and
d. The confusion between ‘burdens on business’ and burdens on ‘businesses’ reasonably suspected of breaking the law.
The ‘right time’ to review
10. The call for evidence opens thus:
“A decade on from the introduction of the opt-out collective actions regime in competition law, we think it is the right time to review its operation and impact. The regime has developed and expanded significantly since its commencement, providing an important avenue for consumers to seek redress through which claimants have sought damages in the tens of billions of pounds.”
11. Under “Why we are reviewing” the Government explains why it is ‘opportune’ to review:
“…primarily, whether it is delivering access to justice for consumers in a way that brings value without being disproportionately burdensome on business.”
12. There is no reason why a decade – in itself – makes a review ‘opportune,’ so that we need to consider how the regime has ‘developed and expanded’, how it is ‘delivering access to justice’ and what the ‘burden on business’ is.
13. But for more than half of that first decade, no collective action was certified. This changed on 18th August 2021 when Merricks v Mastercard was certified following a long battle, including to the Supreme Court. When the Government issued the Call for Evidence, on 6th August 2025, not even a full four years had elapsed since. Even after that, and despite numerous cases winning certification, many have faced challenge: on the adequacy of methodology/blueprint to trial; the suitability of the class representative; the legality of the funding agreements and on the relative suitability of competing proposed collective actions in carriage disputes. By contrast, only a handful of opt-out collective proceedings have concluded through Collective Settlement Approval Orders, and only one certified case – Le Patourel – has reached full trial on the merits (with the claimant losing overall). Despite a decade elapsing from the Consumer Rights Act, the regime is quite obviously still embryonic: it is not credible to consider that useful inferences can be drawn about whether the ‘burden on business’ (whatever that means) is appropriate.
The growth objective
14. The UK Government has long associated competition law and its enforcement with economic growth. Since the 1990s, ‘more competition’ – it was argued – would promote growth; now, it seems, too much competition (or its enforcement) could harm it.
15. The Call for Evidence says:
“This Government is focused on economic growth, and a regime that is proportionate and focused on returns to consumers where they are due is good for growth and investment.”
16. What economic policy have previous Governments focused on, if not economic growth?
17. The term ‘growth’ borders related ideas of innovation, competitiveness, competition, and dynamism. In broad terms, competitive companies operating in competitive markets will tend to be dynamic and innovate, and these will promote economic growth.
18. The Competition Bill, which later became the Competition Act 1998, was explicitly linked to dynamism and competitive markets:
a. Lord Currie of Marylebone, in a House of Lords debate on Economic Prospects, said, “We need to encourage flexible product markets which will, in turn, encourage competition and the dynamism which create jobs and, indeed, innovation. In that respect the Competition Bill which your Lordships are considering at present is an important part of the picture.”1
b. Lord Simon of Highbury, in the House of Lords debate on the Competition Bill, stated: “The Bill shows our commitment to ensuring effective and fair competition. It would benefit both consumers and business.” And, “It is perhaps more obvious that competition provides value and choice for consumers. But, as Minister responsible for trade and competitiveness in Europe, I feel just as strongly about the spur which strong competition in the UK and continental Europe provides to the competitiveness of our companies in overseas markets outside the European Union; that is, in the global market.”2
19. When the Consumer Rights Bill was before Parliament in 2014- 2015, speeches in both Houses emphasised the growth objective underpinning the reforms that created the opt-out (and opt-in) competition collective actions regime:
a. Viscount Younger of Leckie said, “Our aim is to foster high levels of consumer confidence so that people try new products and services and also shop around. This encourages businesses to enter the market and drives innovation, boosting competition and creating growth. However, in order for consumers to be confident, they need to know what their rights are and what they are entitled to if something goes wrong. Having clearer rights and remedies is also important for businesses because it means that they can more readily understand how they can best meet their responsibilities. Helping consumers to become more confident and businesses to become more responsive is the challenge that we face.”3 (emphasis added)
b. Liberal Democrat Parliamentary Under-Secretary of State for Business, Innovation and Skills, Jo Swinson, said, “The Bill is the biggest overhaul of consumer rights for a generation. It sets out a simple, modern framework of consumer rights that will promote growth through confident consumers driving innovation and more competitive markets.”4 (emphasis added)
20. The evidence taken from ‘business’ – while foreshadowing the debate today about the alleged harm of collective actions – also indicates a shared understanding that the Government had a ‘growth agenda’:
a. BT, itself the object of the unsuccessful Le Patourel litigation, warned in written evidence to BIS: “…the draft Bill raises the spectre of encouraging a costly litigation culture in the UK, thereby harming business investment and growth.”5
21. There is, in short, nothing new or special about this Government’s focus on ‘growth’ in the context of competition policy; what is new is that the language of growth is being directed towards a potential reversal of that policy.
The ‘balance’ frame
22. The Government has framed the debate, and this consultation, as a contest of ‘consumer rights’ vs. ‘burdens on business’. From ‘burdens on business’ it is a short logical leap to saying there are ‘harms to growth’.
23. The Consultation states:
“a regime that is proportionate and focused on returns to consumers where they are due is good for growth and investment”.
24. Nowhere does it say to what, precisely, the regime is supposed to be proportionate. One assumes it means a regime where the benefits to consumers justify the costs arising from its operation. The words “where they are due” are pure flannel: as if it could reasonably be said by anyone that giving consumers returns that they are not due is good for growth and investment.
25. The Government justifies this approach in stating that the third of its original objectives for the opt-out collective actions regime were to, “strike the right balance between the need for an effective system for collective action claims and protecting of defendants from having to settle unmeritorious claims.”
26. The Parliamentary record for the Consumer Rights Bill bears out that concern was expressed at the time about vexatious claims but the Government explicitly addressed those concerns; in its consultation response, several ‘strong safeguards’ were introduced: strict judicial certification of cases so that only meritorious cases are taken forward; no treble damages; no contingency fees for lawyers; maintaining the ‘loser-pays’ rule so that those who bring unsuccessful cases pay the full price.6
27. Lawyers for claimants and defendants tend to disagree profoundly on whether the CAT’s certification of claims is sufficiently strict, but it is undeniable that for claimants, the process of case preparation for a certification hearing is highly burdensome and defendants will object at very great length (and expense). The other safeguards – no treble damages, no opt-out contingency fees and loser-pays – all play a part in limiting the cases that are brought. There is no question that substantial safeguards exist to prevent ‘unmeritorious claims’: those promoting them have much to lose. Moreover, can the Government seriously draw inferences about the burden to business on the basis of only one merits trial? How can it draw inferences about the cases currently working their way through the CAT at pre-merits stage – and is not that the CAT’s job, not the Government’s?
28. The trade off between ‘consumer rights’ and ‘growth’ is problematic. Done well – at least according to the policy intention behind the Competition Act 1998 – competitive markets underpinned by strong competition law enforcement are good for businesses and consumers – and so, presumably, growth. But if the law reduced consumer access to justice, then business will not be held to account to the same degree, so the spur to dynamic, competitive, pro-growth behaviour will be lower. How does the Government propose to measure this trade off? Or should the Government instead make clear precisely where it believes the private enforcement of competition law is harming growth?
The ‘burdens on business’ frame
29. The frame of “consumers vs business” is also too narrow, because consumers, as the Government notes, can also be businesses. The CICC litigation against Mastercard and Visa comprises opt-in and opt-out claims brought on behalf of businesses, not consumers. The division is according to the size of the business: those with average annual turnover (in a reference period 2016-2019) of £100 million or more may opt-in; those below £100 million are automatically included unless they opt-out. In practice, this means: first, that businesses across all sectors of the UK economy are included; secondly, that businesses of all sizes are included; thirdly, these first two together mean that the total number of potential claimant businesses is in the hundreds of thousands; and fourthly, some of those businesses are very large indeed. If the case is successful, resulting in damages being payable to these claimants, is that bad for ‘business’, or just bad for the entities within global defendant businesses Mastercard and Visa? If the litigation were to find that the defendants, having been found (subject to appeal) to have operated a scheme that – through levying multilateral interchange fees – prevented, restricted or distorted competition, did not merit exemption, and so needed to change their business practices to avoid further infringement, is that, again, bad for ‘business’ (who pay the multilateral interchange fees to their acquirers) or just the defendant businesses? If the latter, then plainly it would be good for the claimant businesses and their contribution to the UK economy.
30. Is the Government suggesting that the settlements achieved so far in Merricks and Gutmann v First MTR South Western Trains were unmeritorious, and if so, on what basis? Because if they were not unmeritorious (i.e. there was merit in those cases being brought) then giving business ‘certainty’ in this means ensuring those businesses do not have to compensate when they have infringed the law.
31. The consultation notes, without further comment, that it had been expected that most of the competition collective actions would be follow-on rather than stand-alone. It also states that private actions should not be the first form of redress. Other forms of redress might be ADR, or redress schemes. How are these supposed to work when most of the cases brought are stand-alone? There must be a finding of infringement. What incentive is there on business to engage in ADR without the threat of litigation? If stand-alone actions were restricted, the business would have much greater certainty: there is a limit on how much public enforcement (leading to a full infringement decision surviving appeal) the CMA can carry out, and therefore a limit on how many private enforcement actions can follow.
Focus on making the regime work better
32. The correct frame, in our view, is:
a. Recall the pro-consumer, pro-growth objectives of the Competition Act 1998;
b. Recall the pro-competition enforcement objectives of the Consumer Rights Act 2015;
c. Note that public and private competition law enforcement should complement one another, to drive higher levels of business compliance (including in areas where public enforcement – for lack of resources – cannot reach) and that this would tend to encourage dynamic markets;
d. Note that it is for the courts to adjudicate on the evidence before them in each case whether a collective action has substantive merit, or not;
e. Consider that the opt-out collective actions regime for competition could be made more cost-effective, procedurally efficient and therefore less burdensome for both claimants and defendants with specific and targeted reforms;
f. Consider that consumers’ welfare is improved not only by damages they claim, but also by other means such as redress schemes, and, above, all, the prevention of future harm through improved business compliance with the law.
g. Note that the ebb and flow of enforcement (public and private) creates its own uncertainty and unpredictability for business, which cannot assist ‘growth’.
Possible reforms
33. We do consider that many improvements can and should be made to the regime; that these would tend to improve the process of private enforcement while leaving to the Tribunal – the proper place – the adjudication of which cases have merit. These reforms would:
a. Create incentives on defendants and claimants to resolve disputes at the earliest stage, creating procedural balance between the parties and reducing the financial burden (but not the stringency of) the certification process;
b. Clarify what lawful funding agreements may and may not contain;
c. Specify the steps a class representative must take at all stages of the proceedings;
d. Provide a mechanism for costs on all sides (not just the claimant side) to be carefully assessed and controlled;
e. Take steps to educate and inform consumers and businesses about their rights under competition law, and the importance of asserting those rights, to address in part the current low take-up of damages; and
f. As we have previously noted, recommendation 21 of the CJC review is incoherent and should not be effected.
34. Many of these changes could be effected by reform of the CAT Rules and Guide to Proceedings.
35. The proof of the effectiveness of the regime will not come from the absence of siren voices claiming to represent ‘business’ but from the efficiency and dynamism of markets that benefit both businesses and consumers. This is, after all, what the UK competition regime was designed to do.
14 October 2025
- 3 December 1997, see: Economic Prospects – Hansard – UK Parliament at column 1373. ↩︎
- Competition Bill [H.L.] (Hansard, 30 October 1997) ↩︎
- 1 July 2014, see Hansard ↩︎
- 9 March 2015, see Hansard ↩︎
- 15 August 2013, “Business, Innovation and Skills”, Written evidence submitted by BT ↩︎
- January 2013, “PRIVATE ACTIONS IN COMPETITION LAW: A consultation on options for reform” , government response ↩︎