House of Lords shows support for consumer law collective action regime
Further to our previous blog post (here), it seems Parliament is once again considering amending the Digital Markets, Competition and Consumers Bill (the “DMCC Bill”) to pave the way for collective actions to be brought on the basis of consumer law. As we mentioned in our previous post, an amendment was originally tabled, but not ultimately passed, in the House of Commons that proposed to expand the scope of the collective action regime in the Competition Appeal Tribunal (the “CAT”) to include actions based on consumer protection law. Following rejection of the amendment in the House of Commons, it appeared that consumer law focused claims would need to continue being “dressed-up” as competition law claims in order to be brought as opt-out collective actions before the CAT (see our previous thoughts on this here).
However, on 5 December 2023, the DMCC Bill had its second reading in the House of Lords, during which several peers voiced support for introducing a collective action regime for consumer law claims (see Hansard for 5 December 2023). Amongst them was the former Master of the Rolls and Head of Civil Justice, The Rt Hon. the Lord Etherton KC, who considered that the current regime (which essentially requires consumers to bring claims on an individual basis) disincentives companies to comply with their obligations and explicitly urged the Government to make provision in the DMCC Bill for a collective action regime (Hansard for 5 December 2023, per Lord Etherton at 5:58pm).
The DMCC Bill is yet to finish its passage in the House of Lords and the exact form of any potential amendment does not appear to have been publicly debated by peers. It’s worth noting that, even if an amendment regarding collective actions is incorporated into the DMCC Bill, it will then go back to the House of Commons for further consideration. However, for now, it seems that the expansion of the collective action regime to claims brought on the basis of infringements of consumer law could be back on the cards.
Opening the flood gates (even further): implications of a collective consumer law action regime
As we previously noted, allowing collective actions for consumer law claims would signify a huge expansion to the landscape of the UK’s class action regime – one that would put consumer-facing companies at risk of large-scale opt-out actions, regardless of their market size.
What is more, consumer-law based collective actions would likely be significantly simpler to bring as compared to actions brought pursuant to competition law. This is primarily due to the absence of the complex legal and economic assessments involved in determining the existence of competition law infringements and their impact on a particular market. The fact that the DMCC Bill also contains substantive new aspects of consumer law, including certain practices that are automatically deemed to be unfair (which, in some instances, are broadly defined, such as “making persistent and unwanted solicitations”) lowers the burden of proof for potential litigants even further (Part 4 and Schedule 19 of the draft DMCC Bill, the current version of which can be found here).
Against this backdrop, and the enthusiasm demonstrated for bringing claims under the existing competition regime before the CAT, as long as it continues to look like the collective action regime will be expanded, we anticipate that litigation funders and the lawyers they work with will quickly start seeking out potential claims. This could add fuel to the fire for consumer-facing business, expanding consumer protection risks in the UK outside the regulatory and reputational spheres and creating new exposure to large-scale litigation that could be very costly and time-consuming to resolve.
Whilst the consumer elements of the DMCC Bill are not expected to become law until autumn 2024, consumer-facing businesses should pay careful attention to the evolution of the DMCC Bill and its potential implications. Our team are following this topic closely and would be happy to discuss.
For further information, please contact:
Tom Cassels, Partner, Linklaters
tom.cassels@linklaters.com
