CBI warns against class action proposals

The CBI has argued that proposals to enable group actions against companies will damage business in the UK.

Responding to the launch of a Department for Business, Innovation and Skills consultation on private actions in competition law., Matthew Fell, CBI Director for Competitive Markets, said:

“It’s absolutely right that the victims of competition law breaches receive proper compensation. We are pleased that the Government shares our view that redress should be delivered in a cost effective way, with litigation a last resort. This means promoting Alternative Dispute Resolution methods which are increasingly being used by business, and often result in a better outcome for both parties.

“We are extremely concerned by the Government’s preference towards ‘opt-out’ class actions, which group potential claimants together without naming individuals. This will magnify the total amount of potential claims and fuel litigation.

“The introduction of ‘opt-out’ actions risks sowing the seeds of a class action beanstalk. In the US, they grew out of all proportion to the damage they were seeking to redress and had to be reined in by Congress.

“‘Opt-out’ actions will be inextricably linked with third-party investors and as a result are likely to create a new business in collective litigation, which is not the sort of industry we want to encourage in the UK.”