My Lords, I thank my noble friend Lord Eccles for his perceptive analysis, and for the discussions that we have had where we have found much common ground. I am also most grateful to my noble friend Lord Hunt of Wirral for intervening to urge caution from an admirably common-sense point of view.
I shall address each of the amendments in turn, particularly their possibly perverse effects. Amendment 41D would require us to place in the Bill scrutiny of the strength of a claim and the consideration of alternative dispute resolution. I agree that weak claims should not be brought and that parties should attempt to reach a settlement. Rule 7 of the draft Competition Appeal Tribunal rules provides for this, requiring the CAT to consider the strength of the claims and the availability of alternative dispute resolution.
It is appropriate for these requirements to be in the CAT rules so that they can be more easily modified and strengthened if need be. This ensures an effective regime that promotes the interests of consumers. Although the CAT rules have been made available in the House Library, they will be the subject of formal consultation in the new year, well ahead of commencement. I undertake that the points on both the scrutiny of the strength of the claim and the availability of alternative dispute resolution will be included in the consultation document. To clarify, the CAT rules are made via secondary legislation. They are the responsibility of BIS Ministers and produced by the Government. This means they are binding on the CAT, cannot be ignored and cannot be changed by the CAT. They are the right place for most of the concerns that we have outlined today.
The micro-amendments, Amendments 41E and 41G, would limit a collective action to one representative. I understand why my noble friend would like to prevent multiple representatives bringing claims, as that could lead to businesses facing uncertainty and larger claims for damages. However, these mini-amendments would also have unintended consequences, as he hinted, because they would prevent hybrid claims. These are claims where more than one group of claimants—for example, consumers and small businesses—join together to bring a case. For instance, in a claim for damages following a cartel in rail fares, both consumers and SMEs may wish to make a claim. During the private actions consultation in 2012, however, business groups said that the one thing they wanted was finality and closure. They want to be able to pay out one set of damages and know that it is binding on those within that action.
To prevent a business having to respond to multiple representatives, there is discretion for one representative to be the lead representative. I am happy to discuss this further with my noble friend Lord Eccles in the context of the consultation if that would be helpful. Ruling out hybrid cases, as these mini-amendments
would, means that businesses might face an opt-out collective action as well as multiple follow-on actions. There would be an incentive for claimants to race each other to court to commence a claim before anyone else, even if that claim was then dropped. This type of behaviour could lead to just the kind of litigation and cost that we all want to avoid.
Amendment 41F would provide the CAT with discretion to take into account any other matters that it considered relevant when authorising the representative. The Bill already provides the CAT with a great deal of discretion, and the CAT rules will include other factors that the CAT must take into account. This is likely to include any other factors that the CAT considers relevant.
Amendment 41H would exclude SMEs from bringing forward collective actions that would reduce their access to redress. We have deliberately avoided a prescriptive list of eligible bodies and instead afforded the CAT discretion, in accordance with the CAT rules, to determine whether a body is suitable. The CAT is a specialist competition court with a strong track record in dealing with consumer detriment. The Government believe that the CAT is best placed to scrutinise every body that seeks to act as a representative.
The CAT includes High Court judges—and may include some more if we make progress on the other amendment—who are experienced in making decisions based on broad criteria. It is appropriate that they use their experience to scrutinise each case on its merits. However, we would welcome contributions to our consultation on the collective action provisions of the CAT rules to help to ensure that only suitable bodies may bring collective actions.
Amendment 41J would require that the CAT may authorise a person to act as a representative only if they had appropriate experience and standing. The Government believe that this could be problematic. Given the lack of collective action cases brought forward in the past 10 years, it would be extremely difficult for the CAT to find a representative who would satisfy these claims. It is the Government’s intention to ensure that only appropriate representatives can bring forward cases, with discretion given to the CAT to achieve just that. Again, I will undertake to ensure that this concern is covered in the consultation.
Amendment 41K would require that the CAT believes the representative will act in the best interests of the class members. I agree with the sentiment of the amendment. Indeed, the rationale behind wanting only consumer organisations and trade bodies to bring collective actions is that they will represent the claimants’ best interests. To this end, we have introduced a similar test in the CAT rules. I am reluctant to place such a requirement in the Bill as it may deter those cases that have a mixture of consumers and SMEs. This is because the CAT might be forced to decide that a consumer organisation cannot represent a business or that a trade body cannot represent consumers. In turn, this would lead to business having to respond to multiple representatives, and possibly claims, which, as we have already, said we are keen to avoid.
I have discussed these amendments with noble Lords and set out some further considerations this evening.
I hope that I have provided some useful reassurances about the consultation process. I hope that my noble friend will withdraw his amendment.
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