Guidance on new compensation schemes power in competition cases
The CMA today published guidance on a new power to encourage competition law-breaking businesses to voluntarily pay compensation to victims.
Under the guidance, businesses setting up voluntary redress schemes can, in certain circumstances, receive a discount of up to 20% of any penalty imposed by the Competition and Markets Authority (CMA) for a breach of competition law.
The guidance goes on to provide details on how businesses can apply to the CMA for approval of a scheme, how it will consider such applications, the procedural framework for determining levels of compensation, and how schemes should operate.
The schemes do not prevent affected consumers or businesses from taking action through the courts if they prefer.
The new power enabling the CMA or a sector regulator with concurrent competition powers to approve voluntary redress schemes comes into force on 1 October 2015. It is part of a wider set of changes under the Consumer Rights Act 2015 (CRA) intended to make it easier, quicker and less costly for those who have suffered from breaches of competition law to obtain redress.
The guidance complements and explains the changes made by the CRA and follows a consultation.
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law.
- Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Chapter I of the Competition Act 1998 (CA98) prohibit any agreements or concerted practices between businesses which prevent, restrict or distort competition, unless an exemption applies. Article 102 of the TFEU and Chapter II of the CA98 prohibit the abuse of a dominant position.
- Under the changes made by the CRA, both the CMA and sector regulators with power to apply the CA98 concurrently with the CMA are able to approve relevant voluntary redress schemes. The guidance published today is the CMA’s guidance and was approved by the Secretary of State as required by the legal framework. The CMA expects that regulators will take the CMA guidance into account when producing their own guidance on the power.
- See the explanatory notes to the CRA competition provisions for further details on the wider set of government changes to make it easier for those who have suffered harm from competition infringements to obtain redress. Other key changes include increasing the Competition Appeal Tribunal’s (CAT) role in competition private actions, for example introducing enhanced provisions on opt-out and opt-in collective actions in the CAT and providing for a fast-track procedure to enable simpler cases brought by small businesses to be resolved more quickly and a lower cost.
- The CMA’s guidance is aimed principally at businesses seeking to provide compensation under a voluntary redress scheme and those appointed to determine appropriate compensation in relation to such a scheme. The CMA also plans to publish a complementary ‘quick guide’ for consumers and small and medium-sized enterprises (SMEs) considering claiming redress under approved voluntary schemes.
- The CMA will monitor the operation of the guidance and expects to review it in due course based on experience.
- Enquiries should be directed to Simon Belgard (simon.belgard@cma.gsi.gov.uk, 020 3738 6472).
- For more information see the CMA’s homepage or follow us on Twitter @CMAgovuk, Flickr and LinkedIn. Sign up to our email alerts to receive updates on Competition Act 1998 and cartels cases.