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Alternative Dispute Resolution is the best way of redressal against breach of competition law says CBI

Date: (25 July 2012)    |    

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The Confederation of British Industry (CBI) has warned that ‘opt out’ class action as proposed by the government would spark a new litigation industry’ around competition law and could discourage inward investment and growth.
Businesses needed incentives like reduced fines to take recourse in alternative dispute resolution (ADR), which was the quicker and cheaper way of providing collective solutions.
Opt out class actions would put potential claimants as a group without naming individuals which would lead to magnifying of total amount of potential claims and fuel a culture of litigation warned the CBI. It was responding to a Department for Business Innovation and Skills consultation on private actions in competition law.
The CBI said that it agreed that businesses which cause significant loss to consumers should be liable to provide compensation. Though the government acknowledges ADR as a forum for collective redressal yet it believes that it could work only if companies were faced with the threat of force in this case sanction of ‘opt out’ class actions.
Matthew Fell, CBI director for competitive markets, said that at a time when the unrelenting focus must be growth, the government should set out a strong message that the UK was open for business, not open for litigation.
The government was in danger of importing a number of features of the US class-action system into the UK, including opt-out arrangements, awarding of aggregate damages and a distribution of surplus funds.
He added that victims of competition law breaches must receive proper compensation, but it should be done in a cost-effective way, litigation being a last resort. And the best way to achieve it was through ADR methods, which are increasingly being used by business and often result in a better outcome for both parties.
The CBI advocates a new mechanism by which a court could approve a collective settlement entered into by a company.