Britain looks set for an explosion of American-style mass lawsuits - where thousands of ordinary individuals club together to sue companies that have cheated them - after the UK’s competition watchdog officially encouraged consumers to become more litigious today.

In a major consultation paper that it hopes will lead to a series of changes to current UK laws, the Office of Fair Trading (OFT) set out the reasons why it believes the public should have wider access to litigation if they have bought goods from companies that operated cartels or otherwise colluded to fix prices.

Crucially, the OFT also committed to taking a proactive role in helping consumers to bring private claims including allowing selective public access to evidence of anti-competitive behaviour gleaned during its own investigations.

UK consumers were given the legal means to sue companies that have engaged in anti-competitive behaviour since a change in UK laws last year but such lawsuits are still extremely rare because of practical difficulties – including the cost – of attempting them.

Last month Which, the UK consumer association, began a group lawsuit against JJB Sports on behalf of football fans who overpaid for replica Manchester United and England kits during two years of collusion between kit manufacturers and end retailers.

The group action, the first of its kind in the UK, was launched after the OFT had already carried out its own investigation into the football shirts cartel resulting in a combined £20 million fine for those involved.

Since none of this money went directly to consumers, Which appointed Clyde & Co, a London law firm to sue JJB Sports on their behalf. After advertising in several local and national newspapers, Which attracted several hundred consumers to join its case.

This morning Philip Collins, chairman of the OFT, said cheated consumers were missing out on potential compensation awards and that he would like to see more cases like the Which action.

The OFT also pledged to tackle the crucial issue of costs that it acknowledges is partly to blame for the poor take up of consumer-led litigation in the UK.

In the UK legal system, the losing party in a court case is often ordered to pay the winning parties costs in addition to their own, a feature the OFT calls a “major disincentive” to bringing such claims.

To help tackle this it proposes introducing new forms of “no win, no fee” arrangements that allow consumers to bring cases without fears of crippling costs - but still provide enough of an incentive for lawyers to dedicate themselves to winning cases.

The consultation also takes pains to address fears that the UK could drift towards the US system by insisting that it is not proposing introducing fee structures where lawyers take a percentage of the overall winnings.

Such fee systems have made millionaires of hundreds of US lawyers leading to accusations that lawsuits are more beneficial for lawyers than the consumers they represent.

Matthew Levitt, a competition law expert at Lovells, said: “The OFT will be sensitive to the need to avoid the 'excesses' of the US system. One of the key features of the US system - triple damages (where consumers are awarded compensation equal to three times their loss) is not part of the OFT's proposals.”

Although the OFT proposals remain at the consultation stage, Mr Levitt noted that the European Commission has been pushing member states to introduce, or enhance mechanisms, for private enforcement.

In this light, and the fact that “it is difficult to object in principle to the notion that private enforcement of competition law is a good thing,” Mr Levitt said there is a “good chance” that the OFT proposals will be introduced.

Michael Grenfell, competition partner at Norton Rose, said: "The consultation shows that the OFT is as keen as the European Commission to encourage private litigation on competition cases - not least because it lightens the OFT's own case workload so freeing it to set its own enforcement priorities.

"There are some interesting ideas for encouraging consumers to litigate - including the possibility of consumer groups litigating on behalf of individual consumers who have suffered losses from anticompetitive practices; the possibility of smaller claims being heard in the lower courts, so saving legal costs; and the introduction of a form of contingency fees for lawyers, so that genuine claimants are not deterred from pursuing cases."

"Many of these ideas would require legislation, at UK or EU level," Mr Grenfell added.

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