Class action-style lawsuits seeking compensation for consumers cheated by anti-competitive business practices should follow the US system where all potential claimants are automatically included in the case, a public hearing was told this morning.

Deborah Prince - head of legal affairs at Which, the only UK consumer body currently allowed to launch competition cases on behalf on consumers – told an Office of Fair Trading (OFT) hearing that Which “strongly advocates” bringing the UK system in line with the US.

At present, UK consumer actions can only be brought on behalf of named individuals, who must actively sign-up to join the case.

But according to Dr Prince, a combination of lack of awareness, apathy and the likelihood of small payouts means that only a fraction of those consumers who could potentially join group actions are doing so.

This means that neither of the aims of group actions - to compensate consumers who have lost out and discourage businesses from engaging in anti-competitive behaviour – are being properly achieved.

Earlier this year Which launched a consumer group action on behalf of consumers who overpaid for football kits because of collusion between kit manufacturers and retailers. Yet despite a potential uptake of several hundred thousand or more consumers, less than one thousand signed up.

Dr Prince said that if such consumer actions are to catch on in the UK it is essential to switch to the US system where lawyers (using economists) assess the group of individuals – known as the class – who are eligible to make a claim. A lawsuit is then launched on behalf of the entire class of individuals unless they choose to opt out.

The effect is that US consumer actions are brought on behalf of thousands, if not millions of people and result in much higher payouts to consumers.

Dr Prince made her comments at an open hearing called by the OFT to discuss its recent proposals for encouraging consumer actions following competition infringements.

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