Public redress in UK competition enforcement: a study of rationales and techniques

Abstract

Competition authorities’ potential role in providing redress for victims of competition infringements has attracted growing interest in Europe. This is attributed to the perceived lack of compensation for victims and the attendant deterrent effect due to the continued shortcomings of private enforcement. The increasing use of alternative regulatory techniques in certain fields has also contributed to this discourse. This article discusses and puts forward a typology of possible public redress mechanisms, from compulsive disgorgement to voluntary redress, drawing on lessons from the USA and other fields. Public redress aligns with competition authorities’ role, helps promote access to justice, fills deterrence gaps, and cultivates a competition culture. While the article focuses on the UK and how public redress might be implemented in that jurisdiction, the analysis may also apply to European Union Member States, especially those with less developed collective proceedings regimes.

1. INTRODUCTION

In recent years, competition authorities’ potential role in providing redress for victims of competition infringements has attracted growing interest among academic and policy circles.¹ This is primarily attributable to the perceived lack of compensation for victims and the attendant deterrent effect due to shortcomings of private enforcement in Europe.² The increasing use of alternative regulatory techniques that reflect the principles of responsive and adaptive regulation has also contributed to this discourse.

The past two decades have seen the significant growth of private enforcement in Europe.³ Owing to the European Union (EU) Commission’s initiatives, including through the enactment of Directive 2014/104/EU, and the EU Courts’ rulings, numerous claimants across EU Member States have found it easier to seek compensation for harm caused by competition infringements.⁴ In parallel, private enforcement in the UK has continued to mature, and it now boasts an increasingly confident collective proceedings regime that permits opt-out actions, together with an active and well-capitalized litigation funding industry.⁵ Nevertheless, despite these renewed efforts to promote private enforcement, there remain notable justice gaps, where victims of competition infringements, particularly consumers, are effectively left without redress.⁶ Scholars have attributed this to, among other things, the complexity and costs of antitrust litigation, procedural deficiencies, and the general unfamiliarity with private enforcement.⁷

In view of these perceived shortcomings, scholars have called for regulators to look beyond attempts to bolster private enforcement and to consider alternative regulatory models that may better compensate victims.⁸ This parallels the debate on redress’ role in US public enforcement, despite the well-established private enforcement frameworks in that jurisdiction. The provision of redress (termed ‘public compensation’ or ‘public redress’) has long been a staple of US public enforcement across different fields. US regulators have wide powers of public redress, ranging from disgorgement and restoration to ‘fair funds’.⁹ Both the Department of Justice and the Federal Trade Commission (FTC), along with other federal agencies, have made use of some of these techniques.¹⁰

In this article, we explore how public redress may play a (greater) role in Europe. Public redress can complement, or in some cases substitute for, private damages claims.¹¹ It aligns with competition authorities’ existing role and helps promote access to justice, particularly for consumers in cases where litigation funding is either unattractive or unavailable.¹² Public redress also helps fill the widely observed deterrence gaps left by the underdevelopment or lack of private enforcement.¹³ In addition, competition authorities that facilitate compensation to victims may enjoy greater public legitimacy, which in turn strengthens global awareness of competition compliance. Public redress options fall within a spectrum, from compulsion (eg disgorgement) to voluntary compensation. Some might promote deterrence more than compensation, and vice versa. Some might more readily be implemented within the existing framework, while others might require legislative reforms. We will develop a typology, drawing on the existing scholarship on this topic and placing the options within analytical grids.

Our article focuses on the UK because of its more advanced private enforcement framework compared to many parts of Europe, particularly in relation to the availability of litigation funding and collective actions.¹⁴ The analysis, however, should also apply to many EU Member States and beyond. Section 2 discusses the limitations of private enforcement. Section 3 explores the justifications for public redress. Section 4 considers the implementation of public redress mechanisms in other jurisdictions and fields. Section 5 discusses key considerations for implementing public redress in UK competition enforcement. Section 6 considers specific implementation options. The final section concludes.

2. LIMITATIONS OF PRIVATE ENFORCEMENT

As set out in Section 1, the current enforcement frameworks in Europe are widely viewed as not having achieved the optimal level of deterrence, and victims of competition infringements are sometimes left uncompensated or undercompensated. In this section, we discuss the underlying reasons by reference to the UK, including the practical problems faced by claimants that could be mitigated by public redress.

No effective recourse for certain victims

In common with all regulators, the UK Competition and Markets Authority (CMA) and the concurrent regulators have limited resources at their disposal and cannot pursue every case that merits investigation.¹⁵ If the threat of enforcement were achieving an appropriate level of deterrence, anti-competitive conduct should be few and far between.¹⁶ As things stand, however, empirical studies suggest that even many hardcore infringements remain undeterred or undetected.¹⁷ In respect of unilateral practices, even though they are generally not secretive, their inherent complexity also diminishes competition authorities’ ability to pursue as many of them as they might like to, given the time and resource constraints.¹⁸

Without regulatory intervention, potential claimants must issue ‘stand-alone’ actions, which require one to establish the existence of an infringement. Litigation can be time-consuming, costly, and uncertain, even considering the introduction of collective proceedings and the increased availability of litigation funding. Collective claims can only proceed after the Competition Appeal Tribunal (CAT) grants a collective proceedings order at the certification stage. Private claimants also lack the extensive investigatory powers available to regulators. Nevertheless, in the past few years, there has been a notable increase in the number of ‘stand-alone’ claims on behalf of consumers issued in the CAT across a wide range of sectors, including telecommunications, digital markets, transport, and utilities.¹⁹

The growth in the absolute number of claims, however, masks a blind spot. Scholars have identified certain categories of victims that are effectively overlooked by the current reliance on private enforcement.²⁰ These are victims of ‘smaller’ competition infringements, typically consumers, that fall below the cost–benefit threshold for bringing a claim.²¹ In such cases, even the possibility of grouping all the individual claims together might be insufficient to fashion a viable action given the anticipated litigation costs. These cases lack appeal to litigation funders focused on the expected ‘returns’ of financing an action, who tend to back cases of a certain profile (eg those involving significant and widespread harm and deep-pocketed defendants). As a result, victims of ‘smaller’ infringements may be left without redress when they are no less deserving. Relatedly, as Sir Marcus Smith noted, a lot of collective proceedings are ‘driven by class representatives, funders, and claimant-sided legal firms’.²² But why, one might ask, should an individual’s ability to obtain compensation depend on whether someone else finds it profitable to finance an action, with a view to taking a cut of any awarded damages or otherwise benefiting from the proceedings? While the overall harm might be too ‘small’, the individual harm might still be sizeable enough to have a material impact. It is plainly arbitrary and unfair that such victims should be left effectively without recourse, and, correspondingly, that the relevant infringers should escape the need to provide compensation.

Even where the CMA (or a concurrent regulator) elects to investigate the anti-competitive conduct and issues an infringement decision, the path to compensation is less than straightforward for victims. In a typical case, the CMA would also impose financial penalties on the infringers. The penalties, however, go directly to the central government or the general budget, rather than to the victims (if any) of the relevant infringements.²³ Nor does the level of the penalties necessarily reflect the degree of harm caused (if any) given the primary objectives they pursue, namely (i) reflecting the seriousness of the infringement and (ii) achieving deterrence.²⁴

Therefore, under the current system, following the issuance of an infringement decision, an affected person must typically bring a ‘follow on’ private claim before the courts to seek compensation.²⁵ A claimant may rely on the findings of liability and the facts contained in the infringement decision.²⁶ Such decisions, however, primarily address the issue of liability, and where the infringement in question is ‘by object’ in nature, the decision may say little about, or be silent on, its effects, which a claimant must prove for the purpose of claiming damages. Decisions adopted pursuant to a settlement procedure may pose additional challenges. As the CAT observed in Royal Mail v DAF,²⁷ the typical ‘brevity’ of a settlement decision ‘creates an obstacle for future damages claimants’ because ‘there is less detail about the infringement and much less information about the effects of the cartel on prices’.²⁸ Thus, even with the benefit of a prior infringement decision, claimants may still have to spend a significant amount of time and resources proving that the infringement had actual effects on them.

Furthermore, in deciding whether a claim is viable at all, similar considerations as discussed above in relation to ‘stand-alone’ actions apply, and many decisions concerning ‘small’ infringements were not followed by damages actions.²⁹ In addition, litigation’s inherently adversarial nature may deter certain victims from coming forward in the first place (eg a business might be reluctant to sue its own suppliers, as might be the case concerning an essential supplier’s abuse of its dominant position). This has been empirically shown to be the case in a number of scenarios.³⁰

Misalignment with public enforcement

Leniency programmes have long been an important part of competition authorities’ toolkit in uncovering secret cartels. Against this context, the study of the interrelationship between public and private enforcement often revolves around the latter’s impact on the effectiveness of the leniency programmes.³¹ The decline in the number of leniency applications in recent years has led to a perception, supported by some empirical evidence,³² that the significant growth in the number of private damages claims over the same period has contributed to this trend.³³

The argument is that companies have become more hesitant to ‘blow the whistle’ for fear of exposure to damages claims from which they are not immune, even as successful leniency applicants. Specifically, since damages awards are not capped (notwithstanding the limited protection conferred by the Damages Directive on immunity recipients), they might dwarf the fines that the whistleblowing companies might be able to avoid paying. Nevertheless, it should be noted that the evidence paints a mixed picture of whether there is a causal link between the growth of private enforcement and the apparent decline in the number of leniency applications in recent years.³⁴

Public redress could help mitigate this possible tension between public and private enforcement. First, the provision of public redress may reduce the need for private actions. Secondly, the routine incorporation of redress within public enforcement removes any incentive for companies not to blow the whistle to avoid the need to provide compensation. Thirdly, as discussed below, public redress schemes might help avoid the risk of over-compensation arising from overlapping claims, where there are numerous potential claimants across multiple levels of the supply chains (eg in Trucks³⁵ and MasterCard³⁶).

Overlapping claims and irreconcilable judgments

As noted above, infringement decisions typically say little about effects, let alone the quantum of any harm and how that might be apportioned between different classes of claimants. Both direct and indirect purchasers have standing to bring damages claims in the UK and EU Member States (in contrast to the USA, where indirect purchasers lack standing to sue for damages under federal antitrust laws). Furthermore, the Damages Directive, as implemented in the UK, presumes that a cartel led to an overcharge and places the burden of proof on the defendant to prove that such overcharge has not been passed on to an indirect purchaser claimant.³⁷

This gives rise to the possibility of overlapping claims and, by extension, that of either over- or under-compensation for direct and indirect purchasers. The risk of conflicting judgments is heightened when claims involving parties at different levels of the supply chain are brought at different times and come to separate judgments without reference to each other. For instance, a court in one case involving direct purchaser claimants may conclude that the defendant(s) failed to establish that any of the overcharge was passed on, while another court involving indirect purchaser claimants may conclude that the entire overcharge was passed on to them. In addition, as a general matter, the quantification of damages is highly complex, even for cases that do not involve complex supply chains.³⁸

While proactive case management (eg as exercised by the CAT in Merchant Interchange Fee)³⁹ could help avoid conflicting judgments, this is not always possible when claims are brought before different venues and/or their issuances are too far apart. It also seems unlikely that all possible claimants along the whole supply chain, particularly if it comprises numerous levels, could ever be brought together in one setting.

Public redress mechanisms could help cut through this issue. For example, well-designed public redress schemes that seek to compensate claimants at different levels of the supply chain could avoid or reduce complex, overlapping litigation. While perfect compensation is nearly impossible to achieve in practice due to data, resources, and methodological constraints, examining the position of claimants at all levels in one setting is likely to minimize the risk of over- or under-compensation, particularly when compared with having numerous individual claims before different judges. Indeed, given the significant risk of over-compensation arising from overlapping claims, it could well be in the interest of infringers to support the routine use of public redress, given the growing certainty of ‘follow-on’ actions (other than in ‘small’ cases).

Misalignment with broader societal considerations

In recent years, plaintiff law firms and litigation funding have grown significantly in the UK. Numerous collective claims have been issued in the CAT, targeting, among others, telecommunications providers,⁴⁰ water utility companies,⁴¹ and transport operators.⁴² Many of these claims are framed creatively and seem designed to bring what may fall more naturally under consumer protection laws and other fields (for which no collective proceedings are available) within the ambit of competition law, the only field for which collective proceedings on an opt-out basis are currently available in the UK.

Against this backdrop, it is widely accepted that many of these claims are led and driven by funders and lawyers,⁴³ whose primary motives are, unsurprisingly, monetary. For example, while recognizing that ‘third-party funding is a necessary feature of many collective proceedings’, the CAT in Gutmann v First MTR South Western Trains stated that it ‘would be concerned if it appeared that collective proceedings would be likely to benefit principally the lawyers and funder as opposed to the members of the class’. It further noted that ‘[s]uch proceedings are hugely expensive for the parties and also demanding on the resources of the Tribunal.’⁴⁴ Similarly, the Court of Appeal in BT v Le Patourel recognized that ‘[c]ommercial funders seek to profit from litigation’.⁴⁵

Thus, despite a degree of judicial unease with the enrichment of intermediaries and the strain on public resources, these features are viewed as a necessary evil to enable access to justice for victims (particularly consumers) under the collective proceedings regime. At this relatively early stage of the regime, there is also understandably greater tolerance for more unusual, ‘creative’ claims that push the boundaries of what conduct could properly be cast as a competition claim. As the CAT recognized, however, significant finite public resources are required for each case, and the current surge in caseload has shown no signs of abating.⁴⁶ Indeed, Sir Marcus Smith noted that the CAT has been ‘inundated with private claims of all shapes and sizes’ and that ‘[m]any of these claims are collective proceedings’.⁴⁷

Furthermore, one might ask what the benefits to society are in putting consumers through years-long litigation, with significant sums spent on intermediaries (in addition to the use of valuable court time and resources), particularly in cases involving regulated entities such as utility companies, where public redress (if regulatory actions are warranted) could have delivered a better outcome more quickly and at a lower cost. Where the infringers are non-profit making charitable bodies, litigation could be a blunt instrument that cripples/bankrupts the defendants and harms the very victims of the infringement. In such cases, the greater flexibility of public redress could deliver a more appropriate outcome (eg the Office of Fair Trading (OFT) imposed only a nominal fine on independent fee-paying schools that took part in a cartel, in view of the schools’ offer to pay £3 million to a charitable fund for the benefit of students that attended the schools during the infringement period).⁴⁸

Conversely, if the parties that suffered harm are public bodies like the National Health Service (NHS) (and indirectly the taxpayers), where the regulator has already investigated the conduct and found an infringement, requiring them to go through drawn-out and expensive litigation to obtain damages does not seem like the optimal approach when an alternative might well be available (eg Aspen agreed to pay the NHS £8 million following the CMA’s investigation into the supply of fludrocortisone).⁴⁹

3. JUSTIFICATIONS FOR PUBLIC REDRESS

Access to justice and accountability

As noted in the previous section, litigation can be prohibitively expensive for individual claimants, particularly consumers, and may only get off the ground through third-party funding. Given this reality, victims of ‘smaller’ competition infringements, typically consumers, may be left without any redress altogether because private actions in such cases would unlikely deliver the necessary financial returns for funders. Thus, class representatives, plaintiff law firms, and litigation funders are effectively able to determine who should receive compensation. This imbalance is amplified by the apparent domination of collective proceedings issuances in the UK by ‘repeat players’ (ie actors involved in numerous cases), a phenomenon that is well-documented in the USA.⁵⁰

Public redress mechanisms could help fill this justice gap and mitigate the imbalance of funders becoming the arbiters of who should be compensated. By requiring infringers to provide redress in the discharge of its public enforcement functions, a competition authority can help ensure that victims, particularly in cases that do not fit the typical case profile that attracts third-party funding, are partially or fully compensated.

While access to justice is concerned with the correction of wrongs from the victims’ perspective, ensuring that infringers are accountable for and do not benefit from their wrongdoing constitutes an independent moral consideration.⁵¹ As Sir Marcus Smith noted, ‘[i]t is important that the class be held harmless; but really collective actions are a statement that it is important that the wrongdoer pay compensatory damages—and that is not quite the same thing.’⁵² There is also a direct link between holding infringers accountable and achieving specific and general deterrence, as noted by the Chief Justice of the Canadian Supreme Court: ‘class actions serve efficiency and justice by ensuring that actual and potential wrongdoers modify their behaviour to take full account of the harm they are causing, or might cause, to the public.’⁵³

Accountability as an imperative requires that an infringer be deprived of the benefit from its wrongdoing. The primary objective of damages actions, which are tort-based in the UK, however, is to put a claimant back in a position it would have been in absent the tortious act (ie the infringement).⁵⁴ In a given case, an infringer’s gain could well exceed the claimant’s loss,⁵⁵ leaving aside that a claimant might also choose to compromise a claim for a lower amount for practical and other reasons.⁵⁶ In other cases, there may simply be no specific victims, or it would nearly be impossible to identify or describe them as a class. In these cases, whilst private enforcement could still play a complementary role, it would fall short of achieving the necessary accountability and deterrence on its own.

Furthering competition authorities’ objectives

Competition authorities are, broadly speaking, tasked with promoting competitive markets and protecting them against anti-competitive conduct (and mergers). Helping victims of competition infringements obtain redress is consistent with and furthers these objectives. For instance, Sarah Cardell, the CEO of the CMA, recognized that the CMA has a ‘central interest’ to, in addition to deterring anticompetitive conduct and holding those liable to account, ‘ensure that those parties who suffer loss as a result of such conduct can obtain redress’.⁵⁷

First, compensatory redress seeks to put the victims in the same position they would be in as if the infringement had not taken place. In doing so, some or all of the harmful effects of the infringement may also (in theory) be reversed. This is particularly the case where the victims are the competitors or business customers of the infringers. Viewed this way, promoting redress is part and parcel of an agency’s role of promoting competitive markets, in this case, through restoring the affected markets to their prior competitive conditions. In practice, it can be difficult to fully restore the prior competitive conditions, particularly if the infringement lasted for a long period and significantly altered the structure of the market, leading to the exit of certain rivals. A level of approximation, therefore, is necessary.

Secondly, effectively requiring infringers to provide compensation to victims could enhance overall deterrence against anticompetitive conduct. As Ms. Cardell noted, private enforcement, whilst aimed at compensation, can also have a deterrent effect.⁵⁸ Should antitrust agencies routinely expect infringers to offer redress, the knowledge of this practice would, arguably, be no less effective than the threat of private actions as a deterrent. In fact, it could be even more effective than private enforcement in this regard. On the one hand, it would be futile for an infringer to carry out a cynical risk-reward analysis in determining whether to engage in anticompetitive conduct based on the likelihood of issuance and success of private actions (taking into account also possible procedural and jurisdictional challenges, which sometimes serve to snuff out otherwise substantively meritorious cases). On the other hand, cases that are too ‘small’ to merit private actions (and for which litigation funding is unlikely to be available) would have (proportionately) the same deterrent effect as a result.

Responsive regulation

Scholars have identified public redress as a species of ‘responsive regulation’ and argue that it can play a useful role in competition enforcement.⁵⁹ Responsive regulation calls for the adaptation of enforcement mechanisms to be more flexible, collaborative, and ‘hybrid’.⁶⁰ It features the participation of a broader array of stakeholders, including victims of infringements and challenges the dichotomy between public and private enforcement.⁶¹ Such tripartism (ie, the involvement of victims alongside regulators and infringers) helps put restorative justice at the heart of public enforcement. Studies in other fields suggest that responsive regulation contributes to more effective enforcement outcomes,⁶² for infringers and victims alike.⁶³ Its participative approach also promotes greater awareness of the relevant issues and enhances overall compliance.

Nevertheless, there are potential drawbacks associated with employing responsive regulation methods, including those identified by Makris, such as the risk of over- or under-enforcement, regulatory failures, and the potential undermining of rule of law principles.⁶⁴ One particular concern is that infringers might be seen as being let off lightly if their conduct escapes compulsive and punitive responses. A related concern is the perception that regulators engaging in responsive regulation are prone to growing too close to the firms they regulate.

In this connection, it is important to note that responsive regulation is not a ‘one-size-fits-all’ approach. On the contrary, it recognizes the need to take into account the specific circumstances of a case.⁶⁵ This is particularly relevant in competition enforcement, given the spectrum of anticompetitive conduct, ranging from vertical arrangements that are not obviously harmful to egregious cartels. Public redress can flexibly accommodate the need for graduated, proportional sanctions in light of the severity of the relevant conduct. For example, compulsive disgorgement and restoration may be used in more egregious cases, while commitments and voluntary redress schemes may be more appropriate for less severe conduct. The availability of a wide range of techniques helps create redundancy in the enforcement system, enabling a regulator to tailor solutions to a given case.⁶⁶

To conclude, competition law and regulatory scholarship have advocated enhancing competition enforcement and compliance through the adoption of responsive regulation techniques and have identified avenues for doing so. Public redress is a key plank of responsive regulation: it has the potential to deliver restorative justice for victims, promoting tripartism, and enhance more effective and longer-term compliance by businesses.

Competition advocacy

Public redress helps enhance the profile of competition enforcement by delivering direct compensation to affected persons. The victims, particularly consumers, can thereby directly share in the benefit of public enforcement. As discussed in the previous section, this promotes awareness of the underlying issues and a ‘competition culture’, whereby businesses and people become familiar with applicable competition rules. This in turn leads to greater compliance.⁶⁷

This is consistent with competition authorities’ focus on delivering impactful results for ‘real people’ and addressing ‘cost of living’ issues. For example, the CMA prioritizes cases it believes will generate the most impact and carry the greatest strategic significance in terms of the benefits that are expected to be felt by people, businesses, and the UK economy.⁶⁸ This includes areas where consumers spend the most time and money.

4. APPROACHES IN OTHER JURISDICTIONS/FIELDS AND TYPOLOGY

USA

The USA long embraced the provision of redress as part of public enforcement. This is reflected in the decisional and litigation practice of several federal agencies, including the FTC, the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission, the Consumer Financial Protection Bureau (CFPB), and the Food and Drug Administration.⁶⁹ Commentators have termed such grant of monetary relief to those affected by the impugned conduct as ‘public compensation’. Public compensation occurs to varying degrees in diverse areas, including consumer protection, housing, advertising, securities, employment, and antitrust.

There are three main ways through which an agency might secure public compensation: (i) seeking the disgorgement of gains from the infringers⁷⁰; (ii) seeking an amount based on the victims’ losses from the infringers (somewhat confusingly called ‘public restitution’)⁷¹; and (iii) more exceptionally, adding civil penalties levied on the infringers to a compensation fund.⁷² As regards the required proof of a causal link between the impugned conduct and the gains/losses as well as quantum, the US courts have held that causation may be presumed if the agency can present a ‘reasonable approximation’ of the gains (for disgorgement) or the losses (for public restitution). The burden then shifts to the infringer to show that the amount is not a reasonable approximation.

The US courts have consistently held that the primary purpose of public compensation is deterrence (rather than the compensation of victims). For example, in SEC v First City Financial Corp,⁷³ the Court of Appeals for the District of Columbia Circuit stated that ‘[disgorgement] may well be a key to the SEC's efforts to deter others from violating the securities laws.’⁷⁴ Similarly, in FTC v LoanPointe, the Tenth Circuit held that ‘the two purposes of disgorgement’ were ‘stripping the wrongdoer of ill-gotten gains and deterring improper conduct’.⁷⁵ Commentators argue that this deterrence rationale supports the lighter proof requirements for public compensation (in contrast with private damages actions, where remedying the harm is the main objective and greater precision in its quantification is therefore warranted).⁷⁶ This common deterrent purpose underlying both civil penalties and public compensation also explains the negative correlation between them (eg the civil penalties should be lower if the infringer was, through public compensation, made to divest its ill-gotten gains or offer a compensatory lump sum, and vice versa).

There have been lively scholarly debates on whether public compensation precludes private damages actions.⁷⁷ On the whole, US case law shows that public compensation does not generally preclude later private claims for monetary relief.⁷⁸ There is, however, a notable exception under the Clayton Act, which authorizes state attorneys general to ‘bring a civil action in the name of such State, as parens patriae on behalf of natural persons residing in such State […] to secure monetary relief’ for breaches of relevant federal antitrust laws.⁷⁹ Any persons given notice of such an action that chose not to opt out within a specified period are precluded from bringing their own claims.⁸⁰ Even where preclusion does not apply, the fact that victims have received partial or full redress through public compensation should be taken into account in later private claims (eg public compensation offering full relief should prevent certification of a later class action).⁸¹

European Union

The European Commission does not enjoy the power to order redress, either by way of restoration or disgorgement. Nevertheless, in a handful of cases over the years, the European Commission has taken into account the infringers’ provision of redress or compensation in determining the level of the fine against them. This includes Nintendo in 2002 (a vertical infringement),⁸²  Pre-Insulated Pipe in 1998 (a cartel),⁸³ and General Motors Continental in 1974 (an abuse of dominance).⁸⁴

Focusing on Germany at Member State level, the Federal Cartel Office (FCO) has in the past accepted compensation in lieu of imposing fines under section 32b GWB⁸⁵ and some has even adopted such an approach in a horizontal price-fixing case.⁸⁶ Furthermore, recent legislative changes might pave the way for public redress’ greater role in German competition enforcement.

On 7 November 2023, the 11th amendment to the German Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen) (ARC) came into force.⁸⁷ The changes, among other things, strengthen the FCO’s ability to order the disgorgement of gains by an infringer of competition law. Despite having had this power for some years, the FCO has never used it, apparently due to practical difficulties in quantifying such gains as required by the relevant pre-amendment provision.⁸⁸

To revitalize this disgorgement power, the 11th amendment introduces presumptions that (i) an infringement resulted in an economic benefit for the infringer and (ii) this benefit amounts to at least 1 per cent of the turnover attributable to the affected products or services over the entire duration of the infringement. Rebuttal is only possible by showing that the legal entity was not involved in the impugned conduct, or that the undertaking as a whole did not generate enough profits. The scope of application is broad, and the FCO can order disgorgement even for minor infringements that might not merit a fine. The monetary upper limit for disgorgement is set at 10 per cent of the total worldwide turnover of the undertaking achieved in the previous year.

This new power was welcomed by most commentators, particularly for abuse of dominance cases.⁸⁹ It is still too early to assess whether the changes might lead to greater use of the disgorgement power by the FCO and how, in a given case, the FCO may weigh its use against the imposition of civil penalties. It also remains to be seen how the use of disgorgement might interact with follow-on private damages actions. Nevertheless, the expected greater prominence of disgorgement in a jurisdiction with a similar public enforcement framework and common EU legislative roots as the UK is significant.

UK: other fields

In adjacent fields, such as financial regulation, consumer protection, and utility regulation, the competent UK agencies already enjoy the power to order redress upon finding a breach of the relevant rules. In determining the quantum of the redress, the profits accruing to the infringers may, in certain circumstances, be taken into account.

In financial regulation, the UK Financial Conduct Authority (FCA) may require firms it regulates to ‘establish and operate a consumer redress scheme’ if, among other things, it appears to the FCA that (i) ‘there may have been a widespread or regular failure by relevant firms to comply with requirements applicable to the carrying on by them of any activity’ and (ii) ‘as a result, consumers have suffered (or may suffer) loss or damage in respect of which, if they brought legal proceedings, a remedy or relief would be available in the proceedings.’⁹⁰ The FCA has exercised this power to order compensation for unsuitable investment⁹¹ and pension⁹² advice by financial firms that it regulates.⁹³

The FCA also has the power to order relevant persons found to have contravened market abuse regulations to pay compensation to investors that have suffered losses as a result of the breach.⁹⁴ In determining the amount of the payment, the FCA may have regard to (i) profits that have accrued to the person and/or (ii) losses that one or more persons have suffered as a result.⁹⁵ The FCA exercised this power for the first time in respect of a trading update by Tesco that gave a false or misleading impression about the value of publicly traded Tesco shares and bonds. Tesco was required to pay compensation estimated to be worth around £85 million (plus interest) to affected investors through a compensation scheme administered by a third party on Tesco’s behalf.⁹⁶

In consumer protection, competent agencies (including the CMA) may seek ‘enhanced consumer measures’ either (i) as part of an undertaking from businesses or (ii) to be included in an enforcement order by the court.⁹⁷ ‘Enhanced consumer measures’ include ‘measures offering compensation or other redress to consumers […] who have suffered loss as a result of the conduct which has given rise to the enforcement order or undertaking’.⁹⁸ The CMA has secured undertakings from care home providers to refund residents as part of an investigation into possible unfair fees,⁹⁹ and from providers Polymerase Chain Reaction (PCR) coronavirus disease 2019 travel tests to refund consumers as part of a probe into unfair terms and practices.¹⁰⁰ In 2024, the CMA received direct powers (ie without having to apply to the court) to order an infringer to take such ‘enhanced consumer measures’.¹⁰¹

In utility regulation, the Gas and Electricity Markets Authority (which governs Ofgem) may make a consumer redress order requiring a regulated person that has violated a relevant condition or requirement to remedy the consequences of that contravention.¹⁰² Ofgem’s Enforcement Guidelines provide that ‘Alternative Action can be used in lieu of opening an investigation into a potential breach, as part of closing a formal investigation, or during an investigation to address ongoing concerns.’ ‘Alternative action’ includes ‘voluntary action, such as the implementation of specified remedial or improvement actions and/or making voluntary/redress payments to affected consumers, other appropriate parties or to the Ofgem voluntary redress fund’.¹⁰³ For example, in EON, Ofgem agreed to resolve an investigation into possible customer service failings by EON by way of alternative action. As part of this, EON agreed to a redress package of £5 million, comprising (i) a £4 million total payment to 500,000 customers who were potentially impacted by poor customer service provision during the relevant period and (ii) an additional payment of £1 million to Ofgem’s Voluntary Redress Fund.¹⁰⁴

Typology of public redress techniques

In the sections above, we considered various public redress techniques in other jurisdictions and fields. Drawing on these and the works of scholars and relevant stakeholders, we have developed a typology for the key public redress options as follows:

• Compulsive restoration: This refers to an infringer being ordered by the regulator/court to make victims whole. The redress is measured by the victims’ losses. Examples include US agencies’ express statutory authority to seek ‘public restitution’ and the FCA’s power to order a regulated firm to establish a consumer redress scheme as discussed above.

• Compulsive disgorgement: This refers to an infringer being ordered by the regulator/court to account for and disgorge gains from an infringement. Examples include US agencies’ express or implied statutory authority to seek disgorgement and the German FCO’s enhanced disgorgement powers as discussed above.

• Plea bargain redress: This refers to an infringer offering redress in exchange for the reduction of fines. We use the term ‘plea bargain’ to draw an indirect analogy with the practice in certain jurisdictions, whereby a prosecutor may provide a concession in return for the defendant pleading guilty to a lesser charge in criminal proceedings. The redress can be measured by victims’ losses or the infringer’s gains, although a loss-based measure is likely more prevalent in Europe. Examples include certain UK regulators’ practices of imposing a lower fine where an infringer puts forward remedial measures.

• Contracted redress: This refers to a firm offering redress as part of binding commitments to a regulator/court. In such cases, no infringement is established. As in option (c) above, the redress can be gain or loss-based, but it is expected that most infringers would opt for a loss-based measure. Examples include Ofgem’s practices of resolving investigations by way of ‘alternative actions’ as discussed above.

• Fair funds: This term originates from the US SEC’s power under section 308 of the Sarbanes Oxley Act of 2002 to add fines to a fund for the benefit of the victims of the relevant infringement. We use the term to denote powers conferred on a regulator to add fines levied on infringers to a compensation fund, either for the same case or also for future cases.

We have mapped these techniques onto two analytical grids. The first grid (Figure 1) plots the options by the goals they pursue and the degree of compulsion. The second grid (Figure 2) plots the options by victims’ identifiability and the precision with which the redress quantum is to be assessed. This necessarily involves a degree of generalization (eg disgorgement might equally serve the compensatory goal in a given case where victims’ losses closely approximate the infringer’s gains).

Public redress typically pursues the twin goals of deterrence and compensation. The two goals are, in our view, not antithetical to each other, and the same technique might promote both goals. Some techniques, however, might promote deterrence more so than compensation, and vice versa. For example, the disgorgement of profits may bear limited relation with harm suffered by the victims, but specific deterrence requires that an infringer be deprived of the benefit from its wrongdoing. Public redress also falls within a spectrum, from voluntary (eg offered by a business as part of its binding commitments) to compulsive (ie ordered by the regulator or court).

Public redress also varies in terms of the precision with which the quantum is assessed. Where redress is offered by an infringer, either in the form of commitments or in exchange for a fine reduction, it is generally in its interest to be as exacting in the calculation of the quantum as possible. This helps reduce the risk of private claims being issued (to the extent they are not precluded) despite the provision of public redress, as well as avoiding over-compensation. In contrast, where redress is ordered, regulators would generally prefer a rough and ready methodology (if permissible) on grounds of efficiency and administrability. A related factor is the identifiability of the victim class. All things being equal, one would expect the class to be less identifiable (if at all) for disgorgement of profits. Fair funds fall in the middle, as they may also include payments reserved for future cases, including where victims of a given infringement are not readily identifiable.

5. KEY QUESTIONS FOR UK COMPETITION ENFORCEMENT

The practices and experience from other jurisdictions and fields highlight key considerations for formulating an approach to redress in UK competition public enforcement, which we examine in this section.

Direct power to order redress

Assuming that a regulator should play a role in securing redress for victims of competition infringements, the question arises as to whether it should be able to order redress directly or whether it must apply to the court to do so. In general, a direct power to order redress should be simpler for a regulator to administer and this might increase the frequency of its use. Conversely, while a requirement to apply to the court could provide judicial oversight at an earlier stage, the greater administrative inconvenience might deter a regulator that enjoys the discretion whether to do so from proceeding.

As discussed above, a number of UK regulators, such as the FCA and Ofgem, already enjoy the power to require regulated firms to set up consumer redress schemes in certain circumstances. The CMA has also recently been empowered to require an infringer of relevant consumer protection laws to provide redress.¹⁰⁵ Accordingly, there does not appear to be any principled impediment for the CMA and concurrent regulators to be empowered to order redress for competition infringements. This would, however, require legislative changes.

Disgorgement as a basis for redress

The second question is whether disgorgement may form the basis for redress. Specifically, in adopting this approach, the measure of the redress will be by reference to the profits accruing to the infringers. Unlike in the USA, where public enforcers frequently order disgorgement by infringers, the role of disgorgement in UK public enforcement is less settled.

In the private enforcement context, the English courts have given mixed signals.¹⁰⁶ In Devenish Nutrition v Sanofi Aventis, the Court of Appeal held that a claimant may not seek disgorgement of profits in a cartel damages action because (i) such a remedy is not available to non-proprietary torts or (ii) alternatively, it is only available in exceptional cases, but that case was not so as compensatory damages would have been adequate.¹⁰⁷ More recently, however, in Evans v Barclays Bank and Others concerning the certification of proposed collective proceedings, the Court of Appeal stated that:

[i]n a case where there is evidence that defendants have gained from their unlawful conduct but it is difficult to determine to what extent this caused loss to the class, it might be possible for the Court to adapt less standard remedies, for instance by ordering disgorgement of profits.¹⁰⁸

In contrast, as discussed above, in certain contexts, UK regulators empowered to order redress may already have regard to the profits accruing to an infringer when determining the redress amount. Furthermore, the CMA already takes into account evidence that the infringer may have derived a benefit from the infringement as a factor in determining whether to increase any fine for specific deterrence.¹⁰⁹ The CMA’s Penalty Guidance further states that, in order to promote effective deterrence, the fine should exceed an undertaking’s ‘likely gains’ from an infringement by a ‘material’ amount, rather than simply neutralizing its ‘likely gains’.¹¹⁰

Using civil penalties for redress

The third question is whether it should be possible to use amounts collected as civil penalties to compensate victims in the same case and/or in future cases. In the USA, only selected agencies (eg the SEC and the CFPB) have been granted such power, in the wake of significant events such as major corporate and accounting scandals or the Global Financial Crisis. It is therefore likely that this option, if deemed appropriate, would only be available through legislative interventions.

A flexibility to pay victims with fines could be particularly relevant in the following situations: (i) where there is only one infringer (eg the impugned conduct is a unilateral abuse) and the infringer is insolvent; and (ii) where there are multiple infringers (eg the infringement concerns a cartel) and one or more of them is insolvent. Under scenario (i), if the infringer can afford the fine but not the redress, the fine may be used to provide redress. If the infringer cannot even afford to pay the fine, however, the redress gap might only be filled if the agency is empowered to use fines collected from other cases to pay redress.¹¹¹ Under scenario (ii), fines collected from those able to pay may potentially be used to cover the insolvent infringer’s ‘share’ of the redress.

Ofgem’s Voluntary Redress Fund provides an example of how this practice might be implemented in a modified manner in the UK. Under the scheme, energy companies and other regulated persons may agree with Ofgem to pay a sum of money to the fund ‘in lieu of, or in addition to a financial penalty for breaches of licence conditions’.¹¹² Although the payments are not strictly speaking fines, they are in effect equivalent given that they are made in lieu of, or in addition to, any fines. Ofgem has appointed an independent party to ‘ensure the voluntary redress funding is well targeted, and is allocated in the best way to maximise the long-term positive impact…for energy consumers…in particular those in vulnerable circumstances’.

Quantification of redress

The fourth question concerns how, and the extent of precision to which, any redress should be quantified. For cases involving the most egregious conduct that is harmful by its very nature and obviates the need to establish effects, competition authorities benefit from considerable administrative efficiency. Even for cases that requires the showing of effects, the courts have consistently held that the authority is not required to quantify the actual or potential effect of the practice on competition.¹¹³ It would impose a significant burden on competition authorities if they could only order redress by quantifying the harm with exactitude.

The use of the ‘reasonable approximation’ framework in the USA helps address this concern. The public deterrence rationale underlying the lighter proof requirements for the agencies to order redress applies with equal force in the UK. Such an approach will also be consistent with the German approach of introducing a presumed level of (gains-based) redress. Furthermore, even in the private damages context, the English courts have consistently held that difficulties in assessing damages are no bar to compensation and that a ‘broad-axe’ approach could be adopted to achieve practical justice.¹¹⁴ In Trucks, for example, having declined to adopt either side’s estimate, the CAT wielded a ‘broad axe’ and assessed the overcharge at roughly the mid-point of the figures put forward by the parties’ experts.¹¹⁵ Such a ‘broad axe’ approach should apply a fortiori in UK public enforcement. Furthermore, in cases involving numerous claimants, coupon remedies could be an appropriate alternative to damages.¹¹⁶

Preclusion of private claims

The final question is whether and to what extent any redress in public enforcement should preclude private claims. The right to compensation for victims of competition infringements stemmed from the EU Treaties and, therefore, notwithstanding Brexit, should only be abrogated in exceptional circumstances.

It is illustrative to consider the possibility, under the Consumer Rights Act 2015, for an infringer of competition law to submit a voluntary redress scheme to the CMA (or a concurrent regulator) for approval.¹¹⁷ In appropriate circumstances, the CMA may grant a penalty discount of up to 20 per cent in light of the scheme.¹¹⁸ Although no scheme has ever been approved on this basis, as discussed below, the CMA has applied a 20 per cent penalty reduction in one case where the limited number of beneficiaries meant that a statutory scheme was unnecessary. Relevant for present purposes, the CMA’s guidance makes clear that ‘[p]otential beneficiaries who decide not to apply for redress under an approved scheme do not lose their right to seek compensation through other means’, such as bringing a private action or participating in a collective action.¹¹⁹ Nevertheless, the CAT may take the redress scheme, which is deemed a form of alternative dispute resolution, into account in assessing, among other things, whether to stay proceedings, certify collective proceedings, or determine the appropriate costs order.¹²⁰ This presents a pragmatic way to prevent potential conflicts arising from the co-existence of public and private redress.

6. IMPLEMENTATION

In the previous sections, we identified the key public redress options and considered their high-level compatibility with the current competition enforcement framework in the UK. It is clear from that analysis that some options might be more readily implemented within the existing framework, while others might require legislative reforms. Furthermore, as discussed below, there are examples of the CMA having employed some of them in past competition cases (see Figure 3 below).

Current practices

Contracted redress

The CMA may accept binding promises, or commitments, from a party instead of continuing its investigation.¹²¹ Commitments may be structural or behavioural, or a combination of both, and may include a business agreeing to cease or modify its conduct or even divesting itself of part of its business.¹²² Although not listed as an example within the relevant guidance, the CMA has previously accepted the offer of redress as part of a party’s commitments.

In October 2019, the CMA accepted binding commitments offered by Aspen to address competition concerns identified by the CMA as arising from Aspen’s bringing all existing fludrocortisone marketing authorizations in the UK under its ownership.¹²³ Aspen’s commitments included a payment of £8 million to the National Health Service. The CMA noted that this voluntary payment would ‘[avoid] the Government having to launch court proceedings for damages’.¹²⁴ The CMA’s former Chief Executive Andrea Coscelli added that ‘[t]he £8 million Aspen has agreed to provide will save the NHS the time and expense of seeking damages in court’ and that the CMA ‘welcome[d] Aspen approaching [it] to find a new way of addressing the CMA’s concerns’.¹²⁵ Significantly, although Aspen’s payment did not have a preclusive effect, the relevant health departments each provided an assurance that Aspen’s payment would be taken into account in the event of any subsequent damages proceedings.¹²⁶

Plea bargain redress

The CMA’s Penalty Guidance provides that the CMA may apply a penalty reduction ‘where an undertaking obtains approval for a statutory voluntary redress scheme’.¹²⁷ No such scheme has been approved to date since its introduction in October 2015. The Penalty Guidance goes on to provide that the CMA may also ‘reduce an undertaking’s penalty where it considers that an undertaking has [otherwise] made appropriate redress’, for example, where only one party has been harmed by the infringement.¹²⁸

In Fludrocortisone, the CMA fined Aspen and two other suppliers for an anticompetitive agreement, whereby the latter agreed to stay out of the fludrocortisone market so that Aspen could maintain its position as the sole supplier in the UK.¹²⁹ In setting the size of the fine against Aspen, the CMA took into account the £8m NHS payment by Aspen discussed above as part of the commitments it offered (to resolve one aspect of the broader investigation). First, the CMA decided not to apply an uplift for specific deterrence on the basis that Aspen had derived financial benefits from the infringement (the CMA would otherwise have done so).¹³⁰ Secondly, the CMA reduced the fine by 20 per cent ‘[i]n recognition of [Aspen’s] payment, including the administrative savings for the NHS in pursuing damages actions through Courts’.¹³¹

Another early example is Independent Schools, where the OFT, one of the CMA’s predecessors, imposed only a nominal fine on fee-paying schools that took part in a cartel to exchange information on future fees.¹³² In doing so, the OFT had regard to a number of ‘exceptional features’ of the case, including notably, the schools’ agreement to make an ex gratia payment to fund a £3 million educational trust fund for the benefit of pupils who attended the participant schools during the academic years in respect of which fee information was exchanged.¹³³ The OFT also took note of the fact that the participant schools were all non-profit-making charitable bodies.¹³⁴

Possible future evolutions

Lack of redress as an aggravating factor?

As discussed above, the CMA’s Penalty Guidance provides for possible fine reductions when an infringer has provided, or offered to provide, redress. The CMA also takes into account evidence that the infringer may have derived a benefit from the infringement as a factor in determining whether to increase any fine for specific deterrence.¹³⁵ Conversely, an infringer’s failure to offer redress may, in appropriate cases, also constitute an aggravating factor meriting an increase in the fine size. This may, for example, be the case where the infringement has caused widespread, readily measurable harm, where the victims are particularly vulnerable, and/or where it is expected that follow-on litigation would unlikely be viable.

Redress as a condition of settlement?

Settlement is a process under which businesses under investigation that are prepared to admit liability and accept a streamlined administrative procedure may benefit from a fine reduction of up to 20 per cent by the CMA.¹³⁶ Settlement is ‘at the CMA’s discretion’ and, among other things, the CMA will have regard to factors such as ‘the likely procedural efficiencies and resource savings that can be achieved’.¹³⁷

Generally, only procedural efficiencies and resource savings pertaining to the administrative procedure are taken into account. There does not appear to be any principled reason, however, why efficiencies that may be achieved through the offer of redress, reducing/eliminating the need for private litigation, could not also be eligible for consideration. The main beneficiaries of such efficiencies are the affected victims, whose ability to obtain redress properly concerns the CMA. The CMA may, however, also benefit in other ways. The CMA may intervene in private actions that consider the application of competition law and has exercised that power in nine cases as of November 2024, all of which were brought on a standalone basis and took place in the last 4 years.¹³⁸ In deciding whether to intervene, the CMA considers whether ‘it can contribute to the proceedings in addition to how the case is presented by the existing parties to the action and in doing so assist the CAT’. Even where the CMA opts not to intervene, it would likely have diverted valuable resources that could otherwise be deployed elsewhere to reach that determination.

Accordingly, the CMA could, in future, consider such anticipated efficiencies arising from an infringer’s offer of redress in deciding whether to enter settlement discussions. Conversely, the failure of a business under investigation to offer redress could, in appropriate cases, militate against settlement.

Compulsive restoration?

As discussed above, other regulators, such as the FCA and Ofgem, already enjoy the power to order firms to set up consumer redress schemes in certain circumstances. Ofgem also maintains a redress fund, the contributions to which could be used not only in the case at hand but also for future cases and wider purposes. In this connection, the CMA has received direct powers to order firms to offer redress in the exercise of its consumer protection functions.¹³⁹ It is conceivable that a future parliament might grant the CMA similar powers in competition cases as well. In that scenario, the CMA would likely be able to build on its experience with using such powers in consumer protection cases.

Guiding principles

No ‘one-size-fits-all’ approach

Public redress techniques, as discussed above, fall within a spectrum. At one end, there are techniques that are more voluntary and compensation-oriented. The parties have more control over assessing the redress quantum and identifying the relevant beneficiaries. At the other end, there are more compulsory techniques that are more deterrence-focused. The regulators play a greater role in setting the redress quantum and the need to identify specific beneficiaries assumes lower importance.

The choice and availability of the techniques should depend on the specific circumstances of a given case. There is no ‘one-size-fits-all’ approach. Relevant factors in making the determination could include the nature and severity of the conduct,¹⁴⁰ the administrability of any redress schemes, the characteristics of the victims and the individual impact on them, the identifiability of gains/losses, the practicability of distribution, and the availability of alternative redress avenues, such as private actions.

This flexible approach is consistent with, and is already reflected to some extent by, the CMA’s current approach. For example, the CMA’s guidance on commitments notes that it is ‘very unlikely to accept commitments in cases involving secret cartels between competitors or a serious abuse of a dominant position’.¹⁴¹ Thus, all things being equal, in cases involving more egregious conduct, more compulsive techniques could take priority to the extent that public redress is warranted (see Figure 4 below).

Formalization of public redress options

As discussed above, the CMA (and its predecessor the OFT) have already employed certain public redress techniques, specifically contracted redress and plea bargain redress, in a few cases. Such cases, however, have remained relatively rare and infrequent. It is also notable that no voluntary redress scheme has so far been approved since its introduction by the Consumer Rights Act 2015. There is, accordingly, scope to increase the use of public redress options.

Transparency and publicity help promote legal certainty, consistency of practice, and good administration. Specifically, the provision and publicization of additional guidance could help ensure that the suitability of public redress is considered in each relevant case. First, any such guidance would send a clear signal that the CMA places significant value on effective redress for victims of competition infringements. This could in turn prompt parties to consider providing redress more proactively. Secondly, lesser-known practices, such as the fact that a party can offer monetary redress as part of any commitments, could receive more attention. This may in turn increase their frequency. Thirdly, more guidance could be provided on the types of cases where public redress would be particularly desirable, such as where the conduct has caused widespread harm, where the victims are consumers, and/or where litigation is unlikely to materialize. Similarly, if it is deemed appropriate, guidance could also identify categories of conduct (eg those that are more established and/or subject to prior enforcement actions) for which public redress might be prioritized.

Continuous assessment and improvements

Following the steps outlined above, the use of public redress techniques could become more common in UK competition cases. As the experience in other jurisdictions shows, however, public redress does not operate in a vacuum and its role depends on the evolution of other redress options. The current renewed focus on public redress in the USA, for example, coincides with the apparent concern that private actions have been subject to increased limitations.¹⁴²

It is, therefore, important to take stock at regular intervals and recognize that an optimal design at a particular juncture may not be suitable forever. More generally, through systematically tracking public redress’ uses and evaluating the experience, it would be possible to identify best practices and areas for improvement. Such assessment should encompass a holistic consideration of whether other redress options, such as private enforcement, could have delivered a better outcome, including in light of future developments. This could in turn inform whether it would be necessary to introduce further changes to the guidance, whether existing powers are adequate, and whether new techniques should be developed.

7. CONCLUSION

Public redress mechanisms have been termed ‘new technologies’ for providing compensation to victims of relevant infringements, particularly consumers.¹⁴³ Public redress provides an alternative, or complement for, renewed efforts in recent years aimed at remedying the perceived shortcomings of private enforcement in Europe. In contrast with litigation, which remains relatively slow, cumbersome, and costly, public redress could rapidly deliver some measure of compensation to a wide class of affected persons at lower costs. Public redress also provides a more flexible instrument adaptable to the circumstances of a case, such as where the infringer is a charitable body or is insolvent. It breaks down the stark dichotomy between public and private enforcement and enables a competition authority to better shape outcomes.¹⁴⁴ In addition, public redress helps fill notable justice gaps where private enforcement is unviable, such as due to the ‘small’ size of certain cases, and in turn, promotes general deterrence, understanding of competition authorities’ role, and a wider competition culture.¹⁴⁵

Our survey of the approaches in other jurisdictions identifies a wide range of public redress techniques. We have developed a typology that maps these options onto grids that highlight the differences in their goals, voluntariness, and precision of distribution and quantum assessment. We have also identified and examined key questions that merit consideration in formulating an approach to public redress in the context of UK competition enforcement. This analysis illustrates that some public redress techniques can already be accommodated within the existing framework. Indeed, the CMA has already employed them in a small number of cases over the years. But it also highlights that more compulsive measures would require legislative changes.

We have also examined the CMA’s practices and possible future evolutions, including both incremental changes already open to the CMA and broader changes that might require legislation. Recognizing that the use of public redress techniques to date has been relatively sporadic, we have set out proposed guiding principles on how they might take a more central stage going forward. We recognize, in particular, that there is no ‘one-size-fits-all’ approach, and careful consideration should be given to the circumstances of each case. Overall, public redress is a powerful instrument in a competition authority’s toolkit and has the potential to significantly enhance the overall effectiveness of competition enforcement. In an era marked by growing inequality and cost-of-living challenges, the delivery of tangible remedies and outcomes to people has never been more important.

DISCLAIMER

The author wrote in his personal capacity, including as a graduate law student at University College London, and the views expressed do not represent the views of the Competition and Markets Authority.

Footnotes