Opt-out collective actions (i.e. US-style class actions) can only be brought in the UK as competition law claims.  Periodic proposals  to legislate to expand this regime to consumer law claims have so far faltered.  However, this is now back on the Parliamentary agenda.  Several members of the House of Lords have indicated their support for expanding the regime to allow consumers and small businesses to bring opt-out collective actions for breaches of consumer law, and potentially on other bases.

If implemented, this expansion would be very significant and would allow for many new types of class actions in the UK.  Tech companies are already prime targets as defendants to competition-related opt-out class actions.  An expansion of the regime to allow actions for breaches of consumer law, as well as competition law, would only increase their exposure further.

As there is now limited time for legislation to be passed to effect such changes before the UK Parliament is dissolved in advance of an upcoming general election, this may be an issue for the next Parliament.  It will therefore be important to assess what the UK’s main parties say on this – and any manifesto commitments – in the run-up to the election.

Background: Previous Attempt to Expand UK Opt-Out Class Actions Regime to Allow Non-Competition Claims

On 15 November 2023, an amendment to the Digital Markets, Competition and Consumers Bill (the “DMCC Bill”) (discussed in a prior Covington blog post here) was tabled in the House of Commons, to allow opt-out collective actions for consumer law claims.  The amendment was supported by a number of MPs, but not by the UK Government, and it was ultimately rejected.

Development: Renewed Support for Expanding the Regime

The DMCC Bill is now being considered in the House of Lords (which scrutinises and recommends amendments to legislation proposed by the House of Commons).  During a debate on 5 December 2023, several lords supported the idea of an extension to allow consumers and small businesses to bring opt-out actions for consumer law breaches.  Some lords went further, suggesting opt-out actions should be allowed in other circumstances (e.g. for data abuse claims).  

Significance of Expanding the Regime

Expanding the regime in the manner considered in the House of Lords debate would allow many new types of claim, and the potential defendants to such claims would also expand significantly.  Under the present regime, we have seen class representatives trying to stretch the boundaries of what is truly competition law, arguing that the alleged offending conduct (which is often in substance a breach of: consumer law, environmental law, or data protection law) amounts to a competition law breach on the basis it represents an abuse by the defendant of a dominant position.  However, if the opt-out regime is expanded, potential class representatives will not be limited to bringing competition claims, meaning that claims could potentially be brought more easily against a wider range of consumer-facing businesses.

Looking Forward

The bill will be discussed in the committee stage of the House of Lords’ review, beginning on 22 January 2024.  Amendments expanding the scope of the regime could then be included in the version of the DMCC Bill sent back to the House of Commons later this year for final consideration. 

The House of Commons may reject such amendments (as it did previously) and send a further revised version back to the House of Lords (and drafts can move back and forth in this way until there is agreement).  It is also quite possible that the DMCC Bill (whether or not any amendments are accepted) will not be passed before Parliament is dissolved in advance of the UK’s next General Election (expected in the second half of 2024). 

One other area to look out for is what the amended version of the DMCC Bill says regarding litigation funding agreements (“LFAs”) (which are used by third party litigation funders that fund collective actions).  The current version of the bill already includes a Government amendment designed to remove some of the difficulties faced by litigation funders in using LFAs to fund opt-out collective actions (following a Supreme Court decision in PACCAR, discussed in a prior Covington blog post here, and alert here).  However, a member of the House of Lords has indicated an intention to table an amendment to cover LFAs used in opt-in collective actions also.  The Government’s initial response to this has been to say that the DMCC Bill “is not the appropriate vehicle to deliver this aim” but it is “actively considering options for a wider response.” 

Covington is monitoring these issues closely.  If you have any questions on this topic, or collective actions in the UK more generally, please do get in touch with a member of the Covington team.

Photo of Louise Freeman Louise Freeman

Louise Freeman represents parties in complex commercial disputes, and co-chairs the firm’s Commercial Litigation and European Dispute Resolution Practice Groups.

Described by Legal 500 as “one of London’s most effective partners” and by Chambers as “a class act,” Louise helps clients to navigate…

Louise Freeman represents parties in complex commercial disputes, and co-chairs the firm’s Commercial Litigation and European Dispute Resolution Practice Groups.

Described by Legal 500 as “one of London’s most effective partners” and by Chambers as “a class act,” Louise helps clients to navigate challenging situations in a range of industries, including life sciences, technology and financial markets. Most of her cases involve multiple parties and jurisdictions, where her strategic, dynamic advice is invaluable.

Louise also represents parties in significant competition litigation proceedings, including a number of the leading cases in England.

Louise is a key member of our market-leading Privacy and Data Security Litigation team, which advises a broad range of international clients on data privacy-related litigation. She has recently represented a client in an intervention in an appeal in the leading UK case making new law in relation to both data privacy claims and class actions.

Photo of Sinead McLaughlin Sinead McLaughlin

Sinead McLaughlin has a broad commercial disputes practice, with a particular focus on crisis management and multi-party disputes, across a number of sectors, including advising major banks and financial institutions, media and technology companies.

Her work often requires her to work across a…

Sinead McLaughlin has a broad commercial disputes practice, with a particular focus on crisis management and multi-party disputes, across a number of sectors, including advising major banks and financial institutions, media and technology companies.

Her work often requires her to work across a range of practice areas, conducting internal investigations, advising clients in relation to investigations by regulators and other authorities, and acting in any subsequent disputes or litigation which may arise.

Sinead has significant experience working in-house (on secondment), which she leverages for the benefit of her clients. Her secondments have included a long secondment at a leading global investment bank where she advised the bank on a range of contentious commercial and regulatory matters, across the firm’s businesses throughout EMEA; and to a large global company specializing in in e-commerce, cloud computing and other services, advising on contentious data and privacy issues.

Her regulatory enforcement experience includes acting in investigations alleging market abuse, systems and controls failings, financial reporting errors and GDPR compliance matters; in litigation she has acted in claims relating to data and privacy issues, mis-selling, allegations of anti-competitive behavior, and a range of contractual disputes and tortious actions. Sinead also has significant experience acting for defendants in large group litigation (also known as collective actions) in the English High Court.

Photo of Alan Kenny Alan Kenny

Focusing on high value, multi-party and multi-jurisdictional matters, Alan Kenny advises companies, banks, institutions, and high-net-worth individuals on all stages of dispute avoidance and resolution.

Alan has notable experience of high profile and complex commercial litigation, competition litigation, and class actions. He acts…

Focusing on high value, multi-party and multi-jurisdictional matters, Alan Kenny advises companies, banks, institutions, and high-net-worth individuals on all stages of dispute avoidance and resolution.

Alan has notable experience of high profile and complex commercial litigation, competition litigation, and class actions. He acts for clients in a broad range of industries with particular experience in financial services, technology, fast moving consumer goods, commodities, and media.

Alan has represented clients in:

  • Pre-action negotiations;
  • Mediation;
  • Commercial litigation before the English High Court and Court of Appeal (and internationally with local counsel);
  • Competition litigation, including class action proceedings before the UK’s Competition Appeal Tribunal;
  • International arbitration and trade association arbitration under a variety of rules, including LCIA, HKIAC, SCAI, LMAA, GAFTA and FOSFA;
  • Responding to enquiries from – and defending enforcement proceedings brought by – regulators in the UK and internationally;
  • Bringing competition-related complaints to the European Commission, leading to investigations and dawn raids;
  • Proceedings to obtain emergency and interim relief, including: security, vessel and container arrest, freezing orders, disclosure orders, Norwich Pharmacal and Bankers Trust orders, delivery up of passport orders, search orders, committal orders, and anti-suit injunctions;
  • Settlement negotiations;
  • Proceedings to enforce judgments; and
  • Proceedings to compel UK-based third parties to produce evidence under the Hague Convention for use in foreign proceedings.

Alan is a contributing editor of the International Comparative Legal Guide to Litigation and Dispute Resolution.

Alan’s recent pro bono work includes:

  • Advising an international development charity working to combat poverty and climate change, to settle disputes with distributors relating to its projects to provide access to solar power in Malawi and Zambia.
  • Representing a charity that provides young people with opportunities to explore orchestral music, obtaining a judgment and third party debt orders to successfully recover payments made to a catering company for services that were not provided.
  • Representing a vulnerable, single-parent immigrant family facing deportation to obtain rights of residence and access to public funds and pursue UK citizenship.
  • Representing a charity that works with vulnerable women and children to remove defamatory statements relating to the charity and its staff from third party websites, search engine result pages, and other media.