Collective Redress: National Franchised Dealers Association (NFDA) Position Paper
About the NFDA
The NFDA is part of the UK's Retail Motor Industry Federation (RMI). The NFDA represents the interests of franchised motor vehicle dealers and authorised repairers operating in the UK motor retail sector.
The NFDA is the UK’s leading retail trade association in the motor sector, with over 4,700 dealers. The vast majority of the NFDA's members are SMEs who sell directly to consumers (as well as corporate customers, fleets etc).
An outline of Collective Redress in the UK
OFT research has shown that many businesses view the present approach to private actions as one of the least effective aspects of the UK competition law regime. Additionally, BIS has recognised the cost and complexity of challenging anti-competitive behaviour.
The Department of Business, Innovation and Skills ran a consultation between 24 April 2012 and 24 July 2012 entitled “Private actions in competition law.” NFDA submitted a response to this consultation.
NFDA Director, Sue Robinson,was also invited by Ed Davey, during his time as Minister for Employment Relations and Consumer Affairs at BIS, to sit on a convened panel with a number of legal representatives to discuss the implementation of collective actions in the UK.
An outline of Collective redress in the EU
The EU Commission ran a consultation entitled “Towards a coherent European approach to collective redress” between 4 February 2011 and 30 April 2011. As the title suggests, the consultation aims to identify common legal principles on collective redress across member states. The concept has been discussed for a number of years at European level and the Commission plans to continue further work in 2012 in order to look at an EU framework for collective redress. The EU aim to ensure they provide an effective mechanism for the enforcement of laws.
Proposals
NFDA encourages BIS to explore measures to facilitate the bringing of representative and collective actions by trade associations on behalf of their members in the UK. This will have the effect of depersonalising legal disputes, for example between smaller businesses and larger vehicle manufacturers without running the risk of jeopardising important commercial relationships.
Furthermore, where individual loss is small compared to the costs of litigation, collective redress is an efficient means of dealing with claims from a group of affected undertakings against one specific defendant. It does not in itself facilitate unmeritorious claims. Crucially, collective redress via a representative body means that SMEs, in particular, are less likely to be excluded from access to justice as a result of limited financial resources or because of the damage they fear will be done to commercial relationships.
NFDA would support an opt-out regime for collective redress, given the potential problems with encouraging affected parties to opt-in. Additionally, although the BIS consultation specifically relates to competition law, NFDA see no reason why representative actions should not be extended to other areas beyond competition law.
Summary
NFDA agrees that improvements to the current system of collective redress - including the ability of a trade body to bring a stand alone or follow-on claim on behalf of member businesses - would enhance the application of competition law in the UK and strengthen the deterrent effect of the UK competition system.
NFDA is of the opinion that the Government should also look to extend representative action beyond the confines of competition law, or at the very least explore the possibility of improved regulation and remedies in respect of unfair commercial practices in B2B relations along the lines currently being considered by the European Commission.