City wary as OFT backs private actions

City lawyers have reacted cautiously to plans put forward by the Office of Fair Trading (OFT) to allow private actions in competition cases.

The plans are part of a series of measures in a consultation paper released today (18 April) by the body, which also proposes the use of representative actions for businesses and consumers and encourages out-of-court settlements when competition law has been breached.

The paper also raises the possibility of creating a competition ombudsman similar to the financial ombudsman.

Hogan & Hartson competition partner John Pheasant said: "The OFT is focusing particularly on user-friendly consumer actions. There have been worries that enhancing representative actions in competition will lurch Europe towards the class action system used in the US....but it does not look like the OFT is going down that route."

Clifford Chance competition litigation partner Elizabeth Morony commented: "Broadly these proposals seem sensible, but it is important to focus on compensation where it is needed, not litigation for the sake of litigation."

OFT chairman Philip Collins had earlier claimed the plans would "promote a greater culture of compliance with competition law and ensure that public enforcement and private actions work together to the best effect for business and consumers".

The consultation, which is open to responses until 13 June, follows a European Commission Green Paper in December 2005 focusing on competition law. A workshop on the issues involved is to be held in July, after which the OFT will make its final recommendations to the Government.

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