Claims in respect of Loss or Damage arising from Competition Infringements (Competition Act 1998 and Other Enactments (Amendment)) Regulations 2017 - Motion to Approve

– in the House of Lords at 1:00 pm on 2 March 2017.

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Moved by The Earl of Courtown

That the draft Regulations laid before the House on 20 December 2016 be approved.

Photo of The Earl of Courtown The Earl of Courtown Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, these regulations implement key aspects of the EU damages directive. The damages directive aims to make it easier for consumers and businesses to bring private action claims for damages. It applies only where there has been a breach of European competition law, which may or may not be accompanied by a parallel breach of national competition law.

Among other things, the directive covers a range of issues affecting a claimant’s ability to have access to compensation, including access to the relevant information to support their claim; the time within which a claim must be brought; and incentives aimed at encouraging businesses to settle a claim early. The directive also offers protections for small business defendants, cartel leniency applicants and defendants’ commercially sensitive information, all of which help make the regime robust and fair to both consumers and businesses.

The United Kingdom has long been at the forefront in Europe on providing access to damages for breaches of competition law. The directive recognises the strengths of UK law in this area and is closely based on it. The Consumer Rights Act 2015 introduced changes to the law to help consumers and businesses bring private actions. The Act widens the jurisdiction of the Competition Appeal Tribunal and promotes collective proceedings and settlements.

As this directive is being implemented so soon after the changes implemented by the CRA, we are conscious that we should try to avoid unwelcome confusion and disruption. In our consultation with stakeholders, we initially proposed the usual “copy out” approach to implementation to ensure full compliance. However, respondents highlighted the risk that this carried the potential for undermining important, established UK case law and creating confusion. The Government’s approach therefore relies as much on case law and changes to court rules as on the introduction of new regulations.

I now turn to “gold-plating” in respect of the single regime. The damages directive applies only where a business has caused harm following a breach of European competition law or both national and European competition law in parallel. It does not apply to harm resulting from a breach solely of national competition law. However, owing to the close relationship between the United Kingdom and EU competition regimes, the Government intend to apply the provisions to cases following breaches of UK law even when no parallel breach of European competition law exists. This is technically gold-plating, but it will provide for a simpler and more transparent regime and limit the amount of satellite litigation about which regime applies in a particular case. At consultation, stakeholders supported this approach.

I want now to set out the way in which the Government plan to handle the transition from the old regime to the new. The directive states that its substantive provisions should not be applied with retrospective effect, whereas procedural provisions can be backdated. The directive does not designate measures as substantive or procedural. To ensure clarity, the regulations distinguish substantive provisions from procedural.

Substantive new rules will apply only to claims where both the infringement and harm occurred after the coming into force of the implementing legislation. Procedural provisions will apply to proceedings which begin after the commencement of the implementing legislation and may apply to cases where the harm or infringement took place before the coming-into-force date. All provisions of the regulations are substantive save for the provisions on disclosure and use of evidence.

I will now run through the Government’s approach to some of the key provisions of the directive. The regulations introduce into UK law for the first time a presumption that cartels cause harm and a ban on the award of exemplary damages. The directive sets out provisions to tackle the passing-on of overcharges by a business which has been a victim of, for example, a cartel. Claimants may be several steps removed from the infringing company which is ultimately responsible for paying damages. If an infringement has caused price increases which have been passed along a distribution chain, those who suffered the harm in the end can claim full compensation.

In addition, the directive provides a defence where the claimants have passed on the whole or part of an overcharge. Well-established principles of tort law establish the right of indirect purchasers and the principle of passing on. The recent judgment of the Competition Appeal Tribunal in the Sainsbury’s v Mastercard case explicitly set out both the rights of indirect purchasers and the validity of the passing-on defence. Therefore, we are not legislating for these provisions. We are, however, using the regulations to set out who has the burden of proving that there has been passing-on and what must be established in the different circumstances.

It is important that SMEs are held accountable for their actions as part of a cartel. It is also important that any damages that an SME pays are proportionate to its role in the cartel. The regulations therefore ensure that an SME is liable only for the loss or damage caused to its direct or indirect customers. The protection applies only where the SME held less than a 5% share of the market for the duration of the offence or where paying damages would make the SME economically unviable. If an SME was the ringleader of a cartel, coerced others to join or had previously breached competition law, it would not be protected.

The regulations also limit the liability of successful applicants to a cartel leniency programme. As is the case with SMEs, a cartel leniency applicant is liable only for the loss or damage suffered by its direct or indirect customers, unless claimants cannot gain full compensation from other cartelists. To further protect the UK’s important cartel lenience regime, the regulations also ensure that leniency and settlement submission are protected from disclosure.

Part 5 of the regulations deals with the limitation periods, or prescriptive periods in Scotland. These are the periods during which a claimant can make a claim. The Competition Act 1998 already establishes a stand-alone limitation regime for competition private actions in the UK. The Consumer Rights Act 2015 amended this regime to bring it closer to the Limitation Act 1980 and similar legislation in Scotland and Northern Ireland.

Limitation periods already meet the requirements in the directive that they run for “at least five years.” They will remain six years in England, Wales and Northern Ireland, and five years in Scotland. The limitation or prescriptive period starts when the competition infringement has ceased and a claimant knows or can reasonably be expected to know the identity of the infringer; that an infringement has occurred; and that harm has occurred arising from the infringement. The regulations ensure that the limitation period is suspended in various circumstances—for example, where a competition authority in the UK or the European Union is investigating the behaviour to which the complaint relates.

The regulations introduce a requirement that a defendant who settles a claim should be protected from contribution claims by co-defendants. This will protect the incentives for defendants to settle early, providing them with confidence that they will not be subject to multiple further claims once they have settled with affected parties.

What I have set out today is what this Government believe is a full implementation of the directive which retains important aspects of the UK’s current regime and will work for UK consumers and businesses in the long term. I commend the draft statutory instrument to the House.

Amendment to the Motion

Moved by Lord Hodgson of Astley Abbotts

At end insert “but that this House regrets that the draft Regulations were laid without Her Majesty’s Government taking the opportunity to bring forward proposals for a regulatory structure which will maintain public trust and confidence in the provision of funding for third party litigants.”

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Conservative

My Lords, I thank my noble friend for his explanation of this legislation. I know that he has been landed with it at the last minute and he has taken on this pretty technical subject with his usual verve and aplomb. Despite being technical, the subject is nevertheless important in that it has at its core the important issue of the protection of consumers.

Turning to the legislation, my noble friend drew attention to the fact that this is a twin-track approach. We have taken the whole EU directive but maintained a good deal of existing UK law and practice alongside it. He referred to it as gold-plating but, as he equally fairly pointed out, the approach was approved of and supported by the practitioners. In those circumstances, who is to complain about that? My concern about these regulations is that the Government have not taken the opportunity to bring forward, or at least signal their intention to bring forward, proposals to make sure that sufficient transparency and accountability exist for a regime by which funding is provided by third parties otherwise completely unconnected with the action to enable competition and other cases to be brought before the court. This process is known as third-party litigation funding.

Before going any further, I must remind the House that in my registered interests I am a non-executive chairman of a company that provides analytical services to companies involved in third-party litigation funding. The company is not party to the actions, it merely provides services and has no direct involvement. That having been said, I shall get back to the background.

The growth of third-party litigation funding has been prompted by two important developments. First, there is the general increase in contingent fee litigation, where any damages awarded do not go exclusively to the injured party but can be shared with others, including those who provided the means to bring the case to court. This increase has arisen in large measure following the passage of the Legal Aid, Sentencing and Punishment of Offenders Act, which in turn implemented the measures recommended by Lord Justice Jackson in his 2010 report on the costs of civil litigation. That is the first big driver of growth.

Secondly, there has been the change brought about by the Consumer Rights Act 2015, referred to by my noble friend in his opening remarks. This made the important change of abandoning the traditional approach of opting in to a case—you had to indicate your wish to be involved in order to participate—in favour of an opt-out approach where unless you say, “I do not want to be part of the case”, you are assumed to be in. As a result, huge and potentially hugely profitable cases have become easier to lodge. The numbers are huge. The Mastercard case now before the courts, again referred to by my noble friend, has been brought on behalf of 46 million individual consumers and alleges damages of £14 billion. Importantly, an external funder put up £40 million on terms that are not entirely clear to bring the case to court.

It is important that my remarks today should not be seen as an attack on the concept of third-party litigation funding. It has a useful role to play in intercompany disputes and in helping to bring consumer cases. Many third-party litigation funders are entirely respectable and open their activities to public scrutiny. At least one company is listed on the Stock Exchange. However, we have an iceberg problem. What is going on with that part of the industry operating below the water line? As an industry in the United Kingdom, third-party litigation funding is virtually unregulated. The Association of Litigation Funders, the ALF, is a voluntary, self-governing organisation. I understand that there are currently seven members but anecdotal evidence suggests that there are more than 20 firms operating in this field in the UK, so less than half belong to the association. It has a code of conduct but lacks any real enforcement capability. The maximum fine it can impose is £500—trivial given the nature of the sums we are discussing—and the maximum penalty is expulsion from the association. That would not prevent the particular firm continuing to provide funding for third-party litigation.

Moreover, funders have benefited from a loophole in the law. When the Jackson proposals on contingency litigation were brought in with the LASPO Act, they included various restrictions on insurance companies and legal practices involving themselves in funding third parties. I imagine that Lord Justice Jackson’s purpose was to inhibit the growth of a litigation culture. However, no such inhibitions have been placed on the work of third-party litigation funders, who have thrived commensurately.

In an article in the legal trade press on 7 February, the law firm RPC—formerly known as Reynolds Porter Chamberlain—claimed that litigation funding went up by 26% over the last year from £575 million, or just over half a billion pounds, to £723 million or just over three-quarters of £1 billion. There are further anecdotal suggestions that because legal firms cannot themselves fund these cases directly, some are now packaging up a bundle of cases to pass on to third-party litigation funding firms.

We stand on the threshold of a whole new approach. To date, third-party litigation funders focused mainly on commercial claims and massive consumer ones. Now they are beginning to focus on smaller-value claims. Augusta—not an ALF member—is looking to provide funding down to £50,000 to bring a claim. Burford—an ALF member—launched what it calls a specialist “sprint” product or service for lower-value claims, providing funds between £25,000 and £50,000 per case. This development may well increase the rise of entirely lopsided arrangements between experienced third-party litigation funders and smaller groups of inexperienced plaintiffs. All this means that a number of important issues must be addressed—and the Government need to be aware of them.

First, how are the costs of funding the litigation being dealt with in any distribution? This is what is known in the trade as the waterfall. Who gets the first bit of the money? For example, assume that a third-party litigation funder provided funding on the basis of his receiving 25% of any damages after deducting the costs of the case. A consumer might believe that his receiving 75p in the pound was not an unreasonable percentage. However, if the costs of the case turned out to amount to 30% of the damages awarded, then his share is not 75% any more but 52.5% because he has only 75% of the 70% available after the costs are deducted.

Secondly, should a third-party litigation funder be able to receive 100% reimbursement of all costs before any payment is made to the plaintiff? Should the injured party have some rights to share in at least some way any awards made?

Thirdly, should there be a maximum percentage payable to third-party litigation funders? I went to a seminar on third-party litigation funding and was astonished to hear a funder say proudly, “We would never take on a case where we received more than 50% of the damages”. I assume that he would be quite happy to take, say, 45%. There is nothing absolutely wrong with that percentage so long as the person on the other side of this bargain, the plaintiff, is able to judge that what is being sent to him is fair and he has been adequately advised that it is so.

Fourthly, who controls the case and who ensures that continuing or discontinuing any action is done on a basis that is fair to all parties? Third-party funders may well raise a discrete fund, a block of money that will be invested in a particular group of cases. Say there are a dozen, 11 of which have now settled perfectly satisfactorily. There will be a terrible temptation for the funder to bring the twelfth and last case to an immediate conclusion irrespective of the interests of the plaintiff, wind up the fund, show its investors that it has made a lot of money, and no doubt go out and try and raise another, rather larger fund and start all over again.

Finally, if a funded case is lost, does the third party have any exposure to adverse costs on the principle that the loser pays, and is his maximum exposure the amount of money that he has devoted and put into the case? Could there be cases where the funded parties—the plaintiffs—could be exposed to these costs in the event of the third-party funder not providing it?

So far I have focused on the position of the individual but there is also a growing danger for businesses, especially smaller businesses. This arises from the increasing use of what is known in the US as a blackmail settlement. This involves a marginal case where the third-party funder calculates that an award of damages will probably cover its costs but there is a chance of a major payout. To avoid tying up management time and incurring costs—maybe extensive costs: professional fees and so on—for defending a case that may drag on for years, the accused firm may conclude that it is cheaper to settle, even if it believes it has a good case.

I will conclude by pulling the threads of my argument together. I am not arguing that third-party litigation funding should be banned. There is undoubtedly an access to justice argument. But there are reasons to fear that some of the emerging practices that claim to be providing consumer protection or litigation services to business are resulting in good returns to the funders and their legal advisers, while low and negligible returns are being given to the injured parties, at the same time diverting much corporate management time from its central duty of growing successful businesses, on the success of which the future prosperity of the country depends.

I will finish as I began, with Lord Justice Jackson. In his 2010 report he said:

“I accept that third party funding is still nascent in England and Wales and that in the first instance what is required is a satisfactory voluntary code, to which all litigation funders subscribe. At the present time, parties who use third party funding are generally commercial or similar enterprises with access to full legal advice. In the future, however, if the use of third party funding expands, then full statutory regulation may well be required, as envisaged by the Law Society”.

I argue that now, five years on, we are at that point. Whether statutory regulation is the right answer I do not know but I argue strongly that the present regulatory regime is inadequate. The Government have a choice. They can stand by and await an inevitable scandal and, I fear, be caught in the backwash, or they can now set in train, with the various regulators, a scheme to bring forward a regulatory system which has the transparency and accountability to maintain public trust and confidence. I urge the Government to choose the latter course now. In particular, I regret that they have not chosen the introduction of this statutory instrument to make that choice. I beg to move.

Photo of Lord Faulks Lord Faulks Conservative 1:15, 2 March 2017

My Lords, I am grateful to the noble Earl for outlining the regulations and to my noble friend Lord Hodgson for his contribution to the debate and for drawing my attention to this opportunity to alert Her Majesty’s Government to what I believe is a highly significant development in the funding of litigation in the United Kingdom. He speaks as someone with experience of business and I speak as a practising lawyer.

As a law student I was introduced to the rather mysterious rules concerning barretry, maintenance and champerty. These rules meant, as I understood them, that it was only the parties to litigation who should finance or benefit from it. For a recent and authoritative discussion of the issue, I recommend the lecture delivered by the noble and learned Lord, Lord Neuberger, as President of the Supreme Court at Gray’s Inn in May 2013.

At the heart of the problem is that the law is expensive and yet it is important there should be access to justice. Yet there was a historical prohibition on litigation funding by third parties, based in part on the acknowledgment that the law could become an instrument of oppression and injustice. Parliament itself, in setting up the legal aid scheme post war, provided an exception to the principle, one which was broadly welcomed. Similarly, insurance- and trade union-funded litigation made significant inroads into that prohibition.

Things moved on with the gradual restriction on what was an extremely expensive legal aid scheme with the development of conditional fee arrangements. After a modest beginning in 1990, they were extended through the Access to Justice Act 1999 but eventually got out of hand. What had once been a scheme intended to help indigent litigants turned out to be a bonanza for lawyers and oppressive to defendants, including government bodies such as the NHS.

Sir Rupert Jackson was invited to investigate the matter and the result was legislation in the form of the LASPO Act, which has done much to rebalance the CFA system. CFAs are not as profitable now and thus less likely to be employed. Damage-based agreements, which are in effect contingency fees as opposed to conditional fees, allow lawyers to a certain extent to share the fruits of litigation with their clients but they have not had very widespread take-up.

Although CFAs were primarily funded by insurance companies, there has now developed, as my noble friend Lord Hodgson said, a substantial third-party litigation funding market. There is, as I understand it, very little hard evidence as to the extent of the market and the evidence is anecdotal. But it is becoming increasingly clear that large-scale litigation is now regularly funded by third-party financiers.

The Civil Justice Council has had some engagement with the issue and has helped develop the code referred to by my noble friend but I wonder whether the Government have any idea how extensive this market is. The code is voluntary and the penalties for failing to follow it are derisory so that in effect this is a large and unregulated market. There is a real risk of abuse. Of course, even conventional litigation presents challenges to those involved. A lawyer’s interests may not always be entirely congruent with those of his or her client. But where the litigation is an investment, and those running the case are not regulated, as are solicitors and barristers, the risk of a wholly commercial approach to issues of justice is worrying.

Once a party knows that the other side has third-party funding, this can bring about a form of bullying in relation to the non-funded party. The temptation not to be straight with opponents is considerable. Accepting offers early because of external financial pressures nothing to do with the litigation can distort the process. Commercially driven pressures from expert serial litigation funders on lawyers themselves can result in, to put it gently, ethical challenges. These challenges are compounded by the innovation of alternative business structures. The explosion of litigation following the Access to Justice Act 1999 resulted in the evolution of a number of parasitic organisations, not least claims management companies. Although these are increasingly regulated, many lawyers doubt they need to exist at all or that they have much to do with the interests of justice.

What should the Government do? I respectfully suggest that the Government should get a real grip on what the market is doing. I am aware that the Ministry of Justice is reviewing the LASPO Act in terms of whether it has resulted in a loss of access to justice. This will mean considering the availability of legal aid and how the new post-LASPO CFA system is working. This would also provide an opportunity for the Government to consider third-party funding of litigation generally.

I do not expect my noble friend to respond in detail to these points. He may well say that this statutory instrument is concerned with consumer rights and it needs a little time before the Government decide how well matters are working. But experience shows that this is a vigorous market which reacts quickly to economic pressures. America is not a good example of a satisfactory litigation system. For the Government to make any meaningful interventions, they need to know what is going on. Should they not require far more information to be provided by litigants about the source of their funding than is currently the situation? All government departments are, to some extent, affected by litigation and there is room for some cross-departmental work. I hope my noble friend will alert other departments to this troubling phenomenon.

Finally, I remind the House that personal injury litigation has just got a great deal more profitable. This week, the Lord Chancellor altered the discount rate. This will affect the NHS and every motorist in the country. It may help to fan the flames of third-party funding. It is time the Government seized the initiative.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Education) 1:30, 2 March 2017

My Lords, I am grateful to the noble Earl for introducing the substantive subject of our discussion—the regulations before us—but we have also been treated to a masterclass in other areas. The combined effect of the speeches from the noble Lords, Lord Hodgson and Lord Faulks, has been to raise what might be a very serious issue. The whole House owes them a debt of gratitude for doing so, even if they had to be inventive in trying to work out the main points they wished to make within the constraints of this instrument.

I was going to say very much the same things as the noble Lord, Lord Faulks, but in a much more workmanlike way, since I lack his legal and other experience. I sense in this the beginnings of a scandal that will affect the way statutory measures before us and others will be taken. These speeches gave us the benefit of the business perspective—it is clear that this is an ongoing issue—and the legal dimension, where the ethical issues raised will have to be addressed. The ongoing review of LASPO gives the Government an opportunity to move quickly on this. The noble Lord, Lord Hodgson, said that this needs to be nipped in the bud quickly if it is not going to run out of steam, particularly in the light of the changes announced on personal injury. I back what has been said and hope the Minister will be able to respond positively.

We have no particular objections to the statutory instrument itself, which is a sensible way forward based on existing UK law. The point has been made that the model derived under the Enterprise Acts and various legislation that has gone through this House in recent years has been used to bring forward a model for the whole of Europe.

I will make three or four minor points. It was good to hear during the tail end of today’s debate on consultation that consultation does work in certain instances, and that the consultation responses—albeit mainly from the professionals, not consumers—went for a rather more gold-plated result that would simplify the work being done. There is nothing wrong in that. It is good that a loophole has been closed that could have been exploited through different jurisdictions operating in different ways in Europe and in the UK.

The Minister made a good attempt to resolve an issue that might still cause problems further down the line: the rather ill-defined difference between procedural and substantive issues. I do not expect him to deal with that today, but he might reflect on how this will play out in a letter. The Explanatory Memorandum is simply a list: it does not give a sense of how the litigants or those affected will respond in practice. I would be grateful if he explained that.

There is one other point it would be interesting to have more detail on. The approach taken to SMEs is right in principle, but it is surprising to learn that the SMEs caught up in what might be regarded as cartel issues, and which therefore might be subject to penalty, will be limited to those with a 5% share. The problem is that a 5% share of market limit, presumably on a UK basis, will not deal with what happens in the real world of SMEs’ engagement with very local areas. A small business will be small in its reach, as well as in terms of employees and turnover. Therefore, there may be local effects that would not be caught by the 5% share limit. I do not expect a response on this today, but it would be interesting to hear in due course what the Government’s response would be.

I have two final points. Any response from this side of the House to a statutory instrument from this department usually asks why common commencement dates have not been followed. The Minister knows that, because I have raised the issue with him before. An account is given of why it is not necessary to wait until 6 April on this occasion, but it does not explain why the delay occurred. I do not want an answer today, but at some point it would be interesting to know what held back this provision. As the Explanatory Memorandum anticipates, people want to use it immediately. It came into effect this time last year, but it has taken since then for the statutory instrument to come forward. That is probably to be regretted.

Finally, the debate that led to the introduction of the amendment from the noble Lord, Lord Hodgson, was prompted by a clause in the Consumer Rights Act, with which the House engaged this time last year, relating to opt-in and opt-out arrangements. He explained that third-party litigation funding has had a chance to thrive and grow. He could have mentioned that when we discussed this, we were also interested in the possibility of an alternative dispute resolution approach to a number of the issues that were raised. If there was an ADR approach we would not be seeing so much of this going into the courts, so there would be less third-party funding. Again, I am not looking for a response to that, but it might be noted by the department.

We have a deficiency here. The proposal in the directive was that every sector of our economy should have adequate ADR systems in place. The Government, for their own reasons—we pressed them hard on this—have not gone down that route, so appropriate ADR solutions do not exist in all sectors. Where they exist they have been encouraged, but where they did not they have not been put in place. In retrospect, that might have been a better solution, although of course, one can say that in hindsight of many things.

Photo of The Earl of Courtown The Earl of Courtown Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I thank all noble Lords who have taken part in the debate: my noble friends, Lord Faulks and Lord Hodgson, and the noble Lord, Lord Stevenson. I will deal with the points he raised first, in particular, the procedural issue. I will write to him on that; likewise on the SME 5% share point.

The noble Lord is well known to me regarding commencement dates and such like, as he said, but as far as the directive being implemented later is concerned, in our consultation we proposed to follow standard practice and copy out the directive. Respondents to the consultation highlighted the risks this presented to the UK’s established case law. We listened to these concerns and changed our approach. The regulations do what they need to do to supplement the court rules and case law in order to implement the directive in full. Drafting these regulations has been complex. We wanted to get them right rather than rush them through.

I understand the concerns of my noble friends Lord Faulks and Lord Hodgson. I welcome their questions on whether the Government could have used the implementation of the directive to bring forward proposals for a regulatory framework. The damages directive does not include measures relating to third-party litigation funding. Taking any action through these regulations would be going beyond the powers we have to regulate. The Government are not persuaded that any changes to the regulation of third-party litigation funding are warranted at this time. However, the Government will keep this matter under review as the market for third-party funding develops, and are ready to investigate further should the need arise.

My noble friend Lord Hodgson mentioned that the introduction of opt-out in private actions has led to the increase in third-party litigation funding. Opt-out collective actions were introduced to encourage more consumers to seek redress. During the introduction of these actions, the Government put in place measures to deter claims at the Competition Appeal Tribunal whose aim was to make money for litigation funders.

My noble friend also mentioned that there are no safeguards in relation to third-party litigation under the CRA. The Competition Appeal Tribunal has powers to ensure that, first and foremost, consumers have access to damages awarded following opt-out competition claims. For example, under CAT controls, the assumption is that residual money that is not claimed by the consumers will be given to charity.

I thank my noble friends Lord Faulks and Lord Hodgson for raising their concerns about the impact of third-party litigation funding. The last Government accepted the recommendation of Lord Justice Jackson that a voluntary code of practice be agreed. This work was undertaken by the Civil Justice Council, and the code came into force in 2011. Although the Government have not done a formal review of the effectiveness of third-party litigation funding, they have said that they will keep this under review, as I mentioned earlier. If noble Lords have particular concerns, I urge them to set these out in writing and I will ensure that they are passed on to the Justice Minister.

The Government are committed to reviewing the operation of the regime covering private actions for competition damages by the end of March 2019. I have heard noble Lords’ concerns, but the government position is clear, and it would not have been possible to use the damages directive as a vehicle for this issue. I ask my noble friend to withdraw his amendment to the Motion.

In closing I stress that, as I mentioned in my opening speech, the statutory instrument contributes further to the recent major reforms to consumer and competition law introduced through the Consumer Rights Act 2015. It will make it easier for consumers and businesses to bring private actions for damages where they have suffered loss as a result of breaches of the competition prohibitions set out in Chapters 1 and 2 of the Competition Act 1998 and in Articles 101 and 102 of the Treaty on the Functioning of the European Union. I commend the draft statutory instrument to the House.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Conservative

My Lords, I thank my noble friend Lord Faulks for his expert legal advice and insights into this problem, which align with my experience, and the noble Lord, Lord Stevenson, for his general support regarding the dangers we face. I also thank my noble friend for replying. It is good to know that a review is ongoing and that in March 2019, we may be slamming shut the door of the stable—assuming the horse is still inside. He is perfectly right, of course, that as far as competition cases are concerned, the Competition Appeals Tribunal controls the gate, which may provide some ability to slow things down.

All I had hoped to do today was to warn the House, and through the House the Government, of what I see as some substantial difficulties and dangers that may lie ahead. If nothing is done and difficulties do ensue, I promise my noble friend that I will try to avoid saying, “I told you so”. But in the meantime, I beg leave to withdraw the amendment.

Amendment to the Motion withdrawn.

Motion agreed.