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CBI expresses concerns over threat of “compensation culture“

New competition laws moving towards “opt-out” class actions for consumers could spark a new litigation industry and deter inward investment, according to the CBI.

The business organisation believe that the Department of Business consultation on private actions in competition law has the potential to magnify the total amount of potential claims and fuel a culture of litigation.

While the CBI supports the idea that businesses who cause significant losses to consumers should provide compensation, they believe that it should be done through Alternative Dispute Resolution, which offers quicker and cheaper forms of redress and a more favourable outcome for the consumer.

Matthew Fell, CBI Director for Competitive Markets, said: “At a time when the unrelenting focus must be growth, the Government should set out a strong message that the UK is open for business, not open for litigation.

“The Government is in danger of importing a number of features of the US class-action system into the UK, including opt-out arrangements, awarding of aggregate damages and a distribution of surplus funds.

“Victims of competition law breaches must receive proper compensation, but this should be delivered in a cost effective way, with litigation a last resort. The best way to achieve this is through Alternative Dispute Resolution methods, which are increasingly being used by business, and often result in a better outcome for both parties.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .