What does the new DMCC Act mean for Private Litigation?

The DMCC Act strengthens the existing regime for damages in the competition litigation space:

• It gives the courts and the Competition Appeal Tribunal (CAT) the discretion to award exemplary damages for individual claims in particularly egregious competition law cases i.e. damages awards over and above the actual harm suffered. This change stems from the fact that awards of exemplary damages were prohibited in competition law by the EU Damages Directive (implemented in 2017). However, in a post-Brexit landscape, the Government has sought to provide an additional deterrent for competition law breaches. Exemplary damages will not however be permitted in collective proceedings.

• The Act also permits the CAT to grant declaratory relief, i.e. a legally binding statement on the application of competition law to a given set of facts. The change applies to both individual and collective actions, and means that a party can now request the relief without needing to apply for an injunction or present a claim for damages.

The DMCC Act introduces the prospect of claims under its new digital regulatory regime for Big Tech:

• The Act enables any person who has suffered loss or damage from a breach of a 'requirement' imposed on a firm designated with 'strategic market status' (SMS firm) to bring private proceedings in relation to the harm suffered.
  
  
• Claims may relate to breaches by an SMS firm of Conduct Requirements, Pro-Competitive Interventions or requirements to comply with commitments. See our briefing on scope of the digital regulation regime.
  
  
• Any breach decisions reached by the CMA will be binding on courts (the High Court and the CAT), meaning that the person harmed can bring "follow on" claims in this space

There are, however, some notable omissions in the new Act:

• The much-debated expansion of the CAT's jurisdiction (including opt-out collective proceedings) to the consumer protection space (which would have brought consumer protection in line with the current regime for competition law claims) has not made it into law. However, given the Act's significant overhaul of the consumer law investigatory regime, with the CMA now having powers to enforce consumer law directly, a finding of an infringement by the CMA may facilitate the bringing of private claims in the High Court (e.g. because claimants could adduce the CMA's decision as strong evidence of a breach). Whilst there is no equivalent to the CAT's opt-out collective proceedings regime in the High Court, claims could be brought on an opt-out basis using the representative action procedure in the High Court (although the route to a final damages award using that procedure is more difficult).
  
  
• At the DMCC Bill stage, the Government had sought to deal with the litigation funding issues raised by the Supreme Court's ruling in PACCAR. (In short, litigation funding arrangements that provide for the funder to receive a share of the damages awarded were found to amount to 'damage-based agreements' (DBAs), which are not currently enforceable in opt-out collective proceedings in the competition litigation space unless strict conditions are met). The provisions of the DMCC Bill that sought to reverse the effects of PACCAR were superseded by a wider Litigation Funding Agreements (Enforceability) Bill introduced to Parliament in March 2024 (and therefore the provisions were removed from the DMCC Bill). However, that Litigation Funding Bill did not make it though the wash-up following the announcement of the UK general election and therefore (even though the DMCC Bill did make it through the wash-up) PACCAR is not dealt with. It will now be a matter for the next Government, following the election.