On 17 July 2026, the Department for Business and Trade (DBT) published its proposals for significant reforms across three areas of the UK competition landscape. This post considers its proposed reforms to the opt-out competition law collective actions regime, which build on the DBT’s call for evidence (CfE), which ran between August and October 2025.

Scope

The DBT does not at present propose to expand the regime to other areas of law nor to restrict it to certain types of competition claim, noting that “more time is needed to get the current regime right”. However, it acknowledges that it has sponsored the Law Commission to examine mechanisms to improve the private collective action landscape for consumer law (which we discussed here).  Relevant findings from the DBT’s review will be taken into account as part of that work. 

Certification: Raising the bar

The DBT views the current legal test for certification as too low. It seeks views on three changes to rebalance the regime: 

• Moving from a relative to an absolute suitability test, requiring the Competition Appeal Tribunal (the CAT) to assess not merely whether a claim is better suited to collective rather than individual proceedings, but whether it is proportionate for the claim to use the opt-out mechanism at all, including consideration of its prospects of success.
• Giving greater weight to the cost/benefit analysis, so that claims likely to deliver negligible returns for class members relative to the cost of litigation cannot proceed. This builds on recent case law where concerns about low take-up levels by class members prompted the CAT to assess the likely benefits of the claim compared to its costs.
• Requiring the CAT to consider whether there is sufficient evidence for assessment of damages on an aggregate basis as a factor in certification. 

Changes to the certification test would represent one of the most significant shifts for the regime. Whether a higher threshold risks stalling the regime entirely, as certain stakeholders have argued, will likely be one of the key tensions in responses to the consultation. 

Financing and costs: More options, more oversight

The DBT acknowledges that litigation funding is an important access to justice tool, and that funders will only invest in claims that are expected to be commercially beneficial. However, responses to the CfE suggested that case law developments have added significant uncertainty, and that a viable claim now needs a quantum of at least £500 million to attract backing. The DBT also cites concerns raised by CfE respondents about spiralling costs, litigation tactics that drain budgets and unclear recoverable cost risk. It seeks views on the following measures: 

• Lifting the prohibition on damages-based agreements (DBAs) for opt-out collective actions. While the Government acknowledges historic concerns about stoking a "litigation culture", it hopes that an increase in funding options could increase competition and drive down the cost of litigation finance.
• Requiring the CAT to give an indication of the reasonableness of the funder's return and order of payment at certification, rather than leaving this to the end of a claim (albeit with the ability to revisit the assessment at the conclusion of the claim should there be a notable change).
• Introducing a presumption that funders receive their return straight away on award / settlement, without waiting for the conclusion of distribution.
• Requiring mandatory budgets from both parties following certification, with notable changes flagged to the CAT as proceedings advance, and cost sanctions for behaviour that unreasonably drives up costs or depletes budgets. 

ADR: Litigation as a last resort

The Government's position remains that litigation should be a last resort, with ADR to be encouraged. Nevertheless, there is recognition that meaningful engagement with ADR or early settlement can be difficult in the collective action context. The consultation considers:

• Empowering the CAT to encourage or require mediation between parties, with this power available following the exchange of expert reports.
• Extending Rule 45-style settlement offers (which carry automatic cost-shifting consequences, akin to Part 36 offers under the Civil Procedure Rules) to the opt-out regime.
• Enhancing the voluntary redress scheme model, which has never been used in its statutory form despite being introduced alongside the opt-out regime in 2015. The government seeks views on giving the CMA power to direct the establishment of a redress scheme and accept binding undertakings requiring redress in appropriate cases. This would be coupled with clearer protection against duplicative damages liability – a critical gap that risked companies paying twice for the same conduct. 

Interaction with public enforcement: Protecting leniency

The Government seeks views on full immunity from civil litigation for Type A leniency candidates, i.e. those first to report a cartel, with a carve out possible only where there will otherwise be no possibility of recovery (because, for example, all the other cartel participants have become insolvent). This is one of the consultation's most interesting areas. Under the CMA's leniency regime, the first business to report a cartel before an investigation is underway (Type A) receives immunity from penalties, which acts as an important tool of cartel detection. However, the Government recognises that the growth of private claims may deter potential applicants from coming forward if doing so exposes them to mass follow-on litigation.  The numbers tell a sobering story: average Type A applications have declined from 21 per year in 2014–16 to eight per year in 2022–24. 

We predict this proposal will provoke strong reactions. There is a widely recognised tension between policies aimed at incentivising cartel detection and those aimed at ensuring victims can obtain full compensation. The consultation attempts to address this by relying on joint and several liability between cartel participants, and the limited carve out mentioned above.  Whether the declining trend in leniency applications is sufficient to justify what would be a significant departure from the current position will be closely debated.

Distribution: Making redress real

The regime's success ultimately depends on whether money reaches the consumers and businesses who have been harmed. The DBT finds that there is evidence to highlight a need for improvement, based on the levels of take-up so far in the opt-out regime.

The DBT seeks views on practical measures to improve public trust and take-up of damages: listing claims on a dedicated section of the CAT website to increase awareness and trust; incentivising collaboration between parties to maximize distribution; and exploring whether any changes should be made to the default organisations undistributed damages should flow to.

Looking ahead

Taken as a whole, the proposals suggest a refinement of a regime that is still in its infancy, rather than a wholesale recalibration. The DBT is not looking to make major changes to the opt-out regime; it is looking to make it work better, more efficiently, and more proportionately, while steering parties toward alternative routes to redress wherever possible. Whether the proposed reforms can address concerns that the current regime is too costly whilst not always delivering for the class members it was designed to benefit, remains to be seen.

The consultation closes on 25 September 2026.  If you would like to discuss implications for your business or prepare a response, please get in touch.