Were you overcharged for delivery of a new car?

This is a guest post by Mark McLaren. All views expressed are Mark’s own and not necessarily shared by Which?. 

On behalf of millions of motorists and businesses who bought or leased a new car or van between October 2006 and September 2015, I’m taking five major shipping companies to court under new powers granted by the Consumer Rights Act 2015.

Did you or your business buy or lease a new car between October 2006 and September 2015?  Millions of UK consumers did and, if you’re one of them, you might be due back a little money. Why?

Because unbeknown to us all until recently, some shipping firms transporting many new cars across the world were running an illegal cartel from 2006 until 2012, exchanging commercially sensitive information, coordinating prices and dividing customers amongst themselves to avoid competing with each other.

The European Commission fined the shipping companies €395 million in 2018 for the conduct.

Shipping costs are passed on by the car manufacturers to UK customers, as part of the delivery charge so, in essence, our court action is on behalf of all the affected consumers, to recover the increased delivery charges – a sum which could total around £150 million for all potentially affected consumers. 

The claim covers the period to 2015 because there is a time-lag before the cartel’s impact on prices disappears.

There’s lots more information about the Car Delivery Charges claim – which was filed in the Competition Appeal Tribunal (CAT) in February 2020 – at our new website where you can register for updates and find out if your car was affected.

Why does this matter?

Fines by regulatory bodies such as the European Commission do not go to the victims of the illegal conduct – you – the consumer.

That’s why the new collective action scheme – strongly supported by Which? – created under the Consumer Rights Act 2015 allows for large aggregate claims to be brought on behalf of the consumers whose individual claims are not significant enough to make it possible for them to bring a claim. 

If no claim was brought the cartelists would, in effect, be able to keep the profits of their illegal cartel and consumers would not be compensated for the harm suffered.

How much is the claim worth?

Though the total sum being claimed is in the region of £150m (the precise amount and how it is distributed to consumers will be determined by the CAT if our claim is successful), the amount of the car delivery overcharge per car is obviously a relatively small sum because millions of cars were shipped to the UK during the period the cartel was operating.

For some car makes, the amount could be up to £60, but the average overcharge is likely to be around £10. 

While these sums are small, it could nevertheless make a welcome contribution to the daily costs of running a car (some petrol perhaps). Families (or businesses) that bought more than one car between 2006 and 2015, such as on a regular 3-year lease deal, could see their claim value really build up. 

What are the risks if I register?

There is no risk. The claim is being brought as an ‘opt-out’ collective action under a regime introduced by the Consumer Rights Act 2015, where consumers who fall within the class definition (i.e. any purchaser of an affected car or van) are automatically included in the claim, unless they choose to exclude themselves by ‘opting-out’ of the class.

Most consumers will not need to do anything until the claim is successful, when they will need to make a claim to receive their part of the damages back in full. 

In the meantime, consumers can register their interest to be kept updated, and should retain documents such as registration, tax or insurance documents as proof of ownership. 

Consumers won’t pay any legal fees because the litigation funder is paid out of any damages that are not claimed by consumers, nor will they have to pay the other side’s legal fees.

How long will the case take?

There is no easy answer to that question as there are lots of legal hurdles to jump over.

The first one – expected by mid 2021 – is for the CAT to certify the claim. 

Of course, settlement could be reached before then or at any time but, if that is not possible, the case could take years to conclude. 

Whatever happens, as the Class Representative, my overriding duty is to act in the best interests of the class: those affected, maybe that includes you as a consumer. 

What happens to unclaimed damages?

For consumers who do not claim their portion of the damages, the law requires unclaimed damages to go to charity, specifically The Access to Justice Foundation. 

This is another reason to bring the claim. This sum will be the amount left over after the costs of the litigation have been deducted from the unclaimed damages. 

The litigation itself is being funded by what is called a 3rd Party Funder – Woodsford Litigation Funding – who are funding the case because they believe that the claim will succeed.  

If the claim is successful, they will receive a return on their investment.

Are opt-out collective actions working for consumers?

Unfortunately, no mass consumer claims have yet been brought to a successful conclusion using the Consumer Rights Act 2015. 

We hope ours may be the first. Parliament set down that opt out claims under the CRA can only be brought for competition law claims and not wider consumer claims such as claims for data breaches or product liability.  

Please tell us what you think about the car delivery charges claim and register for updates here. 

Do you think the ‘opt-out’ approach is the best way to recover money owed to consumers? Will claims like this be an effective deterrent for cartels? 

Should the collective action scheme go beyond competition law claims? 

This was a guest post by Mark McLaren. All views expressed were Mark’s own and not necessarily shared by Which?.