Compensation claims offer cash injection for retailers

In a competitive market, retailers are having to become increasingly innovative to boost their bottom line and stay out of the high street graveyard.

But one way of injecting cash into a business that is often overlooked is making financial claims where retailers are entitled to compensation.

A noticeable trend in the sector is the rise of litigation being brought by retailers using third-party funding.

The retailer doesn’t pay the costs of bringing the claim, but receives the significant financial benefit of doing so.

Retailers are changing the way they view litigation, seeing it as a way to drive significant value into their bottom line.

Competition abuses could mean money

Companies have been subject to competition abuses for significant periods of time, resulting in them paying too much for services and products. The most recent example of this is the ‘truck cartel’.

The European Commission issued a record fine of €2.93bn (£2.62bn) against Europe’s leading truck manufacturers that participated in a cartel between 1997 and 2011, which resulted in customers being overcharged by around 10% to 20% for each truck they used.

Truck users are entitled to claim damages against the cartelists, which together account for more than 90% of trucks made in Europe.

“Those seeking to bring a claim are being advised to act quickly if they wish to obtain adverse costs insurance”

Leading retailers that transported goods using trucks during the cartel period are seeking compensation for the amount they were overcharged, which is seeing claim values in the many millions.

Litigation funding is being used by retailers to enable them to bring claims without any effect to their EBITDA, P&L or balance sheet. Funding is turning retailers’ claims into valuable assets.

Those seeking to bring a claim are being advised to act quickly if they wish to obtain adverse costs insurance, given a lack of capacity in the market due to the number of claims being brought.

With the right team in place, these claims can drive real value for retailers with no cost exposure or risk to them. Selecting the right group to work with that has experience and expertise in this area is fundamental to the success of any claim.