The Office of Fair Trading has closed an investigation into “whether a group of companies, and solicitors acting on their behalf, were using threats of defamation action to quell legitimate criticism online”. It was examining whether that had been an infringement of the consumer protection legislation enforced by the OFT under the Enterprise Act 2002.

In the statement on its site, it said that the investigation – started in 2010 following a referral by another regulator – is no longer an “administrative priority”.

This is because the group of companies under investigation have ceased trading and/or the individuals concerned are no longer engaged in the conduct in question and, on the basis of the evidence available, there appears to be little threat of reoccurrence in the near future.

The OFT’s announcement also referenced its submission to the MoJ consultation on the Draft Defamation Bill (June 2011, see end of post), which explains the OFT’s interest in defamation law and its recommendations for reform (with particular regard to the internet). In Part 1.10 it states:

Illegitimate threats of legal action can have a seriously chilling effect on freedom of speech, as well as legitimate sources of information such as web fora. Where used in an aggressive or misleading way by traders, they can stifle useful and accurate information that may benefit other consumers, so there is a potentially much wider negative impact of such interventions. Threats of defamation action against consumers expressing their honest views on a product or service can potentially distort market dynamics at the expense of consumers and fair trading businesses committed to maintaining their reputation. It is possible that illegitimate threats of legal action may constitute breaches of the Consumer Protection from Unfair Trading Regulations 2008. [Meeja Law’s emphasis]

Update:  The OFT has confirmed that the Serious Fraud Office referred this matter to the OFT in 2010 but states that “legal restrictions on disclosure inhibit the OFT from disclosing information about the company/companies which were subject to this investigation”. Additionally, it is “also unable to provide any detail on complaints or whether there are or will be any similar investigations by the OFT“.

This post originally appeared on the Meeja Law Blog and is reproduced with permission and thanks