On 28 April 2016, the Competition Appeal Tribunal (the “CAT”) announced the commencement of a damages claim pursuant to the European Commission’s finding of a cartel in the supply of polyurethane foam. According to the CAT’s notice, the Claimants have applied for the case to be designated to the fast-track.
This is the fourth case in which such an application has been made, but the first three were not typical claims for abuse of dominance or anticompetitive collusion.
- The first and third cases were brought by providers of academic courses claiming abuse of dominance by accreditation bodies in failing to certify their courses. Certainly in the first case – the commencement of which we reported here, and the settlement of which we reported here– there was no obvious commercial incentive for the body to withhold accreditation, and the action appears to have been in response to simple inactivity.
- The second case (which we reported here) was brought by parties claiming unlawfulness in their own agreement. The sellers of land to Tesco claimed that a restrictive covenant preventing the vending of groceries from the land they retained was anticompetitive in violation of Chapter 1 of the Competition Act 1998.
It will be interesting to watch the polyurethane foam claim for two reasons.
First, it will be interesting to see if the CAT agrees to fact-track designation if the case is a large one. There are six Claimants collectively instructing Addleshaw Goddard.
The fast-track is intended for smaller cases. To keep costs low, at the outset a cap is imposed on the costs the winner can recover from the loser, and claims are subject to a tight timeline. Trial must commence within six months of designation.
The criteria for designation are in Rule 58(3) of the CAT Rules, and most of them can be applied to refuse entry of larger cases onto the track, e.g.
whether the time estimate for the trial is three days or less;
whether one or more of the parties is an SME;
the complexity and novelty of the issues;
the number of witnesses;
the likely extent of disclosure; and
if damages are sought, the amount claimed.
Second, if fast-track designation is granted, it will be interesting to see how the case progresses given that it is a damages claim against a cartel because, when the fast-track was introduced in October 2015, it was widely anticipated that it would be used mainly for injunctions, and particularly injunctions to stop abuse of dominance:
- injunctions because it was thought the mandatory six months to trial made most damages claims impractical; and
- abuse of dominance:
- (in follow-on actions) because if anticompetitive collusion has been established by a regulator, it will almost certainly have already stopped without the need for an injunction; and
- (in standalone actions) because if collusion has not been established, it probably cannot be proved within a six month process as it is almost always concealed.