On 23 May judgment was handed down in a strike out application and challenge to jurisdiction brought by the defendants to a competition follow-on damages claim in the case Ilyama Benelux BV (and others) v Schott AG (and others) [2016] EWHC 1207 (ch).

There is view held by some that because in follow-on damages actions (i.e. claims that follow-on from a competition regulatory infringement decision) liability has already been found by the applicable regulatory decision, they are straight forward claims to bring. While this can be the case, the decision in Ilyama emphasises that it isn’t always and underlines the need for careful analysis and preparation before bringing a claim.

Case summary

The claimants brought a claim in the English High Court, which they said followed-on from the European Commission’s (Commission) decisions in respect to cartels in the cathode ray tube (CRT) and the CRT glass markets. The claim was brought against addressees of the decision and certain of their group companies.

The defendants brought applications before the court to have the claim struck out and / or permission to serve the defendants out of the jurisdiction set aside.

In considering the applications, the key questions for consideration by the judge were whether:

  • the claim as pleaded was a pure follow-on claim as opposed to one which also contained stand-alone elements (i.e. elements where are independent to the Commission decisions in respect to which the claimants had to establish an infringement);
  • the claim brought fell within the jurisdictional scope of EU competition law; and
  • the English High Court had jurisdiction to hear the claim.

Finding against the claimants and striking out the claim / setting aside permission to serve the claim out of the jurisdiction, the court observed that:

  • the relevant products which were ultimately purchased by the claimants in Europe had originally been sold in Asia and only entered the European market through a lengthy supply chain, as such, there was no implementation of the cartel in Europe;
  • the Commission decisions related only to Europe and had not found that there was a world-wide cartel; and
  • the claimants had not established that the cartel had foreseeable, immediate and substantial effects in the EU.

Comment

As a funder, Vannin is asked with increasing regularity to fund follow-on damages actions brought before the English High Court and the Competition Appeal Tribunal. Funding such claims can be attractive – the frequently repeated refrain that liability has already been found by the Commission so all that is required is to establish causation and quantum is often espoused to us. Put like that, it sounds easy. However, the decision in Ilyama emphasises the need to not get carried away with the prospect of a straight forward follow-on damages claim (they rarely are).

Careful thought and analysis needs to be undertaken by both the claimants and the funder to ensure that the claim is one worth bringing and, if it is, which is the right jurisdiction and forum in which to bring the claim. This thought and analysis should not only focus on the subject matter of the decision and the likely quantum recovery but the broader, often procedural, hurdles (limitation and jurisdiction to name but a few) that need to be overcome for the claim to succeed.