On 5 July 2012, the UK Competition Appeal Tribunal ("CAT") published its judgment (Case Number: 1178/5/7/11) on the damage claim of 2 Travel Group PLC ("2 Travel") against Cardiff City Transport Services Ltd ("Cardiff Bus"). This claim was brought before the CAT in January 2011 by 2 Travel (at that time in liquidation) as a follow-on damages claim to the Office of Fair Trading ("OFT") decision that Cardiff Bus had abused its dominant position by engaging in predatory pricing. 2 Travel claimed that it had suffered losses as a result of the infringement and sought damages from Cardiff Bus. The damages claimed by 2 Travel totalled to an amount nearing £50 million.
In April 2004, 2 Travel, a small bus operator, launched commercial bus services on four routes in Cardiff. Cardiff Bus, an established local public transport company, responded by introducing competing services on the relevant routes with lower fares. The OFT determined that these fares were loss-making and amounted to predatory pricing. In February 2005, shortly after the withdrawal of 2 Travel from the market, Cardiff Bus discontinued its services on the relevant routes in Cardiff. Although the OFT decided that Cardiff Bus had abused its dominant position, it did not impose a fine.
In this judgment, the CAT awarded damages for the loss of profits (including interest) as well as exemplary damages. The CAT accepted 2 Travel's claim for the loss of profits, which were set at £33,818.79. Furthermore, the CAT awarded 2 Travel exemplary damages, as it found that Cardiff Bus' conduct had been "outrageous". The CAT reasoned that in the absence of the award of such exemplary damages, a compensatory award would be insufficient. By setting the exemplary damages amount to just £60,000 the CAT took into account the fact that Cardiff Bus is only a small company and owned by a public authority.
The judgment is noteworthy because it is the first final damages award made by the CAT and the first case in which an English Court also awarded exemplary damages. The CAT noted that the purpose of the exemplary damages is to punish and deter anti-competitive behaviour. The CAT acknowledged that this judgment is "likely to incentivise the bringing of claims for exemplary damages in competition cases" and noted that in other cases, in which the defendant is economically powerful, the exemplary damages must be set at a higher level. The amount should be sufficient to punish and deter the infringer.