The Enron litigation centres around the decision of the UK Office of Rail Regulation (the "ORR") from November 2006 (the "Decision") finding that EWS had abused its dominant position in the market for coal haulage by rail, having engaged in discriminatory pricing practices in breach of Article 82 EC. A fine of £4.1 million was imposed on EWS for engaging in such practices.
Enron subsequently sought to claim damages from EWS on the basis of the Decision, alleging that as a result of those infringements, it had been deprived of a real chance of winning a contract for the supply of coal. Whilst the infringement itself had been conclusively established by the ORR, the CAT was asked to rule on issues of causation and quantum, having to decide whether any loss had in fact been suffered by Enron.
The CAT's Decision
In support of its claim that EWS's conduct had caused it to suffer loss, Enron relied on several passages in the Decision which alluded to the targeting of Enron by EWS. For instance, Enron relied on one paragraph setting out the following:
"EWS sought to constrain [the competitive threat of Enron moving into the coal haulage market] by ensuring that it, and not Enron, secured direct contracts with the power stations."
Enron argued that this was a finding of fact as to the effect of the infringement which was binding. The CAT did not, however, accept that such references in the ORR's Decision were sufficient to demonstrate a causal link to the losses that were allegedly suffered by the claimant. Enron was said to have placed weight on several of the ORR's findings which they could not properly bear, given their generality.
The CAT concluded that a number of material (non-competition law-related) considerations would, in any event, have led to the rejection of Enron's tender for coal haulage. On the evidence before it, the CAT found that there had been no real prospect of Enron winning the relevant tender, irrespective of the breach of Article 82 EC. The CAT ruled, therefore, that Enron had not been deprived of a real or substantial chance of winning the contract, based on the findings set out in the Decision.
The Court of Appeal's Ruling
The Court of Appeal's judgment, confirming the result reached in the CAT, focussed on the status and effect which findings of fact in the Decision had in proceedings before the Tribunal. Enron's primary argument was that the Tribunal had ignored several of the findings made by the ORR when addressing the question of causation. It, therefore, contended that the Tribunal came to conclusions inconsistent with the Decision. It further argued that it was not the function of the Tribunal to re-evaluate the ORR's decision and findings.
The Court of Appeal did not, in general, dispute the latter argument, noting that the Tribunal was bound by decisions of the ORR, including the findings of fact made during its investigation. However, the judgment was careful to emphasise that any such facts had to be clearly identifiable. Lord Justice Lloyd, who gave the leading speech in the Court of Appeal said:
"The party seeking to rely on a finding must be able to demonstrate that the regulator has made a clearly identifiable finding of fact to a given effect, and it is not enough to be able to point to passages in the decision from which a finding of fact might arguably be inferred.".
In a similar vein, Lord Justice Jacob deemed it to be insufficient for a party claiming damages in a follow-on claim: "to root around in the decision of the regulator to find stray phrases or sentences" claiming these to be finding of facts.
Lord Justice Lloyd concluded that it was plain from the Decision that the ORR had not, in fact, set out to decide whether and to what extent EWS's conduct caused loss to Enron. The point he emphasised was that in order for a regulator or competition authority to find a breach of Article 82 EC, it is sufficient to simply demonstrate an infringement by object rather than effect.
Whilst the dispute centred on section 58 of the Competition Act 1998 and related to a decision of a UK regulator, the judgment is likely to have relevance for follow-on damages cases more generally. In the context of demonstrating discriminatory treatment, it is clear that an actual and quantifiable deterioration in the competitive position of an affected party is not required for the purposes of a regulator's decision. The fact that the ORR concluded that EWS had infringed Article 82 did not (in the absence of concrete findings of facts) show that the regulator found the relevant conduct to have actually harmed a specific party - Enron. The burden of proof for an attribution of damages in such follow-on cases, therefore, continues to lie with claimants, who will need to do more than reiterate helpful passages in an infringement decision in order to prove that breaches of competition law have caused them loss.