The Office of Fair Trading (OFT) has announced that it is conducting an informal consultation in relation to how to make redress for consumers and companies who suffer loss as a result of breaches of competition law more effective. The consultation paper published by the OFT sets out the principles which it believes will improve the existing system and enable effective redress for those affected by competition law breaches without giving rise to a "litigation culture".

The development should be viewed against the backdrop of the current competition law enforcement climate where private damages claims can be described, tentatively, as the up and coming tool in the battle against anti-competitive practices.

Settlements

At the beginning of the year, a damages action brought by Healthcare at Home Limited against Genyzme Limited in the Competition Appeal Tribunal was settled before it went to trial. The claim was a follow on action from a previous abuse of dominance infringement decision taken by the OFT. Shortly before the settlement was made public, the CAT had awarded the claimant interim damages of £2 million.

In addition, Kellogg brought an action in the English High Court against its main supplier of cartonboard after a European Commission decision that that the latter had been involved in an EU wide price fixing cartel. The case was ultimately settled.

It is understood that there have been a number of cases settled out of court, albeit not publicised.

Jurisdiction
As reported in last month's e-bulletin, in the judgement of SanDisk Corporation vs. Koninklijke Philips Electronics NV and Others in the English High Court, the scope of the English courts' jurisdiction to entertain private competition actions was recently tested. When the case, which related to an alleged abuse of a dominant position, was brought in the High Court, the court made clear that there is a limit to the English courts' jurisdiction to hear private competition actions. In this case none of the abuses complained of had taken place in England, no immediate damaged had been caused to the claimant in England, and none of the defendants were domiciled in England. The court therefore ruled that it did not have jurisdiction to hear the claim.

Current claims

Cases currently in the pipeline include Arla Foods £15 million damages action which has been brought in the Court of Session against nine defenders accused of price fixing in the Scottish milk sector, as well as the well publicised Consumers' Association claim against JJB Sports plc in the CAT. The Consumers' Association action has been lodged on behalf of some 130 individual consumers in respect of price fixing arrangements in the sale of replica football kit. The association is seeking, in addition to compensatory damages, exemplary damages to the sum of 25% of the relevant turnover of the defendant.

The CAT is also due to consider (in June) whether it should allow a damages action to be brought against a number of parties involved in a cartel, where some of parties have appealed the Commission's infringement decision to the European courts (the Emerson Electric case).

Policy developments

At European level, the European Commission has signalled that it will follow up its December 2005 Green Paper on damages actions with a White Paper anticipated to be published later this year/beginning of next. The Green Paper identifies a number of obstacles to the bringing of private damages actions and a number of suggestions as to how these obstacles could be overcome.

In the UK, the Office of Fair Trading published a consultation paper on 18 April intended to stimulate debate on how to make redress for breaches of competition law more effective. The consultation period ends on 13 June. Thereafter, the OFT intends to recommend to the Government what steps can be taken to improve the current system. The OFT also plans to use the consultation exercise as the basis of its response to the Commission's White Paper.