Deutsche Bahn AG and others v Morgan Advanced Materials Plc (formerly Morgan Crucible Co Plc)

Supreme Court clarifies when the limitation period starts to run in respect of a follow-on damages claim before the Competition Appeal Tribunal when some but not all the cartel members appeal the Commission’s decision.

On 9 April 2014, the Supreme Court, reversing the Court of Appeal’s decision, upheld the Competition Appeals Tribunal’s (CAT) findings that the limitation period for bringing a follow-on damages claim under section 47A of the Competition Act 1998 is not extended against a non-appealing addressee by virtue of appeals by other addressees of a European Commission’s  decision.

On 9 April 2014, the Supreme Court, reversing the Court of Appeal’s decision, upheld the Competition Appeals Tribunal’s (CAT) findings that the limitation period for bringing a follow-on damages claim under section 47A of the Competition Act 1998 is not extended against a non-appealing addressee by virtue of appeals by other addressees of a European Commission’s  decision.

Section 47A of the Competition Act 1998

A person who has suffered loss or damage by virtue of an infringement of relevant EU or UK competition law1 is entitled to bring a claim for damages suffered as a result of that infringement under section 47A of the Competition Act 1998.

Rule 31 of the Competition Appeal Tribunal Rules 2003 (SI 2003/1372 (the Rules) provides that a claim for damages must be brought within two years from the “relevant date”, being the later of: (1)the date on which the right to bring an appeal against a relevant decision expires (2) the date on which such an appeal is determined or (3) the date on which a cause of action accrued.

During the period in which an appeal against a European Commission decision may be instigated, or, if any such proceedings are instigated, the period before those proceedings are determined, a damages action may not be brought without the permission of the CAT.

Facts

The European Commission issued a decision on 3 December 2003 holding that a carbon and graphite market cartel had infringed Article 81 (1) of the EC Treaty (now Article 101 of TFEU) (the decision). The alleged cartel had been involved in price fixing and market sharing. Fines totalling €101.4m were imposed on six companies (the defendants) although leniency was granted in relation to the fine against Morgan.

A number of the defendants lodged appeals against the decision, which were dismissed in their entirety by the Court of First Instance (now the General Court) on 8 October 2008. Morgan did not appeal the decision. The time limit to appeal the decision expired on 18 December 2008.

In December 2010, Deutsche Bahn and a number of other claimants issued a claim for damages against the addressees of the decision pursuant to section 47A of the Competition Act 1998. It claimed that it had purchased products which were the subject of the cartel, or goods or services which incorporated those products, during the existence of the cartel. It therefore claimed for loss or damages that it allegedly had sustained as a result of the defendants’ infringements.

Morgan applied to the CAT for an order, further to Rule 40 of the CAT Rules, rejecting the claims against it on the grounds that it had not been brought within the time limit set out in Rule 31 of the CAT Rules.

CAT decision

The CAT held that the limitation period to bring a damages action against Morgan expired two years after the date on which Morgan could have brought an appeal against the decision. The CAT’s decision in this case was based on a narrow interpretation of “decision”, which it interpreted as referring to the decision with respect to an individual addressee/defendant.

The actions against Morgan were therefore dismissed by the CAT as being out of time. The claims would have had to have been issued by 14 February 2006, being two years from the date by which Morgan would had to have brought any appeal.

Court of Appeal

The Court of Appeal disagreed with the CAT’s findings and held that a “decision” under the Competition Act 1998 is a decision that there has been an infringement of competition  law, and therefore the limitation period is extended while an appeal is still pending, or while a decision can still be appealed, before the European Courts.

The CAT held that the time limit for a follow-on damages action against Morgan was the same as the time limit applicable for actions against those defendants who had appealed. Therefore the claim was  not out of time, as the time for an appeal from the General Court’s decision expired on 18 December 2008, and the two year limitation period ran from this date.

Supreme Court

The Supreme Court considered that the main issue in this case was whether the “decision” referred to in section 47A of the Competition Act 1998 and Rule 31 of the CAT Rules was:

  1. The original Commission decision of 13 February 2004 against Morgan which was not appealed by Morgan (this was the view of the CAT); or
  2. The Commission’s decision considered as a decision against all cartel members, appealed by the majority of them and finally upheld (as to liability) by the General Court in October 2008, with time starting to run from 18 December 2008, being the expiry date for a further appeal.

The Court held that the Court of Appeal had wrongly concluded that European law is irrelevant to the nature of the decision to which section 47A refers. The Supreme Court found that section 47A critically cross-refers to a matter determined by EU law (the decision establishing the infringement), and therefore that to understand the nature of the decision, regard must necessarily be had to EU law.

Accordingly, it was necessary to consider whether, under EU law, a decision operated as against all addressees or as against each addressee separately. Relevant EU authorities have established that a Commission decision in relation to the existence of a cartel constitutes a series of decisions addressed to each addressee individually.

The Supreme Court held that even if the appeals by the other defendants against the European Commission’s decision had succeeded, it would have made no difference to the findings of infringements of EU competition law by Morgan. The decision was the only decision against Morgan in EU law, and therefore the only relevant decision for the purposes of section 47A.

The Supreme Court therefore overturned the Court of Appeal’s decision and reinstated the decision of the CAT.

Commentary

The Supreme Court’s decision has brought clarity in relation to the court’s view of when time starts to run for the purposes of damages claims under section 47A of the Competition Act 1998 where appeals have been brought against a European Commission decision by some addressees but not others. Damages claims against a non-appealing addressee must be brought within two years of the date from which the right to appeal the decision against that particular addressee expires.

Whilst this decision clarifies the current position, it is important to note that the Consumer Rights Bill (the Bill) proposes harmonisation of the limitation period for bringing damages claims under the Competition Act 1998 with the six year period to bring a claim before the High Court. The Bill is currently before the House of Commons and is expected to receive Royal Assent in late 2014.