The UK Supreme Court has issued its judgement in relation to Morgan Advanced Materials Plc’s appeal against a decision by the UK Court of Appeal. The issue on the appeal was whether claims against the appellant for loss suffered by reason of a cartel infringing Article 81(1) TEC (now Article 101 TFEU) were time barred.
The appellant as whistleblower disclosed the existence of an illegal cartel in electrical and mechanical carbon and graphite products to the European Commission and a Commission decision issued in December 2003 found that the appellant and other cartel members had engaged in practices which breached Article 81(1) TEC. As whistleblower, the appellant escaped any Commission fines, while the other cartel members received heavy fines.
The other cartel members appealed the Commission’s decision to the General Court. These appeals were dismissed in October 2008 and the time for any further appeal to the Court of Justice against the finding of infringement expired on 18 December 2008.
In December 2010, Deutsche Bahn AG and filed a claim for follow-on damages in the Competition Appeal Tribunal (CAT) against the appellant (and others) regarding the loss it allegedly suffered as a result of the cartel. The respondents’ claims were brought under Section 47A of the Competition Act 1998 which provides a statutory basis for a party to bring a follow-on claim. Rule 31 of the CAT Rules 2003 state that the time limit for bringing a follow-on claim is two years from the later of the expiration of the period during which an infringing party can appeal a Commission decision, or the date on which the cause of action accrued. The CAT accepted the appellant’s argument that the respondents’ claims were out of time, and so struck out the respondents’ claim.
The Court of Appeal by a judgment dated 31 July 2012 accepted the respondents’ case and so restored their claim. The appellants then appealed to the UKSC.
The issue to be decided by the UKSC was as follows:
- Whether the Commission decision was to be viewed as a decision made against individual addresses and not appealed by the appellant or
- Whether the Commission decision was to be viewed as a decision made against all the cartel members, appealed by most of them and finally upheld as to liability by the General Court.
The split between some cartel members appealing the Commission decision and others meant that the UKSC had to decide when the clock started running for follow on damages claims against those parties that had not appealed the Commission decision. If the UKSC determined that the first alternative was correct, the two- year limitation period for claims against the appellant ended on 13 February 2006 (following the time expiring for the appellant to appeal on 13 February 2004), and the follow-on claims issued on 15 December 2010 were therefore brought too late. But if the second alternative was deemed correct, there was one single timeline for all claims and the two-year limitation period began on 18 December 2008, when time expired for an appeal to the Court of Justice by those who appealed to the General Court; the follow-on claims were therefore on time.
The UKSC unanimously allowed the appeal. Mance LJ stated that the decisions of the ECJ relating to a Commission decision establishing the existence of a cartel are a series of decisions addressed to individual addressees rather than all of the addressees of the decision. The only relevant decision which was applicable to the respondents’ follow-on damages claim against the appellant was the original Commission decision of 3 December 2003. The appellant had until 13 February 2004 to appeal against the Commission decision. As the appellant had not appealed against the Commission decision, the respondents had a period of two years, beginning on 13 February 2004, to bring a follow-on damages claim against the appellant. As the respondents’ follow-on damages claim was brought on 15 December 2010, it was out of time.
In reaching its decision, the UKSC considered that the rules governing the recovery of any loss resulting from the operation of an illegal cartel are a matter of domestic law insofar as they are compatible with the general principles of European law. As section 47A CA98 makes explicit references to decisions issued by the Commission relating to infringement findings, it is necessary to consider the jurisprudence of the European courts in determining this issue. The UKSC considered that Articles 249 and 288 TEC do not specify whether a decision by the Commission operates on a unitary basis against all addressees, or against each addressee separately. However, the ECJ has previously considered this issue in Case C-310/97 AssiDomän Kraft Products AB v Commission of the European Communities  All ER (D) 1010, which held that “a decision that has not been challenged by the addressee within the relevant time limit becomes definitive as against him” irrespective of whether an appeal has been brought by another addressee of the same decision. It follows that, even if the appeals by the other cartel members had succeeded, the Commission decision would have remained in full force and effect against the appellant.
The outcome of this case is that a whistleblower may face follow-on damages litigation earlier than other companies participating in a cartel. Because whistleblowers will generally avoid fines and are therefore unlikely to challenge any decision before the EU courts, the two-year limitation period for claims will likely begin once the time has expired for the appeal of a Commission decision.