A victim of an infringement of competition law such as a cartel understandably wishes to have as much information as possible about the infringement and its loss before bringing a damages claim. However, the recent judgment of the English High Court in Arcadia and others v. Visa highlights the risks of delaying for too long. The High Court held that the 6-year time limit for bringing proceedings started to run when the claimant had or should have had sufficient facts in order to establish a valid claim capable of surviving a strike-out application, not when it had all facts that might quantify or reinforce its claim. This had a substantial impact on the claim – the Court held that the Claimants had had sufficient information before 2007, 6 years before they brought proceedings, and therefore they could not claim for the period before 2007 (around 30 years). The Court referred briefly to the EU competition damages Directive and its judgment sheds some light on the way in which an English court at least might interpret Article 10 of the Directive.
The claim, brought by 12 large UK retailers, was for damages for loss resulting from the operation of Visa's multilateral interchange fees (MIFs) charged by the banks for handling credit card transactions, for a period going back to 1977. The claimants alleged that the MIFs inflated the charges that they paid to the banks.
Some of the claimants began proceedings in July 2013, and others in October 2013. In March 2014, the defendants applied to strike out those parts of the claim alleging infringements prior to July and October 2007, the dates 6 years before the start of proceedings.
Under English law, a claimant must usually bring its claim within 6 years of the event giving rise to it. However, where the defendant deliberately conceals any fact relevant to the claimant's claim, the 6-year period does not start to run until the claimant has discovered the concealment, or could with reasonable diligence have discovered it. The judgment addressed the issue of whether there were facts relevant to the cause of action that the claimants did not know prior to the expiry of the limitation period, and not whether there had been concealment.
The judge noted that courts take a "generous approach" to claimants in cartel claims in particular, because of the inherent secrecy of the arrangements concerned. This makes it more difficult for defendants to strike out cartel damages claims at an early stage on the grounds that they fail to set out their allegations in detail. However, this very generosity means that a claimant cannot wait until litigation risks are reduced to levels that it might consider commercially acceptable before claiming. Although competition claims have certain complexities, this is not a reason to apply a different approach to this aspect of the limitation rules.
The judge drew a distinction between unknown facts which were necessary to plead the cause of action and unknown facts that were not essential to plead the cause of action. Only the former would be relevant facts for the purposes of extending the limitation period. The unknown facts must be such as to "disable " the claimants from pleading the cause of action.
Was the information essential, or providing reassurance only?
The Court noted that relevant facts about the MIFs had been in the public domain for many years. It referred to a series of press releases, Decisions and Notices published by the European Commission during its long-running investigation into Visa MIFs, and a similar series of press releases from the former Office of Fair Trading. The Court held that these documents contained all of the facts relevant to the claim, or provided sufficient information to allow the Claimants to discover them. The Court recognised that at that stage the Claimants might wish for further reassurance on various points, but that this did not affect the question of whether they knew or could know relevant facts. For example, it was not essential, in order to bring a claim, for the claimants to know exactly how the MIFs operated. To set out their claim it was sufficient to know that the Commission and OFT had concluded that the MIFs restricted competition. The Court also held that it was not essential that the claimants should know the exact level of the MIFs. Those levels were not essential to the existence of the claim, because the claimants argued that any MIF restricted competition and was therefore an overcharge. The Court acknowledged that the question was material to the size of the claim and therefore to the commercial rationale in bringing proceedings. However, the legislation distinguished between facts establishing the claim and facts improving the prospects of success, or establishing the amount of the claim. The trigger for the claim was in fact the dismissal by the EU General Court in May 2012 of MasterCard's appeal against the 2007 Commission Decision on the MasterCard MIFs. However, as the claimants recognised, this revealed no facts that had previously been concealed from them.
The claimants intend to appeal.
Interestingly the Court referred in its judgment to the EU competition damages directive, in final form then and adopted a few days later. It noted that the Directive makes specific provision for limitation periods in competition cases. It provides for a limitation period of at least 5 years, which will not begin to run until the infringement of competition law has ceased and the claimant knows, or can reasonably be expected to know, of the behaviour and the fact that it constitutes an infringement, the fact that the infringement caused it harm and the identity of the infringer. It also provides that these new rules should not have retroactive effect, or apply to cases that have already been brought. The Court therefore had no need to address the application of the Directive to this situation. However, it seems likely that an English Court applying these provisions of the Directive (or, properly speaking, the national rules that will in due course implement the Directive), would reach a similar conclusion on the question of the claimant's knowledge. In particular, under the Directive it is necessary only that the claimant should know that the behaviour constitutes an infringement (and not the detail of how the relevant arrangements or conduct worked), that it caused harm (and not the amount of that harm) and the identity of the infringer (which the claimants may be able to uncover through appropriate enquiries).
It should be noted that Arcadia v. Visa concerned arrangements that had been the subject of very high-profile investigation by the competition authorities for some years, with many of the details in the public domain. Claimants bringing proceedings to recover losses caused by secret cartels are likely to be in a better position to argue that they were not (and could not be) aware of key facts for much longer. However the Judge commented that competition cases did not fall within an exceptional category requiring a different approach to limitation. Claimants should therefore be aware that the trigger for the running of time for limitation purposes will not be the discovery of every potentially relevant fact but only those facts necessary to plead the cause of action.