In BCL Old Co Limited and Others v. BASF plc and Others  UKSC 45, the Supreme Court, in its first competition damages case, confirmed that the two-year limitation period to bring a follow-on damages claim begins to run from the date on which the regulator's infringement decision becomes final. The case may also have implications for other cases relying on EU rights.
In November 2001, the European Commission fined BASF and other entities for participating in a vitamins cartel, contrary to what is now Art. 101 TFEU. The cartelists had until 31 January 2002 to appeal against the finding of infringement and/or the level of the fine. BASF was the only cartelist to appeal and did so only in respect of the fine, which was subsequently reduced by the then Court of First Instance ("CFI"). The time limit in which to appeal against the CFI's decision expired on 25 May 2006 and no appeal was lodged.
On 12 March 2008, BCL Old Co Limited and other claimants sought to bring a follow-on claim for damages under section 47A of the Competition Act 1998 against BASF and other defendants in the Competition Appeal Tribunal ("CAT"). The issue before the Supreme Court was whether the follow-on claim was brought in time.
The CAT Rules provide that a follow-on claim for damages must be brought within two years of the later of (i) the decision of the European or UK regulator becoming final (i.e. upon the expiry of the period during which the decision of the regulator may be appealed); or (ii) the date on which the cause of action accrued.
BASF, the Respondents before the Supreme Court, argued before the CAT that the follow-on claim for damages was time-barred because the two-year limitation period started running from the date on which time for them to appeal against the Commission's infringement decision expired (i.e. 31 January 2002), and therefore the limitation period for the follow-on claim for damages had expired on 31 January 2004.
BCL Old Co Limited and the other follow-on claimants, who were the Appellants before the Supreme Court, countered before the CAT that the two-year limitation period only started running on the date on which the Respondents' time for appealing the CFI's decision on the level of fine had expired, i.e. two years from 25 May 2006 and accordingly, their follow-on claim was in time.
Out of time
In earlier proceedings, reversing the decision of the CAT, the Court of Appeal found in favour of BASF and the other Respondents and held that the claim was time-barred and could only proceed if an extension of time was granted. In a later judgment, the CAT's reading of the Court of Appeal's judgment was that it had the power to grant such an extension, though it declined to do so on the facts before it. On appeal from that further decision, the Court of Appeal ruled that the CAT did not have the power under the UK legislation to extend the time in which follow-on damages claims could be brought.
The Appellants appealed to the Supreme Court on the ground that the rules governing the commencement of the limitation period and the absence of any power to extend that period compromised EU principles of effectiveness and legal certainty and made it excessively difficult to exercise their rights to bring a damages action.
In a judgment given by Lord Mance, with whom the other four Justices agreed, the Supreme Court dismissed the Appellants' appeal and held that the statutory limitation period is sufficiently clear, precise and foreseeable to allow individuals to ascertain and exercise their rights and obligations without excessive difficulty. In the Court's view, the Competition Act 1998 plainly and repeatedly distinguished between infringement decisions and penalty decisions.
The Court was unsympathetic to the Appellants' contentions that the waters had been muddied by a raft of apparently erroneous decisions regarding the commencement of the limitation period. In a defence of the ordinary operation of the English appeals system, Lord Mance refused to accept that the mere fact that CAT decisions might be overturned by appellate courts, whose very function is to remedy errors and establish the correct legal position, could breach the principles of legal certainty and effectiveness.
The Court confirmed that the limitation period will only be delayed by an appeal against liability and not by an appeal against the penalty only. The Court also affirmed the Court of Appeal's ruling that the CAT does not have a power to extend time for bringing a claim beyond the two years (and indeed noted that the absence of such a power in the CAT rules was deliberate).
Finally, the Court observed obiter that if it had found that the statutory limitation period failed to comply with the principles of effectiveness and legal certainty, then the Appellants' complaint would have been against the UK Government for breach of its European obligations. In these circumstances, the Appellants nevertheless could not have prevented the Respondents from relying on the statutory limitation period as EU law does not require the setting aside as between civil parties of a limitation defence that is successfully founded under domestic law, on the grounds that its effect would have been insufficiently clear, precise and foreseeable prior to the court decision establishing it.
The implication for any case relying on EU rights is that English courts will be very slow to find that English procedural rules or conflicting judgments breach EU principles of effectiveness and legal certainty.
For competition practitioners, the judgment may be considered a robust defence of the Competition Act 1998 and the procedures in place for bringing a s. 47A action. Lord Mance plainly could not understand the Appellants' delay in bringing their claim. The Court was confident that follow-on claimants could use the s. 47A procedure in the way it was intended — as a practical, straightforward and realistic means for ordinary persons to obtain real redress for the losses suffered as a result of anticompetitive behaviour. However, it is possible that the practical effects of the decision make life harder for potential claimants.
Clearly, the onus will be on follow-on claimants not only to study the listings of the relevant courts for any appeals being lodged by cartelists but also to assess the nature of any appeals brought. On the facts of BCL, it was accepted as clear that BASF was only contesting the level of the fine, but in another instance an appeal that is nominally against the penalty may in fact involve arguments against liability. Lord Mance did recognise that the distinction can be blurred and advocated an analysis of the substance of the points of appeal, but in a difficult case it may be doubted whether the summary of the litigation published in the Official Journal is sufficient to enable third parties to characterise the arguments raised. This burden of monitoring the progress and content of cartelists' appeals may curb the utility of the s. 47A regime.
Conversely, cartelists may now be encouraged by this judgment to mount unmeritorious challenges to infringement decisions when otherwise they may have challenged the severity of the penalty alone. Further, cartelists who choose not to appeal at all may be penalised by exposing them to follow-on claims at an earlier date. Such consequences would run counter to the public policy considerations of preventing cartelists from delaying their liability to pay damages by launching protracted litigation.
As a matter of domestic and European law, the decision provides a welcome confirmation that the applicable statutory language is fit for purpose.
At the same time, the shelf life of the ruling in competition cases may be very short as it is widely anticipated that the CAT's procedural rules will be changed in the near future to make it a more attractive and useful venue for damages claims, and its anomalous limitation rules may well be amongst the rules to change.
The decision is available here.