Legislation and jurisdiction
Development of antitrust litigation
How would you summarise the development of private antitrust litigation in your jurisdiction?
England and Wales has proved to be a popular jurisdiction in which to bring private antitrust claims. In addition to ‘stand-alone’ and ‘follow-on’ actions (the former requiring the claimant to prove the infringement; the latter relying on an infringement decision of the UK or EU competition regulators), competition law issues are regularly invoked in the context of other commercial disputes.
A number of features of the English legal system are attractive to claimants considering where to issue private antitrust proceedings:
The disclosure rules in English litigation are extensive compared with those of most other EU member states, although the implementation of the EU Directive on Antitrust Damages Actions has introduced more extensive disclosure rules in other member states. In High Court proceedings, the parties are required to make a reasonable and proportionate search for and to disclose not only documents on which they themselves rely, but also documents that could harm their case and that could assist the other party’s case. In cartel cases, for example, such disclosure is of particular importance because the majority of relevant documentation is otherwise likely to be unavailable to all parties to the litigation. Parties must complete disclosure questionnaires describing the potentially relevant documents (including electronic documents) they may have, prior to disclosure being given. This provides greater transparency about what documents exist, where they are located and the likely cost of retrieving them. Following the introduction of the revised Competition Appeal Tribunal Rules (SI 2015 No. 1648) (the CAT Rules) on 1 October 2015, the rules for disclosure in the Competition Appeal Tribunal (CAT) are similar to those in the High Court.
The CAT is a specialist competition court that, since the Enterprise Act 2002 (EA 2002) came into force in June 2003, has had jurisdiction to hear follow-on damages claims. The purpose was to create a specialist forum in which such claims could be brought, with procedural rules more flexible than the Civil Procedure Rules (CPR) applicable in High Court proceedings. Following the commencement of the antitrust provisions of the Consumer Rights Act 2015 (CRA 2015) on 1 October 2015, the CAT is now able to hear both stand-alone claims and follow-on claims. Procedure in the CAT is governed by the CAT Rules that were revised and reissued on 1 October 2015. Follow-on claims and stand-alone actions can also be brought in the High Court. The Competition Law Practice Direction provides for competition litigation in the High Court to be heard in two specific divisions (the Chancery Division and the Commercial Court), with judges in those courts receiving competition law training.
While the nature of proceedings in England and Wales can make litigating there more expensive than in other jurisdictions, the general rule in High Court proceedings is that the losing party must pay the successful party’s reasonable costs. In the CAT costs awards are made as the tribunal sees fit, taking into account of a number of factors including whether a party has succeeded on part of its case, even if that party has not been wholly successful. The appropriate starting point is that the successful party should be awarded its costs.
Fee arrangements, including damages-based agreements (DBAs), which allow the payment of a percentage of recoveries to legal representatives in return for no fee as the case progresses, and ‘conditional fee arrangements’ in which lawyers acting for a claimant are paid nothing or a reduced fee in the event of an unsuccessful claim but an ‘uplift’ of up to 100 per cent on their basic fees if they win, have encouraged claimants to issue proceedings in England and Wales on a relatively low-risk basis in terms of costs. The ‘uplift’, or success fee, is not recoverable in costs from the losing party in most cases (including antitrust cases). Instead, the success fee must be paid by the claimant from the damages awarded.
Consumer Rights Act 2015
The specific antitrust provisions of CRA 2015 came into force on 1 October 2015. CRA 2015 sought to, among other things, make it easier for consumers and businesses to obtain redress where there has been an infringement of antitrust law. Section 81 of CRA 2015 brought into force Schedule 8, which amended both the Competition Act 1998 (CA 1998) and EA 2002, to allow the CAT to:
- hear stand-alone cases;
- introduce collective proceedings and procedures for collective settlements;
- harmonise limitation periods with those of the High Court;
- provide schemes for voluntary redress approved by the Competition and Markets Authority (CMA); and
- introduce a fast-track scheme for SMEs.
In addition, as described above, a number of changes were introduced by the revision of the CAT Rules. These changes are discussed in further detail below.
The Regulations implementing the Damages Directive
EU governments formally adopted the Damages Directive on 10 November 2014. On 9 March 2017, the Claims in Respect of Loss of Damage arising from Competition Infringements (Competition Act 1998 and Other Enactments (Amendment)) Regulations 2017 (the 2017 Regulations) came into force inserting Schedule 8A into CA 1998. The 2017 Regulations transpose the Damages Directive into statute. In broad terms, they confirm the position that:
- decisions of the Commission and CMA will be binding as to the existence of an infringement in damages actions;
- confirm the availability of the ‘pass on’ defence for defendants; and
- provide protection against requests to disclose leniency statements and settlement materials.
The 2017 Regulations are also supplemented by a new Practice Direction in the Competition Appeal Tribunal.
However, paragraphs 42 to 44 of Schedule 8A (CA 1998) place limits on the cases to which these parts apply at present. In broad terms, the 2017 Regulations apply only to the extent that the claims and proceedings relate to loss or damage suffered on or after 9 March 2017. If an infringement takes place over two or more days, then it is deemed to take place on the first day. Therefore, with the exception of the rules on disclosure; the use of evidence; and determining whether a document is a settlement submission or a leniency statement, these new regulations will only apply to claims where an infringement has taken place wholly on or after 9 March 2017. The rules governing disclosure and the use of evidence (including in relation to settlement submissions and leniency statements) apply to proceedings begun on or after 9 March 2017.
In June 2016, the UK voted by a referendum to leave the European Union. The consequences of this for private antitrust litigation in England and Wales will depend on the nature of the UK’s negotiated withdrawal and any deal struck between the EU and the UK government. For the time being, EU law will continue to apply and, for example, the UK government has pressed ahead with the implementation of the EU Damages Directive.
Are private antitrust actions mandated by statute? If not, on what basis are they possible? Is standing to bring a claim limited to those directly affected or may indirect purchasers bring claims?
Private antitrust actions arising out of an infringement of competition law may be brought in the High Court based on the tort of breach of statutory duty (Garden Cottage Foods Limited v Milk Marketing Board  AC 130 at 141; Crehan v Inntrepreneur Pub Company  EWCA Civ 637 para 156). The breach is of section 2(1) of the European Communities Act 1972, which imports the provisions of the Treaty on the Functioning of the European Union (TFEU) (in the competition law context, articles 101 and 102 of the TFEU) into English law; or of the provisions of Chapters I or II of CA 1998.
Follow-on damages claims brought in the CAT are based on sections 47A and 47B of CA 1998 as amended by EA 2002. Section 47A provides for private actions for compensation to be brought in the CAT where an infringement decision has already been reached by either the UK or EU competition authorities (ie, follow-on claims) or, since 1 October 2015 (following implementation of CRA 2015), where a claimant brings an action for an ‘alleged infringement’ of competition law, a stand-alone action.
Section 47B of CA 1998 (as amended by CRA 2015) allows collective proceedings to be brought in the CAT. In contrast to the old section 47B, collective proceedings are no longer limited to opt-in ‘consumer’ claims brought on behalf of individual consumers by a specified body (the Consumers’ Association). Under the new section 47B, a collective proceeding may be commenced by someone proposing to be the class representative; will combine two or more claims; and may be brought on an opt-in or opt-out basis, that is, brought on behalf of each class member without specific consent, unless a class member elects to opt out by notifying the representative that his or her claim should not be included in the proceedings. Collective proceedings can be brought on a follow-on or stand-alone basis.
Provided jurisdiction is established, any natural or legal person who has suffered loss or damage as a result of an infringement or alleged infringement of articles 101 or 102 of the TFEU or Chapters I or II of CA 1998 has standing to bring a claim in the High Court or alternatively the CAT (section 47A of CA 1998).
If based on statute, what is the relevant legislation and which are the relevant courts and tribunals?
The CAT has jurisdiction to deal with follow-on and stand-alone damages actions as provided for in sections 47A and 47B of CA 1998. In addition to the CAT, claimants can bring an action in the High Court for breach of statutory duty arising out of a breach of articles 101 or 102 of the TFEU or Chapters I or II of CA 1998.
Both follow-on and stand-alone claims can be brought in the High Court. All claims, whether arising in relation to an infringement of articles 101 or 102 of the TFEU or of Chapters I or II of CA 1998, should be brought in the Chancery Division or Commercial Court (see the Competition Law Practice Direction and CPR Rule 58.1(2)). Under CPR Rule 30.8 and the Competition Law Practice Direction, any competition law claim commenced in the Queen’s Bench Division or County Court should be transferred to either the Chancery Division or, where appropriate, the Commercial Court.
Both follow-on and stand-alone claims that relate to infringements of articles 101 and 102 of the TFEU are based on breach of statutory duty. In relation to follow-on damages actions, sections 58 and 58A of CA 1998 state that the court must accept the decision of the European Commission or the CMA as binding, provided the decision is final (ie, no appeal has been lodged against the decision and the time limit for appealing has expired; or all avenues of appeal have been exhausted).
Both stand-alone and follow-on claims can be brought in the CAT. These are brought under sections 47A and 47B of CA 1998 as amended by CRA 2015. Sections 58 and 58A of CA 1998 (as amended by CRA 2015) state that the CAT will be bound by an infringement decision once it becomes final, as outlined for the High Court, above.
Section 47A applies to persons who have suffered loss or damage as a result of an infringement or alleged infringement of UK or EU competition law (Chapters I or II of CA 1998 or articles 101 or 102 of the TFEU). Following amendments introduced by CRA 2015 to section 47B of CA 1998, collective proceedings are not (as they once were) limited to consumer claims brought on behalf of individuals by a specified body. Instead, any two or more claims may now be combined in a collective proceeding. Collective proceedings may be opt-in or opt-out (ie, brought on behalf of each class member without specific consent, unless a class member elects to opt out by notifying the representative that his or her claim should not be included in the proceedings). Under section 47B(11), an opt-out proceeding will not include any class member who is not domiciled in the UK at a specified time. Those claimants must opt into the proceedings. The CAT must decide whether a claim should proceed on an opt-in or opt-out basis.
Transfer between the High Court and the CAT
Section 16 of EA 2002 provides for the transfer of damages claims between the High Court and the CAT and vice versa. CRA 2015 amended section 16 of EA 2002 to allow regulations to be made in connection with the transfer from the CAT to the court of all or any part of a claim made in proceedings under section 47A of CA 1998. The Section 16 Enterprise Act 2002 Regulations 2015 state that where there falls for determination an infringement issue the High Court may by order transfer to the CAT for its determination so much of the proceedings as relates to the infringement issue. Conversely, the CAT Rules provide that the CAT may, at any stage of the proceedings, on the request of a party or of its own initiative, and after considering any observations of the parties, direct that all or part of a claim brought under section 47A CA 1998 be transferred to the High Court (CAT Rule 71). The CAT Rules also outline the procedure that the claimant must follow where any court has ordered the transfer to the CAT of all or part of any proceedings.
In Sainsbury’s Supermarkets Ltd v MasterCard Incorporated  EWHC 3472 (Ch) the High Court considered whether to transfer the case to the CAT pursuant to the section 16 Enterprise Act 2002 Regulations 2015. No party opposed the transfer of proceedings to the CAT. In his judgment, Barling J outlined the reasons why the present proceedings were suitable to be heard in the CAT. These included that the proceedings were lengthy (nine weeks); they were complex with the latest agreed list of 20 separate issues running to 16 pages, which would involve considerable economic evidence and argument; and that there would be in the region of 1,000 pages of expert evidence as well as oral expert evidence. There was no risk that, as a result of transfer, the trial window would be jeopardised. In addition, Barling J also noted that, as he was available to sit as chairman of the CAT panel, the transfer would not result in loss of such familiarity gained of the issues in the proceedings. He held that, in all the circumstances, including the parties’ wishes, a transfer to the CAT was appropriate.
The first contested application for transfer under the new CAT Rules was in Unwired Planet International Ltd v Huawei Technologies and Others  EWHC 958 (Pat). The claimants issued patent infringement proceedings in the High Court against the defendants and, in response, a number of the defendants brought counterclaims for alleged breaches of competition law. Samsung, one of the defendants, applied to transfer the competition law aspects of the case to the CAT. The High Court noted that such a decision involved the exercise of the court’s discretion taking into account all the circumstances (PD30 paragraph 8.11) and the overriding objective. This meant that saving expense and dealing with the case in a manner proportionate to the value, importance, complexity and position of the parties was relevant as was dealing with the case expeditiously and fairly and allotting an appropriate share of the court’s resources to it. A key practical factor was the extent to which transfer would create any delay or increase in costs; and an important consideration would be the extent to which the two key distinguishing features of the CAT as compared with the High Court (a panel comprising two extra members with economics and other specialist competition experience, and logistical and legal support) arose. When weighing these factors, Birss J said that no transfer should be made without some positive reason for doing so. The High Court held that the provisions of section 16(2) are expressed in a limited way. Their purpose was not to empower the court to transfer the whole proceedings to the CAT if those proceedings involve an infringement issue; on the contrary, they only empower transfer of so much of those proceedings as relates to the infringement issue to the CAT. In this case, to transfer the competition law aspects to the CAT would leave the interrelated contract claims in the High Court, which would create a recipe for confusion and therefore Birss J rejected the application.
In what types of antitrust matters are private actions available? Is a finding of infringement by a competition authority required to initiate a private antitrust action in your jurisdiction? What is the effect of a finding of infringement by a competition authority on national courts?
Private actions can be brought in respect of any breach of UK or EU competition law (Chapters I or II of CA 1998 and articles 101 or 102 of the TFEU respectively). Private actions in the High Court can either be brought as a stand-alone claim (ie, one in which the claimant must show the infringement as well as loss and causation) or as a follow-on action (in which an infringement finding has already been made by the competition regulator at UK or EU level and in respect of which the claimant need only show loss and causation). Both stand-alone and follow-on claims can now be brought in the CAT.
A relevant finding of infringement by the Commission or the CMA is binding on the High Court or the CAT, provided that it is final (ie, no appeal has been lodged against the decision and the time limit for appealing has expired; or all avenues of appeal have been exhausted). As such, a claimant will be required to show evidence of loss and causation in a follow-on claim but, in a stand-alone claim, evidence of the infringement as well.
Paragraph 35 of Schedule 8A of CA 1998 provides that a final decision of a member state competition authority or review court that there has been an infringement by an undertaking is prima facie evidence of the infringement. This only applies to claims brought on or after 9 March 2017.
What nexus with the jurisdiction is required to found a private action? To what extent can the parties influence in which jurisdiction a claim will be heard?
Where the defendant is domiciled in a member state, jurisdiction will be governed by Regulation (EU) No. 1215/2012 (Brussels Regulation), which replaced previous Brussels Regulation (EC) No. 44/2001 for cases commenced on or after 10 January 2015. Defendants domiciled in Norway, Switzerland and Iceland are subject to the provisions of the Lugano Convention 2007, which is similar in its terms.
The main provisions of the Brussels Regulation in the context of where competition damages claims can be brought are:
- article 4(1) (the place where the defendant is domiciled);
- article 7(1) (in contract claims, the place of performance of the obligation under the contract);
- article 7(2) (in tort claims, the place where the harmful event occurred);
- article 8(1) (a defendant joining co-defendants to an existing action);
- article 25 (jurisdiction agreements);
- article 26 (submission to the jurisdiction); and
- article 30 (related actions).
Article 4(1): the place where the defendant is domiciled
Article 4(1) of the Brussels Regulation provides that ‘persons domiciled in a member state shall, whatever their nationality, be sued in the courts of that member state’. Under article 63 of the Regulation, a corporation is ‘domiciled’ in the UK if it is incorporated or has its registered office in the UK, or its central administration is controlled or exercised in the UK. This is subject to the limited exceptions of articles 24 to 26 (exclusive jurisdiction in certain limited areas, jurisdiction agreements and submission to the jurisdiction respectively) and article 9 (lis pendens), but also to provisions in articles 7(1), 7(2) and 8.
Article 7(1): the place of performance of the obligation under the contract (in contract claims)
Article 7(1) relates to contract claims and states that, in matters relating to a contract, a person domiciled in a member state may, in another member state, be sued in the courts for the place of performance of the obligation in question. Unless otherwise agreed, this is the place where the goods were or should have been delivered or, in relation to a contract for services, where the services were or should have been provided. If the obligation being sued for is non-payment, it will be the member state in which payment was due to be made.
Article 7(2): the place where the harmful event occurred (in tort claims)
Article 7(2) provides that ‘a person domiciled in a member state may be sued in another member state, […] in matters relating to tort, delict, or quasi-delict in the courts of the place where the harmful event occurred or may occur’. Long-standing EU case law interprets this to give the claimant a choice between the place where the damage was sustained and the place where the event giving rise to it took place. This provision is more relevant to private antitrust litigation than is article 7(1), given that infringements of competition law are treated as torts of breach of statutory duty. In SanDisk Corporation v Philips Electronics  EWHC 332 (Ch), which related to an article 102 of the TFEU case, the court held that if the event setting the tort in motion took place in England or Wales, the English courts could have jurisdiction under this provision. In that case, however, the link to the UK was tenuous and the court concluded that jurisdiction could not be established on the facts. In Cooper Tire & Rubber Company v Shell Chemicals UK Ltd  EWHC 2609 (Comm) (upheld on other grounds on appeal in Cooper Tire & Rubber Company Europe Ltd v Dow Deutschland Inc  EWCA Civ 864), which related to an article 101(1) of the TFEU case, the court considered that the mere fact of the first meeting taking place in England and Wales would be insufficient to establish that the ‘wrongful act’ took place there. In Deutsche Bahn AG v Morgan Advanced Materials plc  EWCA Civ 1484, the Court of Appeal, in dismissing applications for permission to appeal, held that under the first limb of article 7(2) there was no basis for an argument that a claimant must be the immediate victim of a harmful event. That would have involved an analysis of the connection between a claimant and the jurisdiction, rather than between the defendant and the jurisdiction. The Brussels Regulation was concerned with the latter. On the facts of the case, all of the alleged damage was damage that occurred in the UK. The court also held that in circumstances where the CAT had expressly directed a party who was contesting jurisdiction to take steps in proceedings, that party would not be ‘entering an appearance’ for the purpose of article 26 of the Brussels Regulation and could continue to contest jurisdiction while at the same time contesting the merits of the case, provided that the intention to contest jurisdiction was shown clearly at the outset.
In Iiyama Benelux BV and Others v Schott AG and Others  EWHC 1207 (Ch), the claimants (sellers of computer monitors) sought damages for an infringement of article 101(1) of the TFEU based, in part, on a number of decisions of the Commission including a cartel in relation to certain manufacturers of cathode ray tubes and another in relation to glass. The defendants applied for the claim to be struck out on two grounds:
- that the alleged follow-on claims did not reflect the Commission decisions; and
- that the claims lacked sufficient territorial connection with the EEA for article 101(1) of the TFEU to apply.
In relation to the first ground, the High Court held that the claimants did not purchase products on any European market that was found by the decisions to have been rigged by the cartelists. All sales by the cartelists were some way down the supply chain from the ultimate purchases by the claimants. The decision in relation to glass found that a cartel intended to operate in the European market and intended to affect prices in the European market. In the cathode ray tube decision, the Commission decided that there was a worldwide cartel that operated so as to affect European sales. The claimants had wrongly sought to rely on decisions finding that cartels had been implemented in Europe in relation to a claim relating to purchases that had originally taken place in Asia. In relation to the second ground of appeal, Mann J held (following Woodpulp (Ahlstrom Osakeyhtio v Commission  ECR 5193)) that there was no arguable case that the cartels relied on were implemented in the European Economic Area (EEA). The mere fact that there was some end-of-the-road effect in the pricing of Iiyama purchases in Europe did not mean that the cartel was implemented there. The High Court also considered the application of the ‘qualified effects doctrine’ and whether it was sufficiently arguable that the offending behaviour had an immediate, substantial and foreseeable effect in the European Union. Mann J found that the case on substantiality and foreseeability was very thin but in light of his conclusions on immediacy he did not consider this further. In considering immediacy, the High Court found that the consequences of the non-EU cartels fixing their prices for glass and cathode ray tubes would have been felt in the market in which they were sold, not the EU market. Even if the effect of those sales was ultimately felt in the EU, this was a ‘knock-on’ effect not an immediate one (following Intel Corp v Commission  (T-286/09). On that basis, the qualified effects test did not generate a sufficient EU connection to allow the conduct relied on by the claimants to be considered as an article 101(1) of the TFEU infringement. Mann J decided that all of the defendants were entitled to summary judgment and, or to have the claim against them struck out, and that the court had no jurisdiction to try the claims against some of the defendants.
Shortly after the High Court’s judgment, Morgan J considered issues of jurisdiction in Iiyama v Samsung  EWHC 1980 (Ch). The European Commission held that certain LCD manufacturers had entered into a worldwide price-fixing cartel and implemented it within the EU and EEA. Two of the defendants who were addressees of that decision were incorporated in South Korea (one was a parent company of three wholly owned UK subsidiaries, which were also defendants). The claimants were LCD manufacturers incorporated in England and Wales and in other EU member states. The first two defendants (described above) sold LCDs to companies based in Asia outside the EU. The purchasers sold monitors incorporating these LCDs outside the EU. Those monitors were then sold to the claimants within the EU and the claimants sold them onto other EU dealers. The claimants brought an action for damages for breach of article 101(1) of the TFEU. The defendants applied to strike out the claim against them including on the ground that the claimants had no reasonable prospect of succeeding on their claim. The court also had to consider whether the court had jurisdiction to consider claims against the first two defendants (described above), which were incorporated in South Korea.
Morgan J was not persuaded that the claims should be struck out on the basis that the losses claimed were not sufficiently direct or proximate. However, he made an order to preclude the claimants from contending that the sales by the cartelists outside the EU amounted to a territorial infringement of article 101(1) of the TFEU or an implementation of the cartel within the territorial scope of article 101(1) of the TFEU. The High Court found that while it was true that the conduct and activity, which amounted to implementation within the EU did not involve the supply chains in this case, that did not matter. The real question was whether the claimants could show that they suffered harm by reason of the implementation of the cartel in the EU. The court found that it was not enough for the claimants to say that they were indirect purchasers downstream from the implementation of the cartel in Asia. Following Gencor v Commission  ECR II - 753, the High Court found that the application of the territorial scope of article 101(1) of the TFEU did not depend upon an analysis of the individual steps in the supply chain; instead, it focused on the foreseeable effect of the cartel and the immediacy of that effect in the EU.
The claimants in both cases appealed and those appeals were heard together in Iiyama v Samsung  EWCA Civ 220. There were a number of grounds of appeal but the central issue was the territorial scope of article 101(1) of the TFEU. The Court of Appeal had the benefit, denied to the courts below, of the recent judgment of the Court of Justice of the European Union in Intel v Commission  (Case C-413/14P), which found that the qualified effects test allows the application of EU competition law to be justified under public international law, when it is foreseeable that the conduct in question will have an immediate and substantial effect in the EU. It is sufficient to take account of the probable effects of conduct on competition in order for the foreseeability criterion to be satisfied. The Court of Appeal said that the judgment in Intel provided substantial support for the argument that a worldwide cartel, which was intended to produce substantial indirect effects on the EU internal market may satisfy the qualified effects test for jurisdiction. It acknowledged that there were differences between Intel and the present cases. For example, Intel concerned the territorial scope of jurisdiction of the European Commission rather than the territorial scope of article 101(1) or article 102 of the TFEU, and Intel was a case about article 102 not article 101(1). The court did not consider these distinctions to be significant. It did not accept that the territorial scope of the Commission’s jurisdiction differs in principle from the territorial scope of the two articles nor were they aware of any authority that draws a distinction for jurisdictional purposes between the two articles.
Following Intel the Court of Appeal found that whether or not the test is satisfied will depend on a full examination of the intended and actual operation of the cartel as a whole. Such an examination can only take place in light of the full facts as they emerge and are assessed at trial. The exercise is not one suitable for summary determination on the basis of assumed facts. The Court of Appeal also went on to consider ‘indirect effects’. In the context of the qualified effects test, it did not consider that directness of effect should be treated as an additional requirement to immediacy of effect. It found that the issue of territorial jurisdiction in these cases could not be determined adversely to the claimants in either case on a summary basis and upheld the appeals in this respect.
Article 8(1): a defendant joining co-defendants to an existing action
Article 8(1) of the Brussels Regulation provides (in relation to claims against a number of defendants) that claimants can bring a claim in the courts for the place where any one of the defendants is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. This enables a number of defendants from different member states to be sued in one action in England provided one of them (the ‘anchor defendant’) is domiciled there. It can also be relied on to sue a number of different companies within the same group in England. In reality, the majority of claims involve those brought by companies claiming to have been the victims of a cartel (typically, direct purchasers claiming they were overcharged by the cartel) and therefore tend to be brought as follow-on damages actions following a CMA or Commission decision finding a breach of Chapter I of CA 1998 or article 101(1) of the TFEU. In such cases, the claimant may want to bring an action against all or some of the addressees of the CMA and Commission decision, so would seek to find an anchor defendant domiciled in England, bring the claim on the basis of article 2(1), and then bring in the remaining addressees on the basis of article 8(1).
The leading case on jurisdiction in this context is Provimi v Aventis  EWHC 961 (Comm). The case arose out of the Commission’s 2001 decision in the Vitamins cartel. A claim was brought in England by a German claimant (Trouw) against four companies in the Roche group, including the Swiss parent company F Hoffmann-La Roche AG and three subsidiaries that were English, Swiss and German. Of these, only F Hoffmann-La Roche was an addressee of the Commission’s infringement decision. Jurisdiction was argued as a preliminary issue. The court held that Trouw had an arguable claim that the English subsidiary (Roche Products Limited) had ‘implemented’ the cartel by selling vitamins at the cartel prices, even if it had no knowledge of the cartel itself. This decision enables proceedings to be brought in England against a number of defendants on the basis of an English anchor defendant, which is merely a subsidiary of one of the addressees of a Commission decision, in circumstances where the subsidiary neither played a direct role in the cartel nor had knowledge of it.
The effect of the judgment in Provimi was unsuccessfully challenged in the case of Cooper Tire & Rubber Company v Shell Chemicals UK Limited  EWCA Civ 864. The Cooper Tire case related to a follow-on action from the Commission’s cartel decision in Synthetic Rubber. None of the addressees of the Commission’s decision was English. However, a number of tyre manufacturers that had bought and used synthetic rubber brought an action for damages in the High Court relating to their purchases across Europe, on the basis that English subsidiaries of some (but not all) of the cartelists had implemented the cartel in the UK by selling products at cartel prices. These English subsidiaries would, as in Provimi, be able to serve as the ‘anchor defendants’ and a basis on which the other parties to the cartel (with no English subsidiaries) could be brought into the proceedings under article 8(1) of the Brussels Regulation. The Court of Appeal refused to grant a strike-out application lodged by some of the defendants, holding that the claim could be brought in England. In the court’s view, although the anchor defendants were not addressees of the Commission’s decision, the pleadings were sufficiently broadly drafted to encompass the possibility that they had knowledge of, or were party to, the cartel. The court considered that, since cartel agreements tend to be secret by their very nature, the strength or otherwise of the claimant’s argument as to the knowledge possessed by the English subsidiaries could not be assessed until after disclosure. The result is that the English courts will have jurisdiction to hear Europe-wide cartel damages claims where the pleadings allege that an English-domiciled subsidiary of a cartelist implemented the cartel and either had knowledge of, or was party to, the anticompetitive conduct. The Court of Appeal in Cooper Tire considered the pleadings to be sufficiently widely drafted to encompass the possibility that the English-domiciled subsidiary implemented or had knowledge of the cartel.
Cooper Tire confirmed the attractiveness of England and Wales as a jurisdiction in which to bring Europe-wide cartel claims. It appears that, according to the Court of Appeal judgment, provided claimants can properly draft their pleadings to allege knowledge by an English subsidiary of the cartel arrangements, this may be enough to constitute the jurisdictional hook required to bring the claim in the English court. The effect of Provimi and Cooper Tire is that a claimant seeking damages for loss suffered as a result of a breach of European competition law can sue for its entire loss in the English courts irrespective of where the loss was suffered provided it can identify an English subsidiary of one of the addressees of the decision (which will be assumed to have implemented the anticompetitive conduct), or if its claim is sufficiently widely drafted as to allege or allow for the possibility that the English subsidiary had knowledge of or was party to the cartel. This is regardless of whether the claimant had any dealings with the English subsidiary. The English subsidiary does not have to be an addressee of the Commission’s decision itself.
Toshiba Carrier UK v KME Yorkshire Limited  EWCA Civ 1190 was an appeal against unsuccessful strike-out and summary judgment applications by UK anchor defendants on the basis that they were not addressees of a Commission decision ( EWHC 2665 (Ch)). The case related to a claim for damages arising out of the Commission’s cartel decision in Industrial Tubes, which was addressed to non-UK entities. The defendants to the claim included KME Yorkshire Ltd, a subsidiary of one of the cartelists, which was not an addressee of the decision. At first instance, the court refused to grant the strike-out and summary judgment applications, holding that the claim raised against the UK defendants was both a follow-on claim and a stand-alone claim. The court also found that, in so far as it was necessary to prove knowledge on the part of the UK defendants as to the cartel agreement or arrangements, an initial failure to plead knowledge had been remedied in correspondence between the parties’ solicitors.
The Court of Appeal upheld the first-instance judgment. While noting that the claimants’ pleaded case was ‘far from a model of clear and comprehensive drafting’ and that the claim form fired a ‘blunderbuss of alternative allegations’, the Court of Appeal found that the allegations made by the claimants were sufficient to ground a cause of action against KME Yorkshire Ltd for infringement of article 101(1) of the TFEU, and a corresponding breach of statutory duty, to withstand an application to strike out the claim or for summary judgment in favour of the defendants. This was because acts of implementation of a cartel alone are capable of amounting to concerted practices where they are carried out pursuant to an anticompetitive agreement made between others and with knowledge of that agreement, and the claimants had sufficiently pleaded this stand-alone claim. Regarding the assertion made by the defendants that there was a lack of evidence to support the allegations made against KME Yorkshire Ltd, the Court of Appeal found that the High Court was perfectly entitled to exercise its discretion by refusing summarily to dismiss the claim despite the paucity of evidence to support the allegations, as it was in the nature of anticompetitive arrangements that they are shrouded in secrecy and so it is difficult until after disclosure of documents fairly to assess the strength or otherwise of an allegation that a defendant was a party to, or aware of, the proven anticompetitive conduct of members of the same group of companies. Because the claimants had been found to have made a stand-alone claim against KME Yorkshire Ltd alleging that it participated in and implemented the cartel arrangements with knowledge of the cartel agreement, it was unnecessary to decide whether the anticompetitive acts and intentions of a parent company were to be imputed to its subsidiaries in the context of article 101(1) of the TFEU. However, having considered the Cooper Tire and Provimi judgments, Etherton LJ expressed his own view that it was clear that, ‘save in a case where the parent company exercises “a decisive influence” (in the language of EU jurisprudence) over its subsidiary or the same is true of a non-parent member of the group over another member, there is no scope for imputation of knowledge, intent or unlawful conduct.’
Articles 29 and 30: related actions
England is an attractive jurisdiction for many claimants, and defendants are wise to the liberal scope of jurisdiction under the Brussels Regulation following Provimi that will allow claims to be brought there. As a result, defendants are seeking other ways in which the jurisdiction of the English courts might be limited. In this regard, the ‘Italian torpedo’, typically used in intellectual property cases, has been deployed in competition cases where a defendant seeks to pre-empt a claimant’s choice of jurisdiction by commencing proceedings seeking a negative declaration as to liability in another European jurisdiction. Articles 29 and 30 of the Brussels Regulation provide for courts to dismiss or stay proceedings where the same cause of action or a related action is brought in the courts of a different member state. In Cooper Tire, in an action following on from the Commission’s decision in the Synthetic Rubber cartel, companies belonging to the Eni Group applied to the Italian courts for a declaration that the cartel did not exist, that the Eni companies had never adopted anticompetitive behaviour in relation to the activities covered by the Commission’s decision and that the alleged cartel had had no effect on prices, and that the defendants could not complain that they had suffered damage as a result of the cartel. When subsequently sued in England, the defendants sought to rely on articles 29 and 30 of the Brussels Regulation to dismiss or stay the English proceedings, on the basis that the Italian courts were the courts first seized. The Italian court issued a preliminary ruling on the negative declaration in 2009 stating that it considered the use of the Italian torpedo to be ‘unconstitutional’. That ruling was appealed. In the meantime, in proceedings before the English High Court, the court determined that it did have jurisdiction to hear the claim (brought by the defendants to the Italian proceedings), that the court was not required to grant a stay under article 29 of the Brussels Regulation, and that the court should not exercise its discretion to grant a stay under article 30 of that Regulation (see Cooper Tire & Rubber Company v Shell Chemicals UK Limited  EWHC 2609, upheld on appeal in Cooper Tire & Rubber Company Europe Ltd v Dow Deutschland Incs  EWCA Civ 864).
If a court outside the EU is seizsed of the same or a related cause of action before the English court is seizsed, the English court has discretion to stay its proceedings provided that a judgment given by the non-EU court is enforceable in England and a stay is necessary for the proper administration of justice (articles 33 and 34 of the Brussels Regulation).
Article 25: jurisdiction agreements
Article 25 of the Brussels Regulation provides that if parties have agreed that a court of a member state is to have jurisdiction to settle legal disputes between them, then those courts will have jurisdiction. The Brussels Regulation provides that, unless the parties have agreed otherwise, that jurisdiction will be exclusive. There are a number of formal requirements for article 25 to apply (eg, the jurisdiction agreement needing to be evidenced in writing or by prior course of dealing, as well as not being null and void as to its substantive validity under the law of the chosen court, including its conflict of laws rules). As a number of private antitrust litigation claims in England are brought by customers of parties to a cartel, there may in such cases be contracts in place between the parties (eg, relating to their supply contracts) that specify a jurisdiction clause. Whether the clause is drafted widely enough to fall within the scope of article 25 will be a matter of interpretation. In Provimi, such a clause that stated that ‘any controversies’ that could not be settled would be brought before the courts in Switzerland was held not to include disputes over an overcharge on cartel products and therefore did not constitute a jurisdiction clause under article 25. This is a relatively narrow interpretation of article 25 and may limit a claimant’s ability to rely on this jurisdiction gateway going forward. Note, however, that the decision was reached on a preliminary issue and leave to appeal was granted although the case settled before the appeal was heard. In Ryanair Limited v Esso Italiana Srl  EWCA Civ 1450, Ryanair brought a claim for breach of contract and breach of statutory duty arising from a decision of the Italian competition authority that had found Esso Italiana and others guilty of operating a cartel in relation to the supply of jet fuel to various Italian airports. Ryanair argued that the English courts had jurisdiction in relation to the contractual claim as a result of a non-exclusive jurisdiction clause that provided that for the purposes of ‘disputes under this Agreement, each party expressly submits itself to the non-exclusive jurisdiction of the courts of England’. Ryanair also argued that the English courts had jurisdiction over the breach of statutory duty claim as the infringement of article 101(1) of the TFEU was an essential element of the breach of contract claim. The Court of Appeal held that the breach of contract claim had no prospect of success and accordingly the jurisdiction argument in relation to the breach of statutory duty claim was not pursued further. However, the court went on to state that it also saw nothing to justify a finding that the parties to the contract could reasonably be regarded as intending that a pure claim for breach of statutory duty against a cartel of Italian suppliers of fuel oil at Italian airports for breach of EU or Italian law should fall within the jurisdiction provisions of an English law contract.
Article 26: submission to the jurisdiction
Under article 26 of the Brussels Regulation, any defendant (not only one domiciled in a member state) entering an appearance in the courts of the member state is deemed to submit to that member state’s jurisdiction. The exception is where the defendant is appearing to contest the court’s jurisdiction, provided it raises the jurisdictional challenge at the first available procedural opportunity under relevant national law. Anything going beyond a challenge to jurisdiction will be considered to be ‘entering an appearance’ and will therefore be taken as submission under article 24 (although note the Court of Appeal’s findings in Deutsche Bahn AG v Morgan Advanced Materials plc  EWCA Civ 1484 above).
The jurisdiction rules of the Brussels Regulation (and Lugano Convention 2007) only apply to defendants domiciled in a member state or in Norway, Switzerland and Iceland (as above). For defendants domiciled elsewhere, the residual common law jurisdiction regime will apply. In such cases, jurisdiction depends on whether the defendant is located within England and Wales. If so, the English courts have jurisdiction, although they can stay proceedings on application if it is shown to them that another court that also has jurisdiction is a more appropriate forum. If the defendant is not within England and Wales, the claimant can apply for permission to serve outside the jurisdiction if it can show that the claim has a reasonable prospect of success; that there is a basis for jurisdiction set out in the CPR (including that damage was sustained in the jurisdiction or as a result of an act committed within the jurisdiction or that the defendant is a necessary and proper party to a claim against another defendant); and that England and Wales is the proper place to bring the claim. In practice, the majority of private antitrust litigation in England and Wales is likely to be brought following on from cartel decisions of the UK or EU competition regulators whose decisions are usually addressed to at least one undertaking within the EU, and therefore with at least one subsidiary domiciled in a member state. Recourse to the common law jurisdiction regime is therefore only likely to be necessary in a minority of cases.
Can private actions be brought against both corporations and individuals, including those from other jurisdictions?
Damages actions can be brought against any entity that infringes the competition rules. Actions can therefore be brought against legal entities and against individuals to the extent they are an undertaking and therefore capable of breaching articles 101 and 102 of the TFEU and Chapters I and II of CA 1998. As regards defendants from other jurisdictions, as noted above, the Brussels Regulation allows for defendants not domiciled in England and Wales to be sued in the English courts under relevant provisions of that regulation.
In Safeway Stores Ltd v Twigger  EWCA 1472, Safeway brought an action against its former directors and employees to seek to recoup the amount of an agreed fine that would be paid following settlement in the Office of Fair Trading’s (OFT) (as it then was) Dairy investigation. The investigation alleged breaches of Chapter I of CA 1998 against a number of dairy companies and supermarkets in the UK. The OFT’s case was settled in respect of Safeway’s liability (which had been the subject of a takeover by Morrisons). It was agreed that Safeway would pay a fine that would be subject to a reduction if it continued to cooperate with the OFT’s investigation until the issuance of a decision. Following receipt of the statement of objections but prior to the decision, Safeway issued proceedings against its former directors and employees alleging breach of contract and negligence and seeking to recover the full amount of the fine from them. The Court of Appeal unanimously held (reversing the decision of Flaux J at first instance) that Safeway’s claim should be struck out, holding that the ex turpi causa maxim applied to preclude Safeway from seeking to recover from the defendants either the amount of the penalty imposed by the OFT or the costs incurred as a result of the OFT’s investigation. An undertaking that infringes provisions of CA 1998 relating to anticompetitive activity and is duly penalised by the CMA therefore cannot recover the amount of such penalties from its directors or employees whose actions allegedly caused the infringement.
Private action procedure
May litigation be funded by third parties? Are contingency fees available?
Costs can be significant in the context of litigation in the English courts (see question 32), in particular given that the unsuccessful party will, as a general rule, be required to pay the winning side’s reasonable costs. It is therefore important for claimants to ensure they consider before commencing litigation both how to fund the litigation and the risk of an adverse costs order.
Conditional fee arrangements (CFAs) may be entered into in the context of English litigation. CFAs often involve the lawyers acting on a ‘no win, no fee’ basis, but with provision for a ‘success fee’ (ie, their basic fee, plus an uplift) to be paid to them in the event of a successful outcome. To be enforceable, a CFA must comply with section 58 of the Courts and Legal Services Act 1990. In particular, CFAs must be in writing and the percentage uplift cannot be more than 100 per cent of the lawyer’s normal fees. Changes to the basic rules for CFAs in April 2013 mean that the ‘uplift’, or success fee, is no longer recoverable in costs from the losing party in most cases (including antitrust cases) unless the claimant is in liquidation or administration). Instead, the success fee must be paid by the claimant from the damages recovered. There was an exception to this rule for claimants in liquidation or administration or persons acting in the capacity of liquidators, administrators or trustees in bankruptcy. If the CFA was entered into before 6 April 2016, then a success fee may be recoverable from the other side if either:
- the agreement was entered into specifically for the purposes of the provision of advocacy or litigation services in connection with the matter that is the subject of the proceedings in which the costs order is made; or
- advocacy or litigation services were provided under the agreement in connection with the matter before 6 April 2016 (section 44(6) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (SI 2016 No. 345)).
DBAs have been introduced as an additional type of funding (as provided for by the Courts and Legal Services Act 1990 (as amended) and the Damages-Based Agreements Regulations 2013). Under these agreements, lawyers can agree to accept a share of the clients’ winnings, capped at 50 per cent in commercial cases. DBAs must be on a no win no fee basis, and the lawyer is only entitled to payment if the claimant both wins and recovers the sum awarded to it in damages. A DBA is unenforceable if it relates to collective opt-out proceedings (section 47C(8) of CA 1998), although CFAs are permitted.
Third-party funding by a professional funder is also an option. In the competition law context, Arkin v Borchard Lines Limited is an example of the claimant pursuing a claim funded by a professional funder. In that case, the defendant successfully defended the claim and sought an order for the funder to pay their costs (which were in the region of £6 million). The Court of Appeal held that the professional funders should be liable to pay the costs of opposing parties but capped at the amount of the funding they provided ( EWCA Civ 655).
Potential litigants may also have legal expenses insurance or may be able to take out after-the-event insurance to cover their legal costs. However, an after-the-event insurance premium cannot be recovered from the losing party (except, again, in certain cases including insolvency-related proceedings where the agreements were entered into before 6 April 2016 and publication claims).
Are jury trials available?
Jury trials are not available either in the High Court or in the CAT in relation to competition proceedings.
What pretrial discovery procedures are available?
Disclosure in the High Court is governed by CPR 31. The rules require parties in larger cases to complete disclosure questionnaires before the disclosure exercise is started, so that the other parties, and the court, are aware of what documents (including electronic documents) are thought to exist, and where they are located. The parties can then agree, or the court can order, disclosure that is more relevant to the specific case, if necessary. ‘Standard’ disclosure is still available as one of the options that the parties or the court can choose.
Standard disclosure generally takes place after pleadings have closed, namely, after the claim form, particulars of claim, defence and any replies have been served. It requires the parties to the litigation to search for and disclose all documents in their control on which they rely, and documents that adversely affect their own case, adversely affect another party’s case, or support another party’s case. Privileged documents (see question 11) need to be identified in the disclosure statement but cannot be inspected by the other parties. However, the fact that documents are confidential is not normally a bar to disclosure: concerns of commercial sensitivity are typically dealt with by way of a ‘confidentiality ring’, whereby only specified persons (eg, external experts, legal advisers, in-house lawyers) will be permitted access to the documents. One example of the use of a confidentiality ring is Nokia Corporation v AU Optronics Corporation  EWHC 731 (Ch) a damages claim brought by Nokia against certain companies involved in the manufacture or supply of liquid crystal displays. During the course of the English litigation, Nokia’s English legal team obtained material disclosed in US proceedings pursuant to a confidentiality ring. Nokia obtained an order in the English litigation for use of the US disclosure material in a manner reflecting the US confidentiality arrangements. This led to certain parts of Nokia’s particulars of claim (which had been amended in light of the material disclosed in the US proceedings) not being able to be shared with the in-house counsel of some of the defendants. The court held that Nokia bore the burden of seeking to adjust the earlier order to allow the in-house counsel of those defendants to view the material.
Specific disclosure can be sought requiring a party to disclose specific documents or categories of documents (CPR 31.12). Disclosure can also be sought from non-parties under CPR 31.17 if a document or class of documents is likely to support the case of the applicant or adversely affect the case of one of the other parties to the proceedings, and disclosure is necessary to dispose of the claim fairly or to save costs.
In addition to disclosure in the course of litigation, claimants or potential claimants can ask for pre-action disclosure under CPR 31.16 from someone who is likely to be a party to litigation. CPR 31.16(3) states that:
- pre-action disclosure can only be ordered where the respondent is likely to be a party to subsequent proceedings;
- the applicant is also likely to be a party to those proceedings;
- if proceedings had started, the documents or classes of documents of which disclosure is sought would fall within standard disclosure; and
- disclosure before proceedings have started is desirable either to dispose fairly of anticipated proceedings, to assist the dispute to be resolved without proceedings, or to save costs.
Note that even in the case of successful applications for pre-action disclosure, it is normally the applicant who is required to pay the costs of the respondent.
Applications for pre-action disclosure that are overly broad will be refused, so potential claimants should consider carefully the scope of any requests they make. In Hutchison 3G UK Limited v Vodafone, O2, Orange and T-Mobile  EWHC 55 (Comm), the claimant’s pre-action disclosure request was refused because it was too broad. That request related to a potential claim under articles 101 and 102 of the TFEU and was brought in the commercial court. The defendants denied there had been any anticompetitive conduct and resisted the applications for pre-action disclosure. The court agreed with them that as a matter of both jurisdiction and discretion the material sought was not necessary for Hutchison 3G to plead its case, that the claim was speculative in terms of liability, that the scale of the disclosure requested was very large and unfocused and was likely to go further than that which would be required under standard disclosure, and that the costs and difficulty of obtaining the documents requested were prohibitive.
The status of leniency applications and settlement agreements with the Commission or CMA has also been the subject of dispute in the context of High Court proceedings in recent years.
For cases begun on or after 9 March 2017, paragraph 28 of Schedule 8A (CA 1998), states that a court or tribunal must not make a disclosure order in respect of a settlement submission that has not been withdrawn or a cartel leniency statement (whether or not it has been withdrawn). A cartel ‘leniency statement’ means information provided, orally or in writing, to a competition authority, which consists of information about a cartel and the person’s role in relation to the cartel; is provided voluntarily; and is provided specifically for the purpose of the authority’s cartel leniency programme excluding any pre-existing information. It includes part of or a quotation from a cartel leniency statement; all or part of a record of the statement; or copies of either. Pre-existing information (eg, pre-existing contemporaneous documents) means information that exists irrespective of an authority’s investigations. Upon the application of a claimant, a court or tribunal can determine whether information is a cartel leniency statement.
Paragraph 32 of Schedule 8A (CA 1998) states that settlement submissions (which have not been withdrawn) or cartel leniency statements (regardless of whether they have been withdrawn) are not admissible in evidence in competition proceedings. However, if a party to the proceedings obtains the statement or submission lawfully and otherwise than from a competition authority’s file then these restrictions do not apply.
Paragraph 33 of Schedule 8A (CA 1998) also introduces a restriction over the use of a competition authority’s investigation materials. These are defined as information prepared by a person (other than a competition authority) for the purpose of an investigation by the competition authority; information sent by a competition authority during an investigation to the subject of the investigation; or a settlement submission that has been withdrawn.
Prior to the commencement in March 2017 of the Regulations that implemented the Damages Directive the European Court of Justice (ECJ) Case C-360/09, Pfleiderer v Bundeskartellamt and the judgment of the High Court in National Grid Electricity Transmission plc v ABB Ltd  EWHC 869 (Ch) had gone some way to clarifying the position in relation to the disclosure of documents submitted to national competition authorities and the European Commission under their respective leniency regimes. These cases may still continue to be relevant in relation to cases that were begun prior to 9 March 2017.
The Pfleiderer judgment arose out of a decision of the German national competition authority (the Federal Cartel Office (FCO)), which found an infringement of article 101(1) of the TFEU by a cartel of European manufacturers of decor paper. Following the decision, Pfleiderer, a purchaser of decor paper, applied to the FCO seeking access to the material on its file on the cartel, including documents relating to leniency applications, with a view to bringing follow-on damages actions. The FCO rejected Pfleiderer’s request in part and Pfleiderer then brought an action before the Bonn court challenging the FCO’s decision, seeking access to the complete file. The Bonn court made a reference to the ECJ.
In its judgment, the ECJ stated that, in considering an application for access to documents relating to a leniency programme submitted by a person who is seeking to obtain damages from another person who has taken advantage of such a leniency programme, it is necessary to weigh the respective interests in favour of disclosure of the information and in favour of the protection of that information provided voluntarily by the applicant for leniency. That weighing exercise can be conducted by the national courts and tribunals only on a case-by-case basis, according to national law, and taking into account all the relevant factors in the case. As such, the ECJ held that EU law does not preclude a damages claimant from being granted access to documents relating to a leniency procedure but that it is for the courts and tribunals of the member states, on the basis of their national law, to determine the conditions under which such access must be permitted or refused by weighing the interests protected by EU law.
The Pfleiderer judgment was considered in the English High Court in National Grid Electricity Transmission plc v ABB Ltd  EWHC 869 (Ch). In the course of the litigation, National Grid applied for disclosure of certain documents that may have contained information supplied in the context of leniency applications. These documents broadly fell within three categories:
- the confidential version of the Commission’s decision;
- ABB’s (ie, the immunity applicant’s) reply to the Commission’s statement of objections; and
- replies to requests for information made by the Commission. National Grid did not apply for disclosure of the corporate statements themselves.
The judge (Roth J) invited, and received, an amicus curiae observation from the Commission in relation to disclosure of certain leniency documents submitted to it as part of its leniency regime. The observations stated, among other things, that ‘the Commission’s long-established practice is that the corporate statements specifically prepared for submission under the leniency programme are given protection both during and after its investigation’. Having considered these observations, Roth J held that Pfleiderer, which was a decision in relation to the leniency programme of the national competition authority in Germany, equally applied to the Commission’s leniency programme and, accordingly, to the disclosure application in issue. He also held that it was not exclusively the Commission’s jurisdiction to determine the disclosure of leniency materials submitted to it and that a national court could conduct the Pfleiderer balancing exercise, weighing the interest in disclosure as against the need to protect an effective leniency programme.
Roth J held that a number of factors were relevant in the balancing exercise. The first of these was whether such disclosure would increase the leniency applicants’ exposure to liability or would put these parties at a relative disadvantage compared with the parties that did not cooperate.
Roth J stated that he did not think this was a realistic prospect in the circumstances of the case. Second, he considered relevant the potential effect of a disclosure order in this case in deterring potential leniency applicants as regards other cartels that are yet to be uncovered. Third, Roth J considered whether the disclosure sought was proportionate, an argument that he considered in light of whether the information was available from other sources and the relevance of the leniency materials being sought. As regards the first of these, Roth J held in the circumstances of the case, there were no other means available (at least not without excessive difficulty) for National Grid to derive the information. The question of relevance needed to be determined on a document by document basis, an exercise, which Roth J subsequently undertook. Ultimately, Roth J ordered only very limited disclosure of the documents requested.
In National Grid Electricity Transmission plc v ABB Ltd  EWHC 869 (Ch), following an application for specific disclosure by National Grid, Roth J ordered disclosure of certain documents held by the French-domiciled defendants, despite their argument that providing such disclosure would put them at risk of criminal prosecution in France by virtue of the ‘French blocking statute’ ( EWHC 822 (Ch)). Roth J proceeded on the basis that the production of the documents would infringe the French blocking statute but held that the existence of the blocking statute was not a sufficient reason for not ordering disclosure in this case as the likelihood of any prosecution being brought was very low. This decision, together with a decision arising out of the Servier litigation, was upheld on appeal (Secretary of State for Health v Servier Laboratories Limited; National Grid Electricity Transmission plc v ABB Limited  EWCA Civ 1234).
In ABF v Recticel  EWHC 3610 (Ch), Rose J also refused to order the disclosure of leniency documents. The case was a follow-on damages claim arising from the Commission’s decision that found that the defendant, among others, had been involved in a price fixing cartel relating to the sale of flexible polyurethane foam. The claimants requested the disclosure of drafts of the speaking notes for Recticel’s lawyers that they used in making oral leniency statements to the European Commission and certain questions that the Commission had asked. As the claim had been commenced before the Regulations that implemented the Damages Directive came into force, Rose J had to consider whether the public interest in protecting leniency documents was outweighed by the interest in facilitating this damages action (per Pfleiderer). Rose J exercised her discretion not to order the disclosure of either the drafts of the speaking note nor the Commission’s questions. The court held that the leniency regime in 2006 was carefully set up to prevent these statements falling into the hands of third parties.
In the context of disclosure, disputes may also arise relating to the disclosure of confidential infringement decisions. In Emerald Supplies Ltd v British Airways plc  EWHC 3513, the claimants claimed damage in respect of loss that they alleged was caused by the conduct of British Airways (BA) in a cartel in the market for air freight services. The Commission issued the confidential decision in Air Freight on 9 November 2010 but had not, by the time of the hearing, issued a non-confidential version of that decision. The High Court ordered that the unredacted confidential Commission decision, minus leniency material and material for which legal professional privilege was claimed, be disclosed to all parties but subject to a confidentiality ring. In addition, the court ordered that the claimants could not bring proceedings against anybody other than those already listed (in the Part 20 proceedings) without permission of the court. The court held that these arrangements were consistent with the Court of First Instance’s judgment in Pergan Hilfsstoffe für industrielle Prozesse GmbH v Commission  T474/04 in protecting trade secrets and confidentiality. Separately, in May 2015, the Commission published a non-confidential version of the decision.
The Court of Appeal overturned this judgment on appeal. It found that the judge was not entitled as a matter of law to relax or amend the Pergan safeguards (to protect the presumption of innocence) recognised by the Commission in its publication of the provisional non-confidential decision. There was no principled basis for an approach that permits a judge in national court proceedings to allow a claimant in a damages action to achieve an advantage (access to an unredacted, non-Pergan protected, version of the decision) that such a party could not obtain at the Community level. The General Court in Pergan was well aware that disclosure in that case would create a risk that Pergan would be subject to damages actions in national courts and that one purpose of Pergan’s application was to ensure that particular information did not reach potential claimants. Delay by the Commission in the production of the non-confidential decision did not relieve the High Court of its mutual cooperation obligations under article 4(3) of the TFEU and in this case there was a real risk that the judge’s order would conflict with any future decisions by the Commission on outstanding redaction applications. Permission to appeal the decision to the Supreme Court was denied.
In a further related development, in December 2015, the General Court annulled the Commission’s decision in Air Cargo as against a number of the addressees. The Commission announced that it will not appeal the judgment.
Follow-on damages claims brought in the CAT require claimants to annex to the claim form, a copy of any infringement decision and copies of any document referred to in the claim form (CAT Rule 30(5)(a)-(b). In practice, as noted above, claimants in follow-on damages actions are likely to rely to a large extent on documents in the hands of the defendant, and on the CAT to order disclosure of them. The CAT may at any point give directions as to how disclosure is to be given and, in particular, what searches are to be undertaken, in what format documents are to be disclosed and whether disclosure is to take place in stages (CAT Rule 60(3); see also CAT Rule 89 in relation to disclosure in collective proceedings under section 47B of CA 1998). A party’s duty to disclose documents is limited to documents that are or have been in its control. In practice, as with High Court proceedings, the CAT orders disclosure after close of pleadings. As is the case in High Court litigation, privileged documents are protected from disclosure; and confidentiality rings are also used to ensure commercially sensitive information is ring-fenced as appropriate.
In addition to this ‘standard disclosure’ in the CAT, it is also possible for parties to request specific disclosure, in particular because the requirement to disclose documents with pleadings only applies to documents supporting the case. In this respect, the CAT has adopted the general rules of disclosure set out in the CPR (see Aqua Vitae (UK) Limited v DGWS  CAT 4). In order to obtain specific disclosure, the applicant must specifically identify the documents sought. The application will be rejected if the documents are not relevant and necessary for the fair and just disposal of the proceedings, although the CAT will look at the case as a whole (Albion Water Limited v Water Services Regulation Authority  CAT 3).
The CAT Rules introduced more detailed guidelines for disclosure in proceedings in the CAT. The CAT may at any point give directions as to how disclosure is to be given including what searches are to be undertaken, whether lists of documents are required, the format in which documents are to be disclosed and the requirements in relation to documents that no longer exist (CAT Rule 60(3)). The CAT will decide whether and when a disclosure report and electronic documents questionnaire should be filed (CAT Rule 60(2)). Under CAT Rule 60(1)(b), a disclosure report (which will be verified by a statement of truth) will describe:
- briefly what documents exist or may exist that are or may be relevant to the matters in issue in the case;
- where and with whom those documents are or may be located;
- in the case of electronic documents, how those documents are stored;
- an estimate of the costs of giving disclosure; and
- which directions are to be sought regarding disclosure.
Under CAT Rule 60(1)(c), an electronic documents questionnaire is in the form of the questionnaire in the schedule to Practice Direction 31B of the CPR.
The CAT Rules propose that the claimant or claimants submit a claim form which states (among other things) whether the claim is in respect of an infringement decision (and if so whether that decision has become final), a concise statement of the relevant facts and of any contentions of law that are relied on and the relief sought (CAT Rule 30(3)). The CAT Rules require a claimant to annex a copy of the infringement decision (in the event that they have a copy of it): ‘copies of any documents referred to in the claim form’ and ‘such other documents or annexes as may be specified by practice direction’ (CAT Rule 30(5)).
Under the CAT Rules, in addition to disclosure in the course of litigation, claimants or potential claimants can make an application (supported by evidence) to the CAT for disclosure before proceedings have started (CAT Rule 62). In order for the CAT to make an order, similar requirements to those set out in CPR Part 31 for the High Court apply. CAT Rule 62(3) states that the CAT may make an order only where:
- the respondent is likely to be a party to subsequent proceedings;
- the applicant is also likely to be a party to those proceedings;
- the CAT would, if proceedings had started, have ordered disclosure; and
- disclosure before proceedings have started is desirable either in order to dispose fairly of the anticipated proceedings, to assist the dispute to be resolved without proceedings, or to save costs.
The CAT Rules provide that the CAT can order disclosure from non-parties on similar grounds to the High Court. The CAT may make such an order only if the documents sought are likely to support the case of the applicant or adversely affect the case of one of the other parties to the proceedings, and disclosure is necessary in order to dispose fairly of the claim or to save costs (CAT Rule 63). Under CAT Rule 53(2)(l), the CAT may give directions ‘for the disclosure and the production of by a party or third party of documents or classes of documents’.
In addition, the CAT Rules provide that a person may apply, without notice, for an order permitting the withholding of disclosure of a document on the ground that disclosure would damage the public interest (CAT Rule 64). Such an application must be supported by evidence and, for the purpose of deciding an application, the CAT may require the person seeking to withhold the document to produce it to the CAT, and invite any person, whether or not a party, to make representations (CAT Rule 64(6)).
The CAT Rules also outline that a party to whom any document has been provided by the CAT, by any other party as part of the proceedings, or in accordance with an order under CAT Rule 63 (an order for disclosure against a person who is not party to the proceedings) may use that document only for the purposes of those proceedings (CAT Rule 102). This rule will apply except where:
- a document has been read to or by the CAT, or referred to, at a hearing that has been held in public;
- the CAT gives permission; or
- the party who produced or disclosed the document and the person to whom the document belongs agree.
This exception will not apply to a document or part of a document provided within a confidentiality ring, if the CAT gives permission for further use of that document. The CAT may, either of its own initiative or on the application of a party, make an order restricting or prohibiting the use of any document provided in the course of proceedings, even where the document has been read to or by the CAT, or referred to, at a hearing that has been held in public (CAT Rule 102(5)). An application for such an order may be made by:
- by a party;
- by any person to whom the document belongs; or
- by any person who claims that the document contains confidential information relating to them.
See also the rules on the disclosure or use in evidence of leniency statements and settlement submissions set out above.
What evidence is admissible?
Factual evidence in the High Court may take the form of documents or witness evidence.
In relation to documents, contemporaneous documents can be particularly valuable in relation to allegations of collusive or cartel activity where evidence is sparse. For example, in Bookmakers Afternoon Greyhound Services Limited v Amalgamated Racing Limited ( EWHC 2688 (Ch)) the court accepted that ‘documents which pointed, even obliquely, to the existence of an agreement or concerted practice had particular weight’ (paragraph 18). Under CPR 32.19, a party is deemed to admit the authenticity of any document disclosed to him or her under CPR 31 unless notice is served requiring the other party to prove the document at trial.
In relation to witness evidence, this is provided in witness statements and oral evidence at trial. Witness statements stand as the witness’s evidence in chief (CPR 32.5(2)) with the witness then being cross-examined and re-examined at trial. The weight given to witness evidence will of course depend on the witness’s credibility, as well as the other circumstances of the case. A party wishing to secure evidence of a witness present within the jurisdiction to give oral evidence at trial can also issue a witness summons under CPR 34.31.
The rules on expert evidence are set out in CPR 35. Expert evidence may only be given with the permission of the court and follows exchange of witness statements from the witnesses of fact. Under CPR 35.3 the expert is subject to an express duty to help the court on the matters within his or her expertise, and this duty overrides any obligation to the party from whom he has received instructions. Expert evidence is given initially in the form of a written report (eg, an economist’s report defining the relevant market, or a forensic accountant’s report on the loss suffered by the claimant). Following exchange of expert reports, written questions may be put to the expert by the other party. The experts may also be ordered to meet in order to identify those issues on which they agree and those on which they disagree, and to report back to the court accordingly (CPR 35.12). Experts will also be subject to cross-examination (and re-examination) at trial.
The court can also order that expert evidence be provided by a single expert appointed jointly (CPR 35.7). This is unlikely to be used much in competition cases, given their complexity.
In relation to factual evidence in proceedings in the CAT, the tribunal held in Argos and Littlewoods v OFT  CAT 16 that it will ‘be guided by overall considerations of fairness rather than technical rules of evidence’. Many factors, including whether the evidence in question is hearsay evidence, can affect the weight it is given (Aberdeen Journals v OFT  CAT 11). As in the High Court, factual evidence in the CAT can include contemporaneous documents and written and oral evidence from witnesses. The CAT’s approach to witness statements is to give them such weight as seems appropriate in the circumstances, bearing in mind the extent to which cross-examination has been sought. Under CAT Rule 55, the CAT has the general power to control the evidence placed before it by giving directions as to the issues on which it requires evidence, the nature of the evidence it requires, and the way in which the evidence is to be placed before it.
Expert evidence can be given in the CAT as it can before the High Court. Again, in the context of follow-on damages actions, this involves the submission of expert reports, and experts may be cross-examined at trial. As set out in the CPR in relation to High Court proceedings, paragraph 7.67 of the CAT Guide to Proceedings (October 2015) (CAT Guide) states that the expert is subject to an overriding obligation to the CAT to assist on the matters within his or her expertise. Single joint experts may also be appointed in CAT proceedings, although, as noted above, it is unlikely that they would be in the context of complex follow-on damages claims (CAT Guide paragraph 7.66).
In relation to evidence, CAT Rule 55(1) provides that the CAT may give directions, among other things, as to:
- the provision by parties of statements of agreed matters;
- the issues on which it requires evidence, and the admission or exclusion from the proceedings of evidence;
- the nature of the evidence that it requires to decide those issues;
- whether the parties are permitted to provide expert evidence;
- any limit on the number of witnesses whose evidence a party may put forward, whether in relation to a particular issue or generally; and
- the way in which evidence is to be placed before the CAT.
Under CAT Rule 55(5), the CAT may also dispense with the need to call a witness to give oral evidence if a witness statement has been submitted in respect of that witness. The CAT may limit cross-examination of witnesses to any extent or in any manner it deems appropriate (CAT Rule 55(6)). The CAT also has the power, at the request of any party, to issue a summons requiring a person in the UK to attend as a witness before the CAT and, or answer any questions or produce any documents or other material in their possession or control that are relevant to the proceedings (CAT Rule 56).
They also provide that the CAT may give directions for the appointment and instruction of experts, whether by the CAT or by the parties and the manner in which expert evidence is to be given (CAT Rule 53(2)(e)).
The CAT may sometimes organise, prior to or during the hearing, a structured discussion, in the presence of the CAT, between the parties and their experts in an endeavour to focus on the main points of dispute. This may include, for example:
- experts being asked to agree joint statements;
- the opportunity to put written questions to the experts;
- directing ‘without prejudice’ discussions between the experts; and
- the appointment of a single joint expert or of the CAT’s own expert.
For example, in the appeal brought by GSK and others against the CMA’s decision regarding Paroxetine, the CAT ordered that certain expert evidence of like discipline should be given concurrently (‘hot-tubbing’). This typically involves the CAT putting questions to experts in relation to a particular issue as an alternative to cross-examination.
Legal privilege protection
What evidence is protected by legal privilege?
There are two types of privilege in English law: legal advice privilege and litigation privilege. They apply in both High Court and CAT proceedings. The practical consequence of a document being privileged is that, while it must be included on a disclosure list (in the High Court), it cannot be inspected.
The CAT Rules provide that where a party inadvertently discloses a privileged document, the party who has seen the document may use it or its contents only with the permission of the CAT (CAT Rule 65).
The law on privilege has been subject to two important recent judgments the RBS Rights Issue Litigation  EWHC 3161 (Ch) and the Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Limited  1017 (QB). These judgments have had the impact of potentially limiting privilege in England and Wales. SFO v ENRC is currently on appeal.
Legal advice privilege
Legal advice privilege covers confidential communications between client and lawyer for the purpose of giving or receiving legal advice. There are three elements to this:
- The communication must be confidential, so anything that has come into the public domain or anything that has been circulated widely such that it can no longer be considered confidential, will not be privileged.
- The communication must be between lawyer and client. Under English law, ‘lawyer’ includes both external and in-house counsel, provided they are authorised persons as defined by the Legal Service Act 2007 (ie, qualified in any jurisdiction). In this respect, English law is different from the position under EU law as confirmed by the ECJ in case C-550/07 P Akzo Nobel Chemicals Ltd v Commission. Following Three Rivers (No. 5)  EWCA Civ 474, the definition of ‘client’ may be relatively restricted in some circumstances: in the context of an undertaking it may apply only to a unit or certain specific persons within the undertaking who are instructing the lawyers, rather than all employees within the undertaking.
- The communication must be made for the purpose of giving or receiving legal advice. For example, communications between a lawyer (internal or external) and persons within the business discussing commercial issues but not providing legal advice in relation to them, will not be privileged.
In the RBS Rights Issue Litigation  EWHC 3136 (Ch), RBS claimed privilege over transcripts, notes or other records of interviews conducted by or on behalf of RBS’s lawyers with employees and ex-employees in relation to two internal investigations. RBS argued that the interview notes were subject to legal advice privilege and alternatively that they were lawyers’ privileged working papers. The High Court considered that it was ultimately a question of evidence as to whether the interview notes would, by reason of the legal input they reflect, give a clue as to the legal advice (or some aspect of it) given to RBS.
Hilyard J found that the client for the purposes of privilege consists only of those employees authorised to seek and receive legal advice from the lawyer, and that legal advice privilege does not extend to information provided by employees and ex-employees to or for the purpose of being placed before a lawyer. He held that the interview notes comprised information gathering from employees preparatory to and for the purpose of enabling RBS to seek and receive legal advice. Therefore, the individuals interviewed were providers of information as employees and not clients; and the notes were not communications between client and legal adviser. According to the High Court, it was clear from Three Rivers (No. 5) that information from an employee was equivalent to information from a third party or independent agent.
In English law, lawyers’ working papers are privileged under the legal professional privilege doctrine. The justification for withholding such documents is that disclosure of them would give the party requesting them a clue to the advice that had been given by the solicitor (Lyell v Kennedy (No. 3)  27 Ch D 1). Where the selection of documents that a solicitor has copied or assembled betrays the trend of advice that he is giving the client, the documents are privileged (Ventouris v Mountain  1 WLR 607). Hilyard J said that the question was ultimately an evidential one: has the likelihood sufficiently been demonstrated that the notes would by reason of the legal input they reflect give a clue as to the legal advice (or some aspect of the legal advice) given to RBS? Hilyard J found that all that had been offered by RBS in this regard was that the interview notes contained annotations as to the ‘mental impressions’ reflecting or giving a clue as to the trend of legal advice. The High Court held that this was not sufficient to substantiate the claim to privilege on the basis of lawyers’ working papers.
Litigation privilege covers confidential communications between client and lawyer or between one of them and a third party, which come into existence after litigation is contemplated or has been started and made with a view to obtaining or giving legal advice in relation to the litigation, obtaining evidence to be used in it, or obtaining information that may lead to the obtaining of evidence. These must be the sole or dominant purposes of the communications if they are to attract litigation privilege. This would cover, for example, correspondence with witnesses of fact, experts, reports and drafts etc. made in the context of bringing or defending a follow-on damages action. Litigation may be considered to be ‘in prospect or pending’ at the stage of the Commission or CMA investigation, such that any documents produced would be covered by litigation privilege.
In Tesco Stores Limited v Office of Fair Trading  CAT 6, the CAT refused an application by the OFT (as it then was) for disclosure of information about Tesco’s contacts with potential witnesses and records of discussions with those individuals. In so doing, the CAT stated that the question with regard to litigation privilege was whether the OFT’s investigation could properly be classified as adversarial, as opposed to merely investigative or inquisitorial, at the time that Tesco contacted potential witnesses prior to the OFT’s Dairy retail price initiatives decision. The CAT held that the proceedings were confrontational by the time that Tesco began collecting the material as the OFT had already issued a statement of objections and a supplementary statement of objections and Tesco stood accused of wrongdoing. Accordingly, the administrative procedure was sufficiently adversarial by the time third-party witnesses were contacted that the material Tesco gathered was subject to litigation privilege.
In SFO v ENRC  1017 (QB), the High Court considered the circumstances in which legal advice and litigation privilege can arise in circumstances of potential criminal litigation. The Director of the SFO applied for a declaration that certain documents generated during investigations by solicitors and forensic accountants were not subject to legal professional privilege.
As regards legal advice privilege, the High Court found that where the client is a corporate entity, legal advice privilege attaches only to communications between the lawyer and those individuals who are authorised to obtain legal advice on that entity’s behalf. Following the RBS Rights Issue Litigation  EWHC 3161 (Ch), Andrews J held that communications between solicitors and employees or officers of the client, however senior in the corporate hierarchy, who do not fall within that description will not be subject to legal advice privilege. In the context of carrying out evidence-gathering or fact-finding investigations, while the employee was authorised to hand over the information, he or she does not thereby become part of the confidential lawyer-client relationship. The High Court, when considering the protections afforded to working papers, found that the client cannot obtain the protection of legal advice privilege over interview notes that would not be privileged if he or she had interviewed the witness himself or herself, or a third party had done so, simply because he or she procured a lawyer to interview the witness.
As regards litigation privilege, Andrews J, following established case law, said that whether or not litigation is reasonably in prospect is an objective question that also requires consideration of the actual state of mind of the party claiming privilege. Andrews J held that if a document is created with the express purpose of showing it to the prospective adversary, or with the intention or understanding that it will be shown to him (eg, a position statement prepared for a mediation) then it cannot be subject to litigation privilege. She rejected ENRC’s submission that litigation privilege extends to third-party documents created in order to obtain legal advice as to how best to avoid contemplated litigation (even if that entails seeking to settle the dispute before proceedings are issued). In the context of criminal proceedings, Andrews J also held that reasonable contemplation of a criminal investigation is not necessarily the same as reasonable contemplation of a criminal prosecution (ie, litigation). In this regard, she emphasised that litigation only covers documents prepared for the dominant purpose of the conduct of litigation. This judgment is on appeal.
Privileged status of leniency applications and settlement agreements?
In relation to follow-on damages arising from a decision of the Commission or the CMA, any document submitted by the parties to the investigation to the regulator has arguably lost its ‘confidential’ status and may therefore not be privileged. Such documents would form part of the case file and therefore be disclosed to other parties as part of access to file. The position taken by the Commission is that, as a matter of public policy, leniency applications must not be disclosed (paragraph 40 of the Leniency Notice (OJ 2006 C298/22)) as to do so risks jeopardising the attractiveness of making an application, and thereby threatens the leniency regime; this is also the position it has adopted in relation to settlement agreements (paragraph 40 of the Settlement Notice (OJ 2008 C167/6)). In National Grid Electricity Transmission plc v ABB Ltd, the Commission submitted an amicus curiae observation in which it stated that:
‘The willingness of companies to provide comprehensive and candid information is crucial to the success of the leniency programme, which is the most effective tool at the Commission’s disposal for the detection of secret cartels. To this end, the Commission’s policy has been that undertakings which voluntarily cooperate with DG Competition in revealing cartels should not be put in a significantly worse position in respect of civil claims than other cartel members which refuse any cooperation. In practical terms, this means the Commission’s long-established practice is that the corporate statements specifically prepared for submission under the leniency programme are given protection both during and after its investigation’.
Furthermore, the European Competition Network (representing EU national competition authorities and the Commission) passed a resolution on the ‘Protection of leniency material in the context of civil damages actions’ (23 May 2012) in which it stated that the protection of leniency applications was ‘fundamental for the effectiveness of anti-cartel enforcement’.
Paragraph 32 of Schedule 8A (CA 1998) states that settlement submissions (which have not been withdrawn) and cartel leniency statements (regardless of whether they have been withdrawn) are not admissible in evidence in competition proceedings. However, if a party to the proceedings obtains the statement or submission lawfully and otherwise than from a competition authority’s file then these restrictions do not apply. See also question 9.
Are private actions available where there has been a criminal conviction in respect of the same matter?
Under section 188 of EA 2002 only an individual can be found guilty of the criminal cartel offence. Private damages actions, on the other hand, would tend to be brought against the company that has breached competition law.
Private actions are available where there has been a criminal conviction in respect of the same matter. The Marine Hose cartel is an example: in January 2009, the Commission fined a number of undertakings for their participation in the cartel, including Dunlop Oil & Marine. Following a plea-bargain process in the United States, in June 2008, three Dunlop executives pleaded guilty and were convicted in the United Kingdom for their role in the cartel. In July 2009, the Libyan oil firm Waha Oil Company lodged a claim for damages against Dunlop in the High Court.
In Marine Hose, the criminal cases had already concluded by the time the follow-on litigation was brought. This need not necessarily be the case, although where a private action and criminal proceedings are brought at the same time, the private action may be stayed pending the outcome of the criminal proceedings. In the Passenger Fuel Surcharge case, a civil investigation by the OFT (as it then was) into British Airways and Virgin Atlantic regarding the fixing of passenger fuel surcharges on transatlantic routes was stayed pending the outcome of the criminal prosecution it brought against four of the British Airways executives, which collapsed in May 2010. The OFT subsequently resumed its civil investigation, imposing a fine on British Airways.
The OFT charged three of individuals (one of whom pleaded guilty) in relation to a suspected cartel relating to the supply of galvanised steel tanks for water storage. In June 2015, a jury unanimously acquitted the two executives who pleaded not guilty. In September 2017, a UK businessman, after having pleaded guilty to criminal charges (under section 188 of EA 2002) for his alleged role in fixing prices for precast drainage products, was sentenced to two years’ imprisonment (suspended for two years) and made the subject of a six-month curfew order from 6am to 6pm. He was also disqualified from being a company director for a period of seven years.
Utilising of criminal evidence
Can the evidence or findings in criminal proceedings be relied on by plaintiffs in parallel private actions? Are leniency applicants protected from follow-on litigation? Do the competition authorities routinely disclose documents obtained in their investigations to private claimants?
The claimant in a private action is required to prove all the elements of his or her claim, subject to the fact that a relevant decision of the Commission or the CMA is binding on the court, provided that it is final (ie, no appeal has been lodged against the decision and the time limit for appealing has expired; or all avenues of appeal have been exhausted). As such, the claimant will be required to show evidence of loss and causation in a follow-on claim and, in a stand-alone claim, evidence of the infringement as well. The fact that an individual has been convicted of a criminal offence is admissible in civil proceedings in order to prove the infringement has been committed, but this will just be one piece of evidence in establishing the infringement and will not, of course, assist in showing loss or causation.
EA 2002 has specific rules governing the admissibility of evidence discovered in criminal proceedings. The CMA and the Serious Fraud Office (SFO), the bodies in the UK responsible for investigating the criminal cartel offence, are entitled to disclose information that has come to their attention in the course of a criminal investigation in specified circumstances only. They are not permitted to disclose such information to assist potential claimants seeking damages unless the information has already legitimately been disclosed to the public. The CMA and the SFO have entered into a memorandum of understanding that outlines the basis on which the CMA and SFO will cooperate when investigating or prosecuting individuals under the criminal cartel offence in circumstances where serious or complex fraud is suspected.
For claims where the loss or damage suffered from an infringement takes place before 9 March 2017, there are no statutory provisions protecting leniency or immunity applicants from follow-on damages claims brought in England and Wales. A court will have to consider whether the public interest in protecting leniency documents is outweighed by the interest in facilitating this damages action per Pfleiderer (see question 9). However, for claims where the loss or damage suffered from an infringement takes place on or after 9 March 2017, paragraphs 15 and 16 of Schedule 8A (CA 1998) apply to undertakings that have been granted immunity from financial penalties under a cartel leniency programme.
Paragraph 15 of Schedule 8A (CA 1998) states that an immunity recipient is not liable (either alone or jointly) to pay damages in respect of loss or damage suffered by a person as a result of the cartel infringement (whatever the legal basis of liability) except in the following circumstances:
- the person is unable to obtain full compensation for the loss or damage from other undertakings involved in the cartel infringement;
- the person acquired (or provided) a product or service that was the object of the cartel infringement directly or indirectly from the immunity recipient (or to the immunity recipient);
- the person acquired a product or service containing or derived from a product or service that was the object of the cartel infringement indirectly from the immunity recipient; or
- the product or service that was the object of the cartel infringement contained or was derived from a product or service provided by the person.
The CMA and the Commission do not routinely disclose documents obtained in their investigations directly to private claimants.
For claims begun on or after 9 March 2017, a court or tribunal must not make a disclosure order addressed to a competition authority in respect of documents or information included in a competition authority’s file except where the court or tribunal is satisfied that no one else is reasonably able to provide the document or information (paragraph 30, Schedule 8A of CA 1998) (see question 9 in relation to cartel leniency statements and settlement submissions).
Stay of proceedings
In which circumstances can a defendant petition the court for a stay of proceedings in a private antitrust action?
National courts are under a duty not to take decisions running counter to those of the European Commission or courts (article 16 of Regulation (EC) No. 1/2003). Furthermore, a relevant decision of the Commission or the CMA is binding on the court, provided that it is final (ie, no appeal has been lodged against the decision and the time limit for appealing has expired; or all avenues of appeal have been exhausted). Where a follow-on damages action is brought in the UK in circumstances where the underlying Commission decision is being appealed to the European courts, defendants may therefore apply for an action to be stayed pending the outcome of the appeal.
In proceedings in the High Court, there is no specific provision relating to competition litigation, but CPR 3.1(2)(f) allows the court to stay proceedings as part of its general case management powers.
In WM Morrison Supermarkets plc v MasterCard Incorporated  EWHC 1071 (Comm), the claimants claimed damages against MasterCard in respect of alleged losses suffered as a result of intra-EEA and UK arrangements for the setting of multilateral interchange fees on MasterCard transactions. The European Commission had adopted an infringement decision in relation to MasterCard’s intra-EEA arrangements that was being appealed to the ECJ. No infringement decision had been made in relation to the UK arrangements (an earlier OFT decision had been overturned on appeal). The claim therefore comprised both a follow-on claim (in relation to the intra-EEA arrangements) and a stand-alone claim (in relation to the UK arrangements).
Certain of the MasterCard defendants made an application for an immediate stay of proceedings until the ECJ appeal had been determined. The court dismissed the application, finding that although a stay would be necessary at some time before trial, the defendants ought to be required to file their defences and then a case management conference held regarding the future progress of the case. This was on the basis that:
- in the overall scheme of the litigation, the expense to which the defendants would be put in terms of time and money in pleading defences and preparing for a case management conference was relatively modest;
- the anticompetitive behaviour complained of began in 1992 and there was a ‘pressing need’ to proceed with the litigation;
- even if the appeal to the ECJ resulted in the annulment of the decision, there was an appreciable chance that the UK claim would continue and so the risk that the defendants might incur wasted costs and expend wasted time for which they were not fully compensated was not compellingly high; and
- if there was an immediate stay and the appeal to the ECJ was dismissed, the claimants would suffer the prejudice of a considerable delay in having their claims determined for which they might not be fully compensated by an award of interest.
The court refused the application for an immediate stay and ordered that the action should continue to a case management conference (CMC). This was in line with the approach taken by the High Court in National Grid v ABB  EWHC 1326 (Ch). A further application for a stay of proceedings in the MasterCard litigation was rejected by the court, which conducted a similar analysis (WM Morrison Supermarkets plc v MasterCard Incorporated  EWHC 3082 (Comm)).
In Secretary of State for Health v Servier Laboratories Ltd  EWHC 2761 (Ch), the defendants applied for a stay of proceedings on the basis that there was a substantial overlap between the claim and an ongoing investigation by the European Commission: both the claims and the Commission’s investigation concerned alleged infringements of articles 101 and 102 of the TFEU in relation to the same product, Perindopril, and the same conduct in relation to that product, namely the enforcement of Perindopril patents and the conclusion of patent settlement agreements with generic companies. The court partially granted the stay until the conclusion of Servier’s oral hearing in the Commission investigation. However, it held that it would not be appropriate to order the stay to continue for more than a short period after the end of the oral hearing, after which disclosure could commence (although the court recognised that a trial could only take place after all European proceedings had been exhausted). In a further hearing (unreported), Servier successfully applied to amend the case management directions to postpone the commencement of its disclosure obligations until the conclusion of an appeal in relation to the impact of the French blocking statute (to which see further question 9) on its disclosure obligations in the case.
In Infederation Ltd v Google Inc  EWHC 2295 (Ch), Google sought a stay to proceedings brought by Infederation that alleged that Google had abused its dominant position, on the basis that Google had also offered commitments in response to European Commission preliminary findings that certain of Google’s business practices might be considered abusive and it would be disproportionate to embark on standard disclosure in this case as the Commission was expected to clarify its position ‘in the very near future’.
In refusing both applications, and ordering limited, targeted, disclosure, Roth J summarised the principles that would govern a court’s approach to considering how far it was appropriate to allow an action to progress when there were EU proceedings concerning the same issues ongoing. These principles were:
- there was no objection as a matter of EU law for the national proceedings to continue to a point short of an actual decision or judgment;
- it was in the discretion of the court to determine what steps short of trial should be taken;
- that discretion was to be exercised having regard to the overriding objective and the requirement to avoid a decision that was counter to that of the Commission or the EU courts;
- it would normally be appropriate to require the defendants to plead a defence; and
- whether further steps should be taken depended on all the circumstances, including, among other things, whether the proceedings were a follow-on action subsequent to a Commission decision or an action brought in parallel to a Commission investigation.
In proceedings in the CAT, the tribunal has case management powers that allow it to stay proceedings where appropriate (CAT Rule 51(2)(k)) for section 47A of CA 1998 claims see also Rule 85(1)(k) for collective proceedings under section 47B of CA 1998. In addition, section 58A of CA 1998 (as amended by CRA 2015) states that in respect of claims brought on the basis of an infringement decision of the Commission or the CMA (follow-on claims), the CAT will be bound by that decision once it has become ‘final’ (ie, all avenues of appeal have been exhausted or the time for bringing such appeals has expired). Under the old rules, follow-on claims could not be brought until a decision became final unless the CAT granted permission. There were a number of important cases on this issue that may still be relevant to the CAT’s consideration of whether to stay a follow-on claim or part of such a claim in circumstances where a decision has not yet become ‘final’. The outcome of the Court of Appeal’s judgment in BCL Old Co Ltd v BASF SE  EWCA Civ 434 was that permission to bring a follow-on claim is limited to circumstances where the substance of the infringement finding is being contested and is not required where an appeal relates only to the fine. In Emerson I, the claimant sought to bring a follow-on action in the CAT against Morgan Crucible, the leniency applicant in the Commission’s infringement case. Other addressees of the decision were appealing the decision, but Morgan Crucible, as the leniency applicant, was not. The CAT held that permission was required to commence proceedings where the underlying infringement decision was being appealed by any of the addressees (Emerson Electric Co v Morgan Crucible  CAT 28). However, in Emerson II, the CAT granted permission for the action to be brought against Morgan Crucible, although it indicated that proceedings may be stayed prior to the case coming to trial, and proceedings were in any event stayed against Morgan Crucible by agreement (Emerson Electric v Morgan Crucible  CAT 30). In Emerson III, the claimants went back to the CAT to ask for permission to bring proceedings against the other parties to the Commission’s infringement decision who were appealing to the European courts, but permission was refused (Emerson v Morgan Crucible  CAT 8).
Standard of proof
What is the applicable standard of proof for claimants? Is passing on a matter for the claimant or defendant to prove? What is the applicable standard of proof?
The burden of proof in private antitrust litigation falls on the claimant to establish that there has been an infringement, loss and causation. In relation to the infringement aspect, a decision of the CMA or European Commission will be binding on the court, provided that it is final (ie, no appeal has been lodged against the decision and the time limit for appealing has expired; or all avenues of appeal have been exhausted). It therefore falls to the claimant to prove causation and loss in a follow-on damages claim, and to prove the entire infringement as well as causation and loss in the case of a stand-alone claim.
For claims begun on or after 9 March 2017, paragraph 35, Schedule 8A of CA 1998 provides that a final decision of a member state competition authority or a review court that there has been an infringement of competition law is prima facie evidence of an infringement.
The standard of proof in competition litigation cases, as for all civil claims, is the ‘balance of probabilities’ (ie, more likely than not). The High Court in Attheraces v British Horseracing Board  EWHC 3015 (Ch) held that while the standard of proof is the civil standard of balance of probabilities, the seriousness of an infringement of the competition rules required the proof of evidence to be ‘commensurately cogent and convincing’. This is sometimes referred to as a ‘heightened civil standard’.
For claims where the loss or damage suffered as a result of infringement took place wholly on or after 9 March 2017, it is presumed, unless the contrary is proved, that a cartel causes loss or damage.
In relation to passing-on defences, see question 35.
What is the typical timetable for collective and single party proceedings? Is it possible to accelerate proceedings?
The timetable in the context of a private antitrust action in the High Court will depend on the nature of the proceedings and the complexity of the case. In relation to a follow-on damages case, much will depend on:
- whether proceedings are stayed;
- how extensive disclosure is;
- the number of witnesses; and
- other such issues.
In relation to a stand-alone claim, again the complexity of the issues will largely determine the typical timetable. The practice in high-value claims assigned to the ‘multi-track’ procedure under the CPR is to have a case management conference after close of pleadings (CPR 29.3), in which a timetable to trial is agreed or ordered, which sets deadlines for the various stages in the proceedings (eg, disclosure, exchange of witness statements and expert reports). Cases may be expedited where circumstances warrant it (see, for example, the Admiralty and Commercial Courts Guide, section J1), but this will be rare for a damages claim.
Cases in the High Court can be subject to strike-out or summary judgment applications where the statements of case disclose no cause of action or the claimant or defendant has no real prospect of success (CPR 3 and 24). For example, a margin-squeeze allegation made under article 101(1) of the TFEU was summarily dismissed by the High Court in Unipart v O2  EWHC 2549 (Ch) within three months of the claim being issued. On the other hand, in Adidas v ITF  EWHC 1318 (Ch) the court held that the complexity of the competition law issues meant that striking out the claim or defence would be inappropriate.
Issues may also be tried as ‘preliminary issues’ where to do so could allow the court to dispose of proceedings expeditiously (see, for example, the Chancery Guide, paragraph 3.15 and CPR 3.1(2)(l)), by hiving off a specific issue that can be dealt with discretely and that would allow the action to be determined without recourse to a full trial on all the issues. In Sainsburys Supermarkets Ltd v MasterCard Inc  EWHC 4554 (Ch), the court rejected an application for an argument based on ex turpi causa (see question 36) to be tried as a preliminary issue. The court held that such an application involved a balancing of competing factors and in this case it was not clear that, if the preliminary issue was decided in MasterCard’s favour, the entire claim would be disposed of. The court stated that irrespective of the outcome of the preliminary issue, there was the real possibility that there might still have to be a trial on the question of infringement and, even if success on the preliminary issue did avoid a substantive trial of the main action, it was entirely possible that that result could be achieved without the extra expense and effort of trying the preliminary issue because of MasterCard’s appeal against the relevant Commission infringement decision. Finally, the court regarded the time, expense and evidence required in order to hear the preliminary issue as being potentially substantial. In Streetmap.Eu Limited v Google Inc and Others  EWHC 253 (Ch), the claimant brought a stand-alone claim in the High Court alleging that Google had abused its dominant position in the market for online search and search advertising. In this case, it was directed that the allegations of abuse raised by Streetmap should be tried as a preliminary issue, on the assumption that Google held a dominant position as alleged. Roth J noted that this appeared to be a sensible course, since if the abuse allegations failed, that would be an end of the matter, whereas if they succeeded, the question of dominance could be determined at a subsequent trial.
In Emerald Supplies v British Airways plc  EWHC 3514, the court considered two applications for summary judgment and strike-out (one by the defendant, one by the claimant). The defendant’s application was for strike-out and summary dismissal of the claimant’s claims in the torts of unlawful means conspiracy and unlawful interference. The claimant’s application was for two contentions of law in British Airways’ defence to be declared incorrect, struck out or summarily dismissed. In relation to the defendant’s application, the court noted that the arguments for and against were heavily fact-based and did not believe that the factual platform for these legal arguments was clearly established at this stage in the proceedings. For that reason, the court ordered that the application be adjourned until at the earliest after disclosure had taken place. With regard to the claimant’s application, the court did not think it was appropriate to decide this important point of principle at a summary judgment stage and adjourned the application. Certain of the defendants appealed to the Court of Appeal to seek to overturn the High Court’s decision (Emerald Supplies Limited v British Airways plc  EWCA Civ 1024). The Court of Appeal accepted that where the issue of law depends upon facts, which have yet to be determined, it cannot be right for a court to strike out the case, or any part of it, before disclosure. That was not, however, the position in this case as there was sufficient material before the judge to determine the issue.
In Tesco Stores Ltd and Others v MasterCard Incorporated and Others  EWHC 1145, the defendants brought an application for summary judgment or strike-out on the basis that the claims brought by Tesco Stores Ltd had no real prospect of success and that there were no reasonable grounds for bringing the claim as a result of the principle of ex turpi causa. The case related to a claim for damages arising out of infringements in relation to multilateral interchange fees in the court of operating the MasterCard credit card system. In particular, the defendant argued that the claimants and Tesco Bank were part of a single economic entity, which through Tesco Bank was a participant in the infringement.
The court refused the application on the basis that complex questions of law arose in relation to the application of the single economic entity principle to vertical and horizontal relationships that should be decided at trial with the benefit of full disclosure. Once the context for the single economic entity could be determined, the question of which activities, and therefore which legal persons fall within it, is fact and context-specific. It was not possible to determine that question at this stage because the definition of the single economic entity itself had yet to be determined, and it was not clear that all of the relevant facts were available. Furthermore, the court held that even if the claimants and Tesco Bank were found to be a single economic entity, it could not be said that the claimants did not have a realistic as opposed to a fanciful prospect of success in showing that the infringement by Tesco Bank should not be imputed to them. It was more than merely arguable that responsibility for an infringement within a single economic entity is not based upon strict liability (or mere membership of the entity) but requires something more, which may be decisive influence.
The duration of proceedings in the CAT will again depend on the circumstances and complexity of the case. To date, only three follow-on actions have reached judgment in the CAT, namely Enron Coal Services Limited v English Welsh & Scottish Railway Limited (Case 1106/5/7/08), 2 Travel Group plc (In Liquidation) v Cardiff City Transport Services Limited (Case 1178/5/7/11) and Albion Water Limited v Dŵr Cymru Cyfyngedig (Case 1166/5/7/10). In Enron, the claim form was filed in November 2008 and judgment was handed down in December 2009 ( CAT 36). In 2 Travel, the claim form was filed in January 2011 and judgment was handed down in July 2012 ( CAT 19), while in Albion, the claim form was filed in June 2010 and judgment was handed down in March 2013 ( CAT 6).
The CAT has the power to give directions for the hearing of any issues as preliminary issues (CAT Rule 53(2)(o)). The CAT also has the power to strike out claims. Under CAT Rule 41, the CAT may strike out in whole or part a claim, at any stage of the proceedings if it:
- considers that the CAT has no jurisdiction;
- considers that there are no reasonable grounds for making the claim;
- is satisfied that the claimant has habitually and persistently and without any reasonable ground, instituted vexatious proceedings, or made vexatious applications; or
- the claimant fails to comply with any rule, direction, practice direction or order of the CAT.
Under CAT Rule 43, the CAT may give summary judgment against a claimant or defendant on the whole claim or a particular issue if it considers that:
- the claimant or defendant has no real prospect of succeeding on or defending the claim or issue; and
- there is no other compelling reason why the case or issue should be disposed of at a substantive hearing.
Under CAT Rule 42, the CAT may of its own initiative or on the application of a party give default judgment without a hearing of the claim where:
- the defendant fails to file an acknowledgement of service or defence to the claim, or a counterclaim has been made and a defence to a counterclaim has not been filed; and
- the relevant time for doing so has expired.
An order for default judgment cannot be made by the CAT if the defendant has made an application:
- disputing the jurisdiction of the CAT;
- to have the claim struck out under CAT Rule 41 described above; or
- for summary judgment under CAT Rule 43 described above.
CRA 2015 has introduced a fast-track procedure for simpler competition claims in the CAT. The CAT may, at any time, either of its own initiative or on the application of a party, make an order that particular proceedings be subject to the fast-track procedure (CAT Rule 58(1)). Under CAT Rule 58(2), the fast-track procedure means that:
- the main substantive hearing will be fixed to commence as soon as practicable and in any event within six months of the CAT’s order to fast-track the proceedings; and
- the amount of recoverable costs will be capped at a level to be determined by the CAT.
In deciding whether to make proceedings subject to the fast-track procedure, the CAT will be able to take into account all matters it thinks fit, including:
- whether one or more of the parties is an individual or a micro, small or medium-sized enterprise (SME);
- whether the time estimate for the main substantive hearing is three days or less;
- the complexity and novelty of the issues involved;
- whether any additional claims have been or will be made;
- the number of witnesses involved (including experts);
- the scale and nature of the documentary evidence;
- the likely extent of (if any) disclosure; and
- the nature of the remedy sought and (if relevant) the amount of damages claimed.
Since their introduction on 1 October 2015, a number of fast-track claims have been made in the CAT. Two property developers launched a fast-track claim for infringement of the Chapter I and, or Chapter II CA 1998 prohibitions and common-law restraint of trade against Tesco Stores over an allegedly anticompetitive restriction in the use of land it had purchased. In March 2016, the dispute settled before trial. In April 2016, purchasers of flexible polyurethane foam brought a follow-on damages claim pursuant to a decision of the European Commission dated 29 January 2014. The claimants applied for the claim to be designated as a fast-track claim in particular because they were considered to be SMEs (Breasley Pillows Limited and Others v Vita Cellular Foams (UK) Limited and Others  CAT 8). In his judgment, Roth J (president of the CAT) stated that the claimants’ status as SMEs was only one factor and it did not follow that because a case was brought by one or more SMEs it falls within the fast-track procedure. In finding that fast-track was inappropriate, Roth J considered that although a hearing of three days was not an absolute limit, a case of such longer duration (two weeks) was not the kind suitable for the fast-track procedure; that disclosure was of a scale and scope well beyond the procedure; and that there was no particular urgency in this case. He further commented that when a case concerned damages for a cartel, particularly one of several years’ duration, it was unlikely to come within the criteria of the fast-track procedure.
In April 2016, a fast-track claim was issued by Socrates Trading Limited (a provider of online training) against the Law Society of England and Wales (the professional body for solicitors in England and Wales) alleging that the defendant abused its dominant position in the market for the provision of quality certification and accreditation services to conveyancing firms. In June 2016, the CAT decided to exercise its powers under Rule 58(2)(b) to cap the level of recoverable costs in the case. In his judgment, Roth J (President of the CAT) stated that there was no magic formula that produces an objectively correct figure for the level of recoverable costs. However, where parties are of very disparate means, it is important that those costs strike a fair balance between enabling access to justice for the claimant and providing a measure of protection to the defendant not only from unmeritorious claims but also from the burden of having to defend a claim that it is assumed for this purpose proves to be unfounded.
Socrates Trading Limited v The Law Society of England and Wales  CAT 10, was the first case to proceed to trial under the fast-track procedure. The trial as to the existence of an infringement was completed in four days. Each side adduced two factual witnesses and called one economist, whose expert evidence was confined to questions of market definition and dominance. The evidence of the experts was heard concurrently, in a ‘hot tub’. The CAT found that the Law Society held a dominant position from April 2015 and abused that position by obliging certain firms to obtain the training in mortgage fraud and anti-money laundering (AML) required for Conveyancing Quality Scheme (CQS) accreditation exclusively from the Law Society. The CAT came to the same conclusion in relation to training in Financial Crime from April 2016. It also concluded that the obligation to obtain the training required under the CQS in mortgage fraud, AML and subsequently Financial Crime only from the Law Society breached the Chapter I prohibition. The CAT also found that the Law Society had breached the Chapter I prohibition.
What are the relevant limitation periods?
For claims where the loss of damage suffered from an infringement took place wholly on or after 9 March 2017, the Regulations have introduced new provisions in relation to limitation (Part 5, Schedule 8A of CA 1998).
Under paragraph 17, Schedule 8A of CA 1998, proceedings in respect of a competition law claim may not be brought before a court or tribunal after the end of the limitation period (six years). The limitation period for a competition claim against an infringer begins with the later of: the day on which the infringement ceases, and the claimant’s day of knowledge (paragraph 19(1), Schedule 8A). The ‘claimant’s day of knowledge’ is:
- the day on which the claimant first knows or could reasonably be expected to know, of the infringer’s behaviour;
- that the behaviour constitutes an infringement of competition law;
- that the claimant has suffered loss or damage arising from part infringement; and
- the identity of the infringer.
The references to knowledge are to a person having sufficient knowledge to bring competition proceedings. The beginning of the limitation period may be deferred in certain circumstances including:
- where a claimant is under a disability;
- during the investigation by a competition authority;
- during a consensual dispute resolution process; or
- during collective proceedings (paragraphs 20 to 25, Schedule 8A of CA 1998).
Where a competition authority investigates an infringement of competition law, the period of the investigation is not to be counted when calculating whether the limitation period has expired. The period of an investigation begins when the authority takes the first formal step in the investigation; it ends either one year after the day on which the authority closes the investigation or one year after the infringement decision becomes final (eg, when all appeals have been exhausted).
For claims where the loss or damage began wholly before 9 March 2017, in civil claims brought in the High Court (which includes private antitrust litigation), the limitation period is six years from the date on which the cause of action accrued (section 2 of the Limitation Act 1980). The cause of action continues to accrue until the date the infringement of competition law ceases, so the limitation period will expire six years from the date on which the infringing conduct ends. Follow-on claims based on Commission or CMA decisions relating to infringing conduct more than six years old would therefore be time-barred. However, where there is deliberate concealment, the six-year period will not begin to run until such time as the claimant either discovered the concealment or ought reasonably to have discovered it (section 32 of the Limitation Act 1980). In relation to claims pertaining to cartel activity (that is likely to have been secret or concealed, or both), this may, depending on the facts of each case, extend the limitation period until, for example, the date on which the cartel activity was made public, such as an announcement by the competition regulator that it was investigating the infringement.
The High Court considered limitation in Arcadia Group Brands Limited and others v Visa Inc  EWHC 3561. The claimants, all well-known high street retailers, alleged that by setting (in effect) a minimum price that merchants had to pay banks to process payments by Visa card, the defendants had restricted competition and had inflated the price that the claimants had to pay. The defendants applied for summary judgment to strike out those aspects of the claims that alleged infringement of competition law six years prior to the issue of proceedings. The High Court rejected the claimants’ argument (under section 32 of the Limitation Act 1980) that the limitation period had not started to run owing to the deliberate concealment of facts by the defendants. The High Court found that there were facts that were known, or discoverable by the exercise of reasonable due diligence, by the claimants before the limitation period, which were sufficient to establish a prima facie case. Simon J considered that this was not a ‘secret cartel’, instead the existence and operation of the Visa payment system and interchange fees were matters of public knowledge, which had been notified to the competition authorities. In addition, the High Court found that competition cases (for all their potential complexity) do not fall within an exceptional category calling for a different approach to the application of section 32 of the Limitation Act 1980.
The Court of Appeal upheld the decision of the High Court to strike out those aspects of the claims that were time-barred. The appellants argued that the limitation period under section 9 of the Limitation Act 1980 had not begun to run and that the High Court had wrongly applied the ‘statement of claim’ test as set out in Johnson v Chief Constable of Surrey Times. The Court of Appeal held that, as regards the approach to section 32(1)(b) of the Limitation Act 1980, competition claims should not in principle be treated any differently from other claims. Among other issues, the policy considerations of finality and certainty in the law of limitation are as important to competition claims as to those under consideration in other cases discussed. The Court of Appeal concluded that the statement of claim test applied in the present case because all the necessary ingredients for causes of action were included in the particulars of claim and the appellants accepted that no new material facts came to light in the six-year period prior to the commencement of proceedings. The Court of Appeal also found that the judge’s decision did not infringe EU principles of effectiveness and full compensation.
In MasterCard v Deutsche Bahn  EWHC 3749 (Ch), the High Court gave permission for the claimant to amend their claim to introduce a new claim and held that this new claim had commenced earlier for the purposes of limitation (applying the doctrine of ‘relation back’). Barling J found that, as the new claim arose out of the same facts or substantially the same facts as claims already made by the claimants in the proceedings, it justified an amendment with the benefit of the doctrine of ‘relation back’. The Court of Appeal in MasterCard v Deutsche Bahn  EWCA Civ 272 overturned the judgment of the High Court. Sales LJ held that there was an important difference between the claimants existing claim and their proposed new claim. On their existing claim, they did not argue that the Central Acquiring Rule (CAR) was unlawful whereas their new claim challenged the lawfulness of the CAR. The Court of Appeal found that the factual inquiries that would be required if the new claim was added would be very different from those required if it was not. This clearly indicated that the new claim does not arise out of the same or substantially the same facts. The Court of Appeal also held that a claimant has to sue within time, and if it fails to do so, it cannot retrieve the position by the simple expedient of introducing new matters in its reply and then making an application to amend.
For claims issued before 1 October 2015, the old CAT Rules 2003 apply. This means that the limitation period remains two years from the later of the date on which the substantive infringement decision becomes final and can no longer be appealed or the date on which the action accrued (CAT Rules 2003, Rules 31(1) to 31(3)). As such, an infringement decision of the Commission or CMA that is not appealed within the required time limit will become final; where an appeal is lodged the limitation period will not start to run until the appeal has been determined and no further appeals are possible. As noted above, the Court of Appeal in BCL Old Co v BASF  EWCA Civ 434 held that there is a distinction between an appeal of an infringement decision that concerns only the imposition of a fine and appeals relating to the substance of the infringement finding. In relation to the former, section 47A does not extend the limitation period (which will therefore start to run from the date on which the deadline to lodge an appeal expired), but if an appeal relates to the substance then the limitation period may be extended (until the appeal has been determined and no further appeal is possible). In a separate judgment in BCL Old Co v BASF  EWCA Civ 1258, the Court of Appeal held that the CAT does not have the power to extend the limitation period for follow-on claims brought under section 47A of CA 1998. In BCL Old Co Limited v BASF plc  UKSC 45, the Supreme Court dismissed an appeal by BCL that the consequences of these findings breached the principles of effectiveness and legal certainty.
In Deutsche Bahn AG v Morgan Crucible Company plc  CAT 6, the CAT held that the limitation period must be determined in relation to each defendant individually. Accordingly, the CAT held that an action brought against Morgan Crucible in December 2010 on the basis of the Commission’s Electrical and Mechanical Carbon and Graphite Products decision of December 2003 was brought out of time: in circumstances where Morgan Crucible had not appealed the decision, the limitation period in respect of damages claims brought against it began to run from the deadline for filing an appeal to the European courts (in February 2004) and expired two years later (in February 2006). The CAT’s judgment was reversed on appeal by the Court of Appeal ( EWCA Civ 1055). However, in a unanimous judgment, and following an intervention by the European Commission, the Supreme Court set aside the Court of Appeal’s judgment, restoring the CAT’s judgment and striking out the claims against Morgan Crucible (Deutsche Bahn AG v Morgan Advanced Materials plc  UKSC 24).
CRA 2015 amended CA 1998, to insert section 47E, which harmonised the limitation period of the CAT with that of the High Court. This means that from 1 October 2015, a six-year limitation period applies to all cases brought in the CAT in England and Wales. The Regulations repealed section 47E but it still applies in relation to claims where the loss or damage suffered is before 9 March 2017.
For claims arising before 1 October 2015, the transitional limitation rules apply. Rule 119(2) of the CAT Rules states that Rules 31(1) to (3) of the 2003 CAT Rules will apply for claims arising before 1 October 2015. It is unclear how these rules will be interpreted for stand-alone claims or the new section 47B collective proceedings brought in the CAT as neither type of claim was envisaged under the 2003 CAT Rules. In Sainsbury’s Supermarkets Ltd v MasterCard Incorporated  EWHC 3472 (Ch), the High Court considered whether a stand-alone action was appropriate for transfer to the CAT. Barling J stated that whatever the precise ambit of Rule 119, it could have no application to proceedings if they were transferred in whole or in part to the CAT. A case transferred to the CAT would be all or part of an existing claim, whereas Rule 119 only deals with claims originating in the CAT. Therefore, the relevant limitation period in the High Court would remain in place after transfer to the CAT. On this basis, claimants who are uncertain of the application of the transitional limitation rules to stand-alone claims may consider bringing their claims in the High Court and applying for transfer to the CAT. This is not a route that can be used for collective proceedings under section 47B as these can only be brought in the CAT.
What appeals are available? Is appeal available on the facts or on the law?
Judgments of the CAT (section 49 of CA 1998) and the High Court may be appealed to the Court of Appeal, provided the permission of the lower court or the Court of Appeal has been obtained. CPR 52.11(3) provides that appeals can be made on the basis that the lower court was either wrong, or unjust because of a serious procedural or other irregularity. Appeals can be made either by a party to the proceedings or by someone who has a sufficient interest in the matter. This was widely interpreted by the CAT in English Welsh and Scottish Railways v Enron Coal Services  EWCA Civ 647, where the Court of Appeal held that it had jurisdiction to hear an appeal against the CAT’s refusal to strike out part of the claim for damages. A request to the CAT for permission to appeal must be made in writing and sent to the Registrar within three weeks (reduced from one month under the old rules) of the notification of that decision (CAT Rule 107(1)).
A further appeal from the Court of Appeal to the Supreme Court is possible, again provided permission is granted either by the Court of Appeal or the Supreme Court.
In addition to appeals, the High Court or the CAT can stay proceedings and refer a question to the ECJ under the preliminary ruling procedure set out in article 267 of the TFEU. The CAT Rules outline the procedure for references to the European Court by the CAT (CAT Rule 109).
Are collective proceedings available in respect of antitrust claims?
Following the introduction of the antitrust provisions of CRA 2015 on 1 October 2015, collective actions have been available in the CAT. The regime applies to both follow-on and stand-alone cases and is not be restricted to actions brought on behalf of consumers (as was the case under the old rules). Collective actions can be brought on an opt-in or an opt-out basis in the CAT under section 47B CA 1998. While it is possible to bring representative actions in the High Court, this is difficult to do in the context of private antitrust litigation.
In the High Court, CPR 19.6(1) allows a representative action to be brought by a claimant representing him or herself and other claimants, thereby avoiding the need for those persons to issue their own claim form. Representative proceedings can be brought where more than one person has the ‘same interest’ in a claim and the interested persons must opt into the action to participate.
It is difficult to bring a representative action in the context of private antitrust litigation, as is shown in Emerald Supplies Limited v British Airways plc  EWHC 741 (Ch). The claimants in that case were cut flower importers who were direct and indirect customers of BA’s airfreight services. They alleged that they had paid inflated air freight prices as a result of a price-fixing cartel to which BA and other airlines were party and claimed damages for themselves and other importers of cut flowers who they purported to represent. The High Court struck out the action on the basis that:
- the class of direct and indirect purchasers was too ill-defined for the purposes of CPR 19.6, as the criteria for inclusion in the class depended on the outcome of the claim itself (ie, whether they were indeed purchasers of services at inflated prices); and
- the direct and indirect purchasers would not all benefit from the relief sought by the claimant, because of the need for direct purchasers to pass on the overcharge to indirect purchasers in order for the latter to benefit from damages awarded.
The Court of Appeal in Emerald Supplies Ltd v British Airways plc  EWCA Civ 1284 confirmed the High Court’s decision, rejecting the move to engineer such a class-action mechanism. The court held that the appellant and those it purported to represent did not all have ‘the same interest’ required by CPR 19.6: they were not defined in the pleadings with a sufficient degree of certainty to constitute a class of persons with ‘the same interest’ capable of being represented by the appellant. The potential conflicts arising from the defences that could be raised by British Airways to different claimants reinforced the fact that they did not have ‘the same interest’ and that the proceedings were not equally beneficial to all those to be represented.
In Bao Xiang International Garment Centre and Others v British Airways plc and Others  EWHC 3071 (Ch), the claimants brought a claim on their own behalf and that of 64,696 other claimants (enterprises based in China that conducted international trade and were members of the China Chamber of International Commerce) in relation to alleged damages arising from an unlawful price-fixing cartel in relation to air freight services. However, it was subsequently conceded that only about 5,000 of the claimants could show that they had shipped cargo by air during this period and that none of the claimants had authorised the claimants’ solicitors to bring proceedings. The claimants’ solicitors argued that 362 claimants had ratified the commencement of proceedings. In this context, the defendants applied to strike out the claim on the grounds that the claim had been issued without the claimants’ solicitors having the necessary authority of any of the claimants to bring the proceedings and, in the alternative, that the claim constituted an abuse of process of the court. The court concluded that none of the 64,697 claimants on whose behalf the claim was brought had either authorised the bringing of the claim or ratified their solicitor’s actions in starting the claim on its behalf. The claims were struck out on the basis of a lack of authority.
Group litigation orders (GLOs) are also available in the High Court (CPR 19.11). GLOs are made where one or more claims raise ‘common or related issues’ and are ordered by the court to consolidate proceedings commenced by two or more claimants bringing separate actions. In practice, GLOs are rarely used, and have not been used in the context of competition litigation to date.
Previously in the CAT, representative claims could only be made by a specified body on behalf of consumers on an opt-in basis. Only one representative action (brought on behalf of consumers who had purchased overpriced football shirts) was brought under the old rules.
Now under section 47B of CA 1998 (as amended by CRA 2015), claims may be brought before the CAT combining two or more claims and may be on an opt-in or an opt-out basis (ie, brought on behalf of each class member except those who opt out (by notifying the representative) or who are not domiciled in the UK, unless they opt in). The collective proceedings must be commenced by a person who proposes to be the representative in the proceedings. The CAT may authorise a representative, whether or not that person is a class member, but only if the CAT considers that it is just and reasonable for them to act (CAT Rule 78(1)).
CAT Rule 78(2) outlines that in determining whether it is just and reasonable for a person to act as the class representative, the CAT will consider whether that person:
- would fairly and adequately act in the interests of class members;
- does not have, in relation to the common issues for class members, a material interest that is in conflict with the interests of the class members;
- would be the most suitable person to act (if there is more than one person seeking approval);
- will be able to pay the defendant’s recoverable costs if ordered to do so; and
- where an interim injunction is sought, will be able to satisfy any undertaking as to damages.
In addition, the CAT Rules explain that in determining whether the representative would act fairly and reasonably the CAT will take into account all the circumstances, including whether the proposed representative is a member of the class and, if so, their suitability to manage the proceedings; if the proposed representative is not a member of the class, whether it is a pre-existing body and the nature and functions of that body; and whether the proposed representative has prepared a plan for collective proceedings that satisfactorily includes a method for bringing the proceedings, a procedure for governance and consultation and estimates of and details with regards to costs, fees and disbursements (CAT Rule 78(3)). In addition, the CAT may approve a representative to act as the class representative for a sub-class (CAT Rule 78(4)). The representative must also establish a register on which it will record the names of those class members who opt in or opt out (CAT Rule 83(1)). If the representative is a member of the class and settles the whole or part of his or her personal claim included within the proceedings, he or she must promptly give notice of that fact to all represented persons and the CAT (CAT Rule 86(1)). In addition, a class representative may only withdraw from acting in that capacity in the collective proceedings if the CAT gives permission for withdrawal (CAT Rule 87(1)). The draft CAT Rules had included a presumption that organisations that offer legal services, special purpose vehicles and third-party funders should not be able to bring cases. However, this presumption was not included in the CAT Rules as introduced on 1 October 2015.
It is not a requirement that all of the claims should be against all of the defendants in those proceedings. Furthermore, the proceedings may combine claims brought under section 47A of CA 1998 and those that have not. If a claim has been made under section 47A then it may only be continued in collective proceedings with the consent of the person who made that claim.
Collective proceedings will only continue if the CAT makes a collective proceedings order. The CAT will make such an order only if the person bringing the proceedings is someone it could authorise to act as the representative and it must also be satisfied that the claims are eligible for inclusion in collective proceedings (CAT Rule 77(1)). In order to be eligible, the claims must raise the same, similar or related issues of fact or law and be suitable to be brought in collective proceedings. CAT Rule 79(2) states that when deciding whether claims are suitable to be brought in collective proceedings, the CAT will take into account all matters it thinks fit including:
- whether collective proceedings are an appropriate means for the fair and efficient resolution of the common issues;
- the costs and benefits of continuing the proceedings;
- whether separate proceedings making claims of the same or similar nature have already been commenced by members of the class;
- the size and nature of the class;
- whether it is possible to determine for any person whether he or she is or is not a member of the class;
- whether claims are suitable for an aggregate award of damages; and
- the availability of alternative dispute resolution or other means of resolving the dispute, including the availability of voluntary redress schemes.
The collective proceedings order must authorise the person who brought the proceedings to act as the representative, and shall:
- state the name and address for service of the class representative (or representatives if there are sub-classes);
- state the name of each defendant;
- describe or otherwise identify the class and any sub-classes;
- describe or otherwise identify the claims certified for inclusion in the collective proceedings;
- state the remedy sought;
- state whether the collective proceedings are opt-in or opt-out;
- specify the domicile date;
- specify the time and manner by which a class member may opt in or opt out;
- order the publication of a notice to class members; and
- specify the part of the United Kingdom in which the collective proceedings are to be treated as taking place (CAT Rule 80(1)).
When deciding on whether the proceedings should be opt-in or opt-out, the CAT will take into account all matters it thinks fit, including the strength of the claims, whether it is practicable for the proceedings to be brought on an opt-in basis including the estimated damages that class members may recover along with those set out at CAT Rule 79(2), described above (CAT Rule 79(3)).
Where the CAT gives a judgment or makes an order, the judgment or order will be binding on all represented persons, unless the CAT specifies a sub-class of represented persons or individual represented persons to whom it will not apply (CAT Rule 91(1)). A collective settlement approval order is binding on all represented persons (CAT Rule 94(11)).
The first case to be brought under the new collective proceedings regime was Dorothy Gibson v Pride Mobility  CAT 9. The applicant (General Secretary of the National Pensioners Convention, NPC) applied for a collective proceedings order on a follow-on opt-out basis on behalf of approximately 30,000 people who had purchased a new Pride mobility scooter. The OFT had found, in March 2014, that the respondent had infringed competition law by reducing price transparency between retailers. The CAT considered whether allowing the claim would be contrary to EU law because the infringement and the decision pre-dated the coming into force of the collective proceedings regime introduced by CRA 2015. The CAT held that section 47B of CA 1998 was in essence a procedural mechanism for securing access to justice, without which the claims would not otherwise be brought. Roth J found that such proceedings had no legal effect on accrued or vested rights or liabilities; they were a means by which the pre-existing liability of the defendant to compensate victims could be enforced, and the pre-existing rights of such victims upheld.
The CAT also considered whether the conditions for the grant of a collective proceedings order had been met (whether the claims raised common issues and whether they were suitable to be brought in collective proceedings). Roth J said that the approach to the certification of claims should be rigorous; and not simply take at face value whatever may be said on behalf of the applicant. The CAT considered that the US approach to certification of common issues was of limited assistance (involving extensive discovery, deposition and cross-examination of witnesses and long hearings). The approach under the UK regime was intended to be very different, with either no or only very limited disclosure and shorter hearings. The CAT followed the approach in Canada, holding that the expert methodology must be sufficiently credible or plausible to establish some basis for loss on a class-wide basis. The applicant argued that the matter should be approached on the basis that, in the counterfactual, Pride would not have operated the policy at all. The CAT said that if that approach were adopted then this would allow the applicant to claim damages not merely for the result of the eight infringements but for a policy that had not been found to be unlawful. The CAT invited the applicant to adjourn the application to reformulate the claim and the definition of sub-classes accordingly. In the event, the applicant discontinued her claim.
Roth J found that it was just and reasonable for the applicant to act as a class representative. Ms Gibson was an experienced campaigner and spokesperson and would receive administrative assistance from full-time and part-time NPC staff. The solicitors instructed had extensive experience of group litigation; had secured the services of a US company with extensive experience of class action administration; proposed to engage a neutral third party to assess and process the claims; and were acting on 100 per cent conditional fee arrangements. Roth J did not consider that the question of Ms Gibson’s ability to pay Pride’s costs was a basis for refusing to authorise her to act as a class representative.
A second case, Walter Merricks CBE v MasterCard, was brought in September 2016 and proposed to combine follow-on actions for damages under section 47A of CA 1998 arising from a decision of the Commission. The decision found that the MasterCard payment organisation had infringed competition law by in effect setting a minimum price that merchants had to pay to their acquiring bank for accepting payment cards in the EEA. The proposed claim included individuals who between May 1992 and June 2008 purchased goods and, or services from businesses selling in the UK that accepted MasterCard cards for those who were at the time both resident in the UK and aged over 16 (estimated to be approximately 47 million people). The CAT ruled that the claim was not appropriate to be brought as a collective proceeding.
Section 47C of CA 1998 contains further safeguards in relation to collective proceedings. First, the CAT may not award exemplary damages in collective proceedings (section 47C(1)). Second, damages-based agreements (DBAs), under which lawyers’ remuneration is based on the amount they recover, will not be enforceable if they relate to opt-out collective proceedings (section 47C(8)). However, conditional fee arrangements (sometimes called ‘no win no fee’) will still be permitted. In opt-out collective proceedings, where the CAT makes an order, it must make an order that the damages be paid to the representative on behalf of the represented persons or such other person as the CAT thinks fit (section 47C(3)).
Are collective proceedings mandated by legislation?
In the High Court, the applicable rules for collective actions are set out in the CPR, which are set out above. As noted above, collective proceedings in the CAT are governed by section 47B CA 1998, as amended by CRA 2015. Two or more claims can be combined to form a collective action.
In Walter Merricks CBE v MasterCard  CAT 16, the claimant applied for a Collective Proceedings Order (CPO) under section 47B of CA 1998 on an opt-out follow-on basis following the decision of the Commission dated 19 December 2007 in MasterCard. The proceedings were brought on behalf of a class of 46.2 million people who, between May 1992 and June 2008, purchased goods or services from businesses selling in the UK that accepted MasterCard at a time when they were resident in the UK for at least three months. The CAT rejected the application and did not consider that the claims should be eligible for inclusion as collective proceedings.
Section 47B(6) states that claims are eligible for inclusion in collective proceedings only if the CAT considers that they raise the same, similar or related issues of fact or law and are suitable to be brought in collective proceedings. In this case the CAT considered the issues that an individual claimant would have to establish and found that of those six issues, only one was truly a common issue to all claims. In considering the level of pass-through (the degree to which a merchant passed through the multilateral interchange fee (MIF) overcharges and the percentage impact on its prices) the CAT said that this could not be described as a common issue in any meaningful sense; and the level of individual spend was also manifestly not a common issue. On this basis, it rejected the applicant’s assertion that the individual claims were largely identical.
Nonetheless, the CAT went on to consider whether the claims were suitable to be brought as collective proceedings. The applicants sought to address the problems with pass-through by suggesting that the CAT could arrive at an aggregate award of damages, which would then be distributed to class members. The CAT considered that in theory this may be a permissible approach. However, it was necessary to consider whether the applicant had provided:
- a suitable methodology that could be applied in practice to calculate a sum that reflects an aggregate of individual claims for damages; and
- a reasonable and practical means for estimating the individual loss.
In considering the above first point, the CAT found that to apply that method across virtually the entire UK retail sector over a period of 16 years was a hugely complex exercise. The CAT was not persuaded that, based on the material before it, there was sufficient data available for this methodology to be applied on a sufficiently sound basis. It was not satisfied that the claims were suitable for an aggregate award of damages.
As to the second question, the CAT also considered that it was impossible to see how the payments to individuals could be determined on any reasonable basis. There were three sets of relevant issues:
- individuals’ levels of expenditure;
- the merchants from whom they purchased; and
- the mix of products that they purchased.
The governing principle of damages for breach of competition law is restoration of the claimants to the position they would have been in but for the breach. The CAT held that this application would not result in damages being paid in accordance with that principle at all. Instead, it found that there was no plausible way of reaching even a very rough-and-ready approximation of the loss suffered by each individual claimant from the aggregate loss calculated. On that basis, this claim was not suitable to be brought in collective proceedings.
Even though the CAT rejected the application, it went on to consider the objections raised by the respondent that Mr Merricks should not be authorised as a class representative on the basis of an agreement he had entered into with a third-party funder. The CAT rejected the concerns raised by the respondent, subject to proposing certain amendments to the funding agreement. The CAT found that if a third party agrees to provide substantial monies in order to fund litigation, the payment that has to be made to that party in consideration of this commitment, whether out of the damages recovered or otherwise, is a cost or expense incurred in connection with the proceedings. The government clearly envisaged that many collective actions would be dependent on third-party funding, and that this could not be achieved unless the class representative incurred a conditional liability for the funder’s costs, which could be discharged through recovery out of the unclaimed damages.
The applicant in Merricks v Mastercard has applied directly to the Court of Appeal for permission to appeal (after having been refused permission by the CAT) and has separately sought a judicial review of the CAT’s ruling in the High Court.
If collective proceedings are allowed, is there a certification process? What is the test?
In the High Court, there is no equivalent in England and Wales of the US-style (opt-out) class action procedure, nor is there a similar certification process. In relation to representative proceedings, it is necessary for the claimant representing others who have the same interest in the claim to show that the ‘same interest’ test is satisfied. The Court of Appeal’s judgment in Emerald Supplies Ltd v British Airways plc  EWCA Civ 1284 has shown that this will be difficult in the context of follow-on damages claims.
In relation to GLOs, an order can be made either of the court’s own motion or following a request from a claimant or defendant. GLOs are made where one or more claims raise ‘common or related issues’, a concept that is wider than the requirement that the persons have the ‘same interest’ for representative proceedings.
Under section 47B of CA 1998 (as amended by CRA 2015), any collective proceedings will only be continued if the CAT makes a collective proceedings order (section 47B(4)). The CAT will make such an order if the person bringing the proceedings is someone it could authorise to act as the representative and it must also be satisfied that the claims are eligible for inclusion in collective proceedings. In order to be eligible, claims must raise the same, similar or related issues of fact or law and be suitable to be brought in collective proceedings. The collective proceedings must:
- authorise the person who brought the proceedings to act as the representative;
- describe the class of persons whose claims are eligible for inclusion; and
- specify whether the proceedings are on an opt-in or an opt-out basis (section 47B(7) of CA 1998).
See question 20.
Have courts certified collective proceedings in antitrust matters?
It is now possible for the CAT to hear both opt-in and opt-out collective actions under section 47B CA 1998 (see question 21).
In the High Court, Emerald Supplies Limited’s attempt to bring a quasi ‘class action’ was rejected at first instance, a decision that was upheld by the Court of Appeal (see questions 19 and 20).
To date, no collective proceeding has been authorised by the CAT. In Dorothy Gibson v Pride Mobility  CAT 9, the CAT invited the applicant to adjourn the application to reformulate the claim and the definition of sub-classes accordingly. Ms Gibson subsequently discontinued her claim. In Walter Merricks CBE v MasterCard  CAT 16, the CAT did not consider that the claim was suitable to be brought in collective proceedings. As set out above, the applicant has applied directly to the Court of Appeal for permission to appeal and sought a judicial review of the CAT’s ruling.
Opting in/ out
Can plaintiffs opt out or opt in?
Under section 47B CA 1998, it is possible to bring either opt-in or opt-out collective proceedings. Opt-in collective proceedings are those brought on behalf of each class member who opts in by notifying the representative. Opt-out collective proceedings are brought on behalf of each class member except those who opt out by notifying the representative or who are not domiciled in the UK (unless they opt in). Where the CAT gives a judgment or makes an order in collective proceedings, the judgment or order will be binding on all represented persons, unless the CAT specifies a sub-class of represented persons or individual represented persons to whom it will not apply (CAT Rule 91(1)). A collective settlement approval order is binding on all represented persons (CAT Rule 94(11)) (see questions 19 and 20).
Do collective settlements require judicial authorisation?
In general terms, settlement agreements entered into between parties to litigation do not require the consent of the court or CAT. In normal circumstances, the claimant can then withdraw (discontinue) the claim unilaterally. Note, however, that in proceedings brought by more than one claimant, if a settlement is entered into with one of the claimants the consent of either the other claimants or the court is required to discontinue the claim (CPR 38.2(2)(c)).
Settlements should include a provision for payment of costs, or state that each party is to bear its own costs. In the High Court, where a claimant discontinues the claim, it is required to pay the defendant’s costs (CPR 38.6). In the CAT, a claimant may only withdraw the claim prior to the hearing with the consent of the defendant or with the permission the CAT (or if no tribunal has been constituted, with the permission of the president (CAT Rule 44(1)). Where a claim is withdrawn, the CAT may make any consequential order it thinks fit (CAT Rule 44(2)).
CRA 2015 introduced a new opt-out collective settlement regime for competition law in the CAT. Any opt-out settlement must be judicially approved. Section 49A CA 1998 applies to cases where a collective proceedings order has been made and where the CAT has specified that the proceedings are on an opt-out basis. Where a collective proceedings order has been made and the CAT has specified that the proceedings are opt-out, the claims that are subject to the proceedings may not be settled other than by a collective settlement approval order issued in accordance with the CAT Rules (CAT Rule 94(1)). An application for approval of a proposed collective settlement must be made to the CAT by the representative and the defendant (or where there is more than one, those defendants who wish to be bound by the proposed settlement) in the collective proceedings (CAT Rule 94(1)). The application shall include the following information:
- details of the claims to be settled;
- terms of the proposed collective settlement;
- a statement that the applicants believe that the terms of the proposed settlement are just and reasonable, supported by evidence that may include a report of an independent expert or an opinion from the applicants’ legal representatives as to the merits of the settlement;
- specify how any sums received under the collective settlement are to be paid and distributed;
- have annexed to it a draft collective settlement approval order; and
- set out the form and manner by which the class representative proposes to give notice of the application to the represented persons or class members.
The CAT may approve the settlement only if it is satisfied that its terms are just and reasonable. In determining whether the terms are just and reasonable, under CAT Rule 94(9), the CAT will take into account all relevant circumstances including:
- the amount and terms of the settlement including the payment of costs, fees and disbursements;
- the number or estimated number of persons likely to be entitled to a share of the settlement;
- the likelihood of judgment being obtained in the collective proceedings for an amount significantly in excess of the amount of the settlement;
- the likely duration and cost of the collective proceedings if they proceeded to trial;
- any opinion by an independent expert and any legal representative for the applicants;
- in certain circumstances, the views of any represented person or any class member; and
- the provisions regarding the disposition of any unclaimed balance of the settlement.
The settlement will bind all persons falling within the class of persons described in the collective proceedings order who were domiciled in the UK and did not opt out, or who opted into the collective proceedings.
Section 49B of CA 1998 applies to cases where a collective proceedings order has not been made but, if collective proceedings were brought, the claims could be made at the commencement of the proceedings. The application for the order must be made to the CAT by a person who proposes to be the settlement representative, and the person who, if collective proceedings were brought, would be a defendant (or, where there is more than one, those defendants who wish to be bound by the proposed collective settlement) (CAT Rule 96(1)). CAT Rule 96 provides further detailed application requirements. The CAT may make an order approving a proposed collective settlement, only if it first makes a collective settlement order (CAT Rule 97(1)). The CAT can only make that collective settlement order if it considers that the proposed settlement representative is a person whom it could authorise to act, and in respect of claims that are eligible for inclusion in the proceedings. The collective settlement order must authorise the settlement representative (the representative need not fall within the class of claimants although the CAT must consider it just and reasonable for the settlement representative to act) and describe the class of persons whose claims are eligible for inclusion. Where the CAT has made a collective settlement order, it may approve the settlement only if it is satisfied that the terms are just and reasonable. In determining whether the terms are just and reasonable, the CAT will take into account CAT Rule 97(7), which contains a similar list of factors to those in Rule 94(9) discussed above. Any such CAT-approved collective settlement order will be binding on all persons within the class except those who:
- opt out by notifying the settlement representative; or
- are not domiciled in the UK and do not opt in (CAT Rule 97(9)).
National collective proceedings
If the country is divided into multiple jurisdictions, is a national collective proceeding possible? Can private actions be brought simultaneously in respect of the same matter in more than one jurisdiction?
The United Kingdom is divided into three jurisdictions: England and Wales; Scotland; and Northern Ireland. Claims can be brought separately, and simultaneously, in more than one jurisdiction, but the courts of one jurisdiction cannot order the claims brought in one or both of the other jurisdictions to be consolidated.
However, if simultaneous proceedings are commenced across the different jurisdictions, it is open to the defendants to challenge the jurisdiction of one of the courts on the basis that the other one is the more appropriate forum for resolution of the dispute. It is also likely to be in the claimant’s interests (in terms of both costs and expediency) to bring their claims in one jurisdiction. This applies not just within the UK but also across Europe, to the extent that it is likely to be more cost-effective and efficient for a claim to be heard in one European jurisdiction in relation to losses the claimant suffers as a result of a pan-European infringement of the competition rules. Claimants are wise to these efficiencies: see, for example, the efforts to which the claimant in Provimi v Aventis went in order for all its European claims to be heard in the English courts (see question 5).
Under the CAT Rules, the CAT may, at any stage of the proceedings, on the request of a party or of its own initiative, and after the observations of the parties, direct that all or part of a claim brought under section 47A of CA 1998 be transferred to the High Court or a county court in England and Wales or Northern Ireland, or the Court of Session or a sheriff court in Scotland (CAT Rule 71).
Has a plaintiffs’ collective-proceeding bar developed?
There are an increasing number of claimant firms in England and Wales, which is seen as one of the most active jurisdictions in Europe for EU-wide antitrust damages claims. The plaintiffs’ collective-proceeding bar may develop further as a result of the new collective proceedings that have been introduced by the new section 47B of CA 1998. There have been two attempts to bring collective proceedings, both of which have failed, as set out in question 19.
What forms of compensation are available and on what basis are they allowed?
Follow-on actions are based on the tort of breach of statutory duty (see question 2) and damages are awarded on the tortious basis (ie, the amount of the loss, plus interest). This is in line with ECJ case law (Manfredi v Lloyd Adriatico, Case C-295/04,  ECR I-6619), which requires injured persons to be able to seek compensation not only for actual loss but also lost profit and interest. A limited number follow-on claims in the CAT have resulted in a final award of damages (2 Travel Group and Albion Water, discussed further below), although a number of cases in the English courts have addressed the issue. This is not surprising in circumstances where the vast majority of commercial disputes settle before judgment. An increasing number of damages claims are settling shortly before trial.
How damages might be calculated in a competition law claim will depend on the facts of the case. In Crehan v Inntrepreneur Pub Company  EWHC 1510 (Ch), the High Court considered that if there had been a breach of the competition rules the damages awarded would have been for losses actually suffered, profits and interest up to the date of the judgment; the Court of Appeal ( EWCA Civ 895) considered this approach to be too speculative and held that damages should be assessed as at the date of loss. In any event, the decision to award damages was overturned by the House of Lords, which did not therefore need to rule on which would have been the correct measure of damages ( UKHL 38).
In Arkin v Borchard Lines Limited (No. 4)  EWHC 687 (Comm), the judge considered that an assessment of damages would involve considering what loss, if any, the infringement had as a matter of ‘common sense’ directly caused to the claimant (although he held that, on the facts, there had been no breach of the competition rules). For this purpose, it would be necessary to consider the ‘counterfactual’, ie, what the market conditions would have been like without the infringement, and the likely difference between the price actually paid and the price that would have been paid in such a competitive market.
In Enron Coal Services v English Welsh and Scottish Railways  CAT 36, the CAT concluded that there was no loss at all because on the counterfactual the claimant would have been no better off.
The measure of damages awarded will depend on the nature of the infringement. In relation to a cartel, the damages should be the cartel overcharge, adjusted as necessary for pass-on. In relation to exclusionary abuses, the damages should be the profit that the claimant would have made had it not been excluded from the market or marginalised by the infringing conduct. In December 2009, Oxera published a paper for the European Commission in relation to the calculation of quantum in competition law claims. The paper may be useful to judges awarding damages in such claims, but it is not anticipated that it will provide a shortcut to the detailed damages assessment necessary in the event damages are awarded. The Commission has also published a Communication and a Practical Guide on quantifying harm in antitrust damages claims (both of which are non-binding). The Practical Guide explains various methods available to quantify antitrust harm and, according to the Commission, is intended to assist national courts and parties involved in actions for damages by making information on quantifying harm caused by infringements of the EU competition rules more widely available. The Damages Directive outlines that it shall be presumed that cartel infringements cause harm, although the infringer will have the right to rebut that presumption. In addition, member states have had to ensure that in damages proceedings a national competition authority may, upon the request of a national court, assist that national court with respect to the determination of the quantum of damages.
In relation to stand-alone claims, compensation may be sought for infringements that must be proved de novo and would be awarded on the same basis as follow-on damages actions noted above. In addition, other ‘compensation’ may be sought (see question 29).
In Sainsbury’s v MasterCard  CAT 11 (see question 35), the CAT found that Sainsbury’s was entitled to recover the difference between what it had paid by way of the 0.9 per cent UK MIF during the claim period and the amount it would have paid had it agreed the interchange fees bilaterally (£68,582,245).
In the CAT, an order for interim relief was made in Healthcare at Home v Genzyme  CAT 29. The case involved a margin squeeze by the supplier of a particular drug; the CAT’s judgment specified the percentage discount that should have been applied to the supplier’s pricing to ensure a reasonable profit margin. A purchaser claimed the value of the percentage discount against the amount purchased, plus exemplary damages. The CAT considered that, if the claimant could demonstrate that the effects of the infringement had continued past the period of infringement found, damages could extend for that longer period. The CAT accepted that lost profit margin was an appropriate measure of damages, and made an interim award based on the likely percentage discount that it would find should have been charged. The case settled before final judgment.
In Devenish Nutrition v Sanofi-Aventis  EWHC 2394 (Ch), the High Court held on a preliminary issue that the claimants were not entitled to exemplary or restitutionary damages, or to an account of profits, in circumstances where fines had been imposed by the regulator for competition law infringements (or reduced or waived in the case of leniency and immunity applicants). On appeal, the Court of Appeal confirmed that the claimants were not entitled to restitutionary damages, or to an account of profits ( EWCA Civ 1086).
However, in 2 Travel Group plc (In Liquidation) v Cardiff City Transport Services Limited  CAT 19, the CAT held that 2 Travel was entitled to both compensatory and exemplary damages. The CAT approached the compensatory damages assessment on the basis of what the market conditions would have been without the infringement. The CAT awarded damages to 2 Travel for loss of profits from the date the infringement commenced up to the date of 2 Travel’s liquidation (the infringement ended shortly thereafter), finding that, ‘but for’ the infringement, 2 Travel would have made a further profit from its operations. However, the CAT declined to award damages in relation to loss of a capital asset, loss of a commercial opportunity and the costs of 2 Travel’s liquidation as these would have been incurred in any event absent the infringement owing to pre-existing and ongoing financial and management difficulties. Further, the CAT declined to award damages in relation to wasted management time in dealing with the abuse, as on the facts there was no abnormal waste of time.
In relation to exemplary damages, 2 Travel sought exemplary damages on two counts: ‘oppressive, arbitrary or unconstitutional conduct by servants of the government’ and ‘conduct calculated to make a profit that may well exceed the compensation payable to the claimant’. While the CAT rejected a claim under the first ground on the basis that Cardiff City Transport Services did not exercise government functions, it did award damages under the second ground, finding that Cardiff City Transport Services had acted in knowing disregard of an appreciated and unacceptable risk that the Chapter II prohibition of CA 1998 was either probably or clearly being breached or it had deliberately closed its mind to that risk. The CAT distinguished this case from Devenish on the grounds that while there had been a previous OFT (as it then was) decision, like in Devenish, Cardiff City Transport Services had been granted immunity from fines by the OFT on the basis of it being conduct of minor significance, rather than pursuant to a leniency regime. As such, the CAT held that there was no policy reason why exemplary damages should not be imposed. Given this distinguishing feature, it appears that exemplary damages will still be unavailable in most follow-on damages cases where a fine has been imposed by the regulator (one that may of course have been reduced or waived in the case of leniency and immunity applicants). The CAT’s approach to awarding exemplary damages was to take into account the following factors:
- that the exemplary damages should bear some relation to the compensatory damages awarded;
- the economic size of Cardiff City Transport Services; and
- the fact that Cardiff City Transport Services would no doubt take very full account of the CAT’s judgment even if the exemplary damages were quite low given its association with a local authority.
In Albion Water Limited v Dŵr Cymru Cyfyngedig  CAT 6, Albion brought an action for damages against Dŵr Cymru for losses resulting from Dŵr Cymru’s abuse of its dominant position. The CAT had previously determined that the access price at which Dŵr Cymru was offering a common carriage service to carry water through its pipes from a pumping station to the premises of Albion’s customer, Shotton Paper, was an abuse of its dominant position. Albion claimed compensatory damages on the basis that if Dŵr Cymru had not abused its dominant position, Albion would have accepted the offer of a reasonable price for common carriage and would have supplied water to Shotton Paper more profitably than it had done and Albion would have won a contract with another company, Corus. It also claimed exemplary damages (a claim permitted as Dŵr Cymru had not been subject to a fine for its infringement of the Chapter II prohibition ( CAT 30)).
The CAT granted compensatory damages. In relation to the first compensatory claim, the CAT considered the counterfactual scenario, what would have happened absent the abuse of a dominant position. Dŵr Cymru argued that the counterfactual scenario should assume that the dominant undertaking would have charged as high a price as was lawfully possible. The CAT rejected that submission as ‘wrong in principle’ and ‘entirely impracticable’. The correct approach was to assume that Dŵr Cymru would have offered a reasonable access price. There was a range of lawful access prices that Dŵr Cymru could have offered and the figure in the middle of that range should be taken. Regarding the second compensatory claim for loss of a chance, the CAT also awarded damages as it found that it was highly likely that Corus would have awarded Albion a supply contract. The damages for loss of a chance were, however, reduced by a third as the CAT could not hold that it was a certainty or near certainty that Corus would have awarded Albion the contract.
In relation to the claim for exemplary damages, the CAT stated that evidence was required that Dŵr Cymru knew that the way the price was calculated was unlawfully excessive or that it did not care whether it was excessive or not. Despite criticising Dŵr Cymru, stating that there was ‘a conspicuous and reprehensible failure of corporate governance’, the claim for exemplary damages was dismissed on the basis that the evidence did not establish that Dŵr Cymru’s failures followed a deliberate decision to close its eyes to the likely result of such an exercise. Nor could it be concluded that the failures evidenced a decision taken in cynical disregard of Albion’s rights, or that Dŵr Cymru was reckless as to the risk that the common carriage price might be unlawful. There was insufficient evidence to show that the access price was either clearly or probably unlawful and there was no evidence that Dŵr Cymru had weighed the risks of going ahead with the access price against the likely downside in terms of future compensation payments to Albion.
For claims where the loss or damage suffered was wholly on or after 9 March 2017, under paragraph 36 of the Regulations, a court or tribunal may not award exemplary damages in competition proceedings.
What other forms of remedy are available? What must a claimant prove to obtain an interim remedy?
Aside from damages, claimants can seek injunctions in the High Court in respect of either an ongoing or anticipated breach of competition law (CPR 25). Prohibitory injunctions (requiring the defendant to refrain from conduct), mandatory injunctions (requiring a defendant actively to do something) and quia timet injunctions (restraining the defendant from engaging in future actions) are all available. To succeed in being awarded an interim injunction, the applicant must show it has a good arguable case, and that damages would be inadequate to remedy its losses (American Cyanamid v Ethicon Ltd  AC 396). Where an interim injunction is sought, it is necessary for the applicant to give a cross-undertaking in damages to cover any loss suffered by the defendant as a result of the injunction in the event of the applicant losing the case.
Timing is a critical issue. In AAH Pharmaceuticals v Pfizer Limited & Unichem Limited  EWHC 565 (Ch), the High Court refused to award an interim injunction in circumstances where eight wholesalers sought to prevent Pfizer terminating supply agreements with them but brought their injunction application a month before implementation of Pfizer’s proposals, even though they knew of Pfizer’s proposal six months in advance. The last-minute nature of the application and the complexity of the analysis required to establish whether Pfizer’s actions were anti-competitive caused the court to refuse the wholesalers’ application.
An example of a prohibitory injunction is Adidas v ITF  EWHC 1318 (Ch), in which Adidas successfully argued that the International Tennis Federation’s restriction on the size of logos applied to tennis players’ uniforms was an abuse of its dominant position and obtained interim relief against the application of the restriction at that year’s tournaments. From Adidas’s point of view, this allowed it to pursue its objective (ie, changing the rules rather than receiving damages). In another example, Unlockd v Google  (unreported), an interim injunction was ordered to prevent the withdrawing or suspending of services used by a software application that delivered advertisements on mobile phones. If the services were withdrawn there was an appreciable risk of harm to an existing commercial relationship that could not be compensated for in damages.
An example of a mandatory injunction is Software Cellular Network Ltd v T-Mobile Limited  EWHC 1790 (Ch), in which Truphone obtained an injunction obliging T-Mobile to purchase services on the basis that T-Mobile’s refusal to activate relevant numbers amounted to an abuse of a dominant position (even though T-Mobile had only a 20 to 30 per cent market share and there was no precedent for such a refusal to purchase a service being characterised as an abusive refusal to supply).
The High Court can also award security for costs (CPR 25).
Interim relief in the form of interim payments may be sought from the CAT (CAT Rule 66). Such an order would require the defendant to make a payment on account of any damages (excluding costs) for which the CAT may hold the defendant liable (CAT Rule 66(1)). The conditions for such an award to be made are the defendant against whom the order is sought has admitted liability to pay damages to the claimant; or the claimant has obtained judgment against the defendant for damages to be assessed or for a sum of money (other than costs) to be assessed; and the CAT is satisfied that, if the claim were to be heard, the claimant would obtain judgment for a substantial amount of money (other than costs) against the defendant. In Healthcare at Home v Genzyme Ltd  CAT 29, the CAT ordered an interim payment of £2 million to be made to the claimant in the context of proceedings brought following on from an OFT (as it then was) finding that Genzyme had operated an unlawful margin squeeze in breach of Chapter II of CA 1998.
The CAT can also order security for costs in the context of follow-on damages actions (CAT Rule 59), in circumstances similar to those set out in CPR 25 for claims in the High Court. Indications to date suggest the CAT will consider in particular whether a costs order is ultimately likely to be made: in BCL Old Co v Aventis  CAT 2, the CAT declined to award security for costs primarily because it was not satisfied there was a substantial likelihood that the defendants would in due course benefit from a costs order.
CAT Rule 59 prescribes a procedure for a defendant to obtain an order for security for costs from the CAT. The CAT may make an order for security for costs if it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order and one or more of the conditions set out in the CAT Rules or another enactment applies (CAT Rule 59(4)). These conditions include:
- that the claimant is resident out of the jurisdiction, but not resident in a Brussels contracting state, a state bound by the Lugano Convention 2007 or a regulation state;
- the claimant is a company or other body and there is reason to believe it will be unable to pay the defendant’s costs if ordered to do so;
- the claimant has changed address since the claim was commenced with a view to evading the consequences of the litigation;
- the claimant failed to give its address or gave an incorrect address in the claim form;
- the claimant is acting as a nominal claimant, other than under section 47B of CA 1998, and there is reason to believe it will be unable to pay the defendant’s costs;
- the claimant has been authorised to act as a class representative and there is reason to believe it will be unable to pay the defendant’s costs if ordered to do so; and
- the claimant has taken steps in relation to its assets that would make it difficult to enforce an order for costs against it (CAT Rule 59(5)).
If the defendant seeks an order for security for costs against someone other than the claimant then the CAT must be satisfied that:
- the person against whom the order is sought has assigned the right to the claim to the claimant with a view to avoiding the possibility of a costs order being made against that person; or
- the person against whom the order is sought has contributed or agreed to contribute to the claimant’s costs in return for a share of any money or property that the claimant may recover in the proceedings (CAT Rule 59(6)).
CRA 2015 has inserted a new 47D into CA 1998 that gives the CAT the power to grant injunctions under section 47A of CA 1998 or in collective proceedings. An injunction granted by the CAT has the same effect as an injunction granted by the High Court and will be enforceable as if it were an injunction granted by the High Court (section 47D(1) of CA 1998). In deciding whether to grant an injunction, the CAT must apply the principles that the High Court would apply. CRA 2015 also introduced section 1A to EA 2002 in relation to the enforcement of injunctions. Where a person fails to comply with an injunction, the CAT may certify the matter to the High Court. The High Court may enquire into the matter and if the High Court is satisfied that the person would have been in contempt of court if the injunction had been granted by the High Court, the High Court may deal with that person as if he or she were in contempt. The CAT can also make interim injunctions at any time (CAT Rule 68(1)). An application for an interim injunction must be supported by evidence, unless the CAT directs otherwise (CAT Rule 69(2)). An application for an interim injunction can be made without notice if it appears to the CAT that there are good reasons for not giving notice that must be stated as part of the evidence in support of the application (CAT Rule 69).
Are punitive or exemplary damages available?
For claims where the loss or damage suffered was wholly on or after 9 March 2017, under paragraph 36, Schedule 8A of CA 1998 (as amended), a court or tribunal may not award exemplary damages in competition proceedings. However, for claims where loss or damage was before 9 March 2017, punitive and exemplary damages are available in certain limited circumstances in England and Wales. The ECJ in Manfredi v Lloyd Adriatico (Case C-295/04  ECR I-6619) required that, in accordance with the principle of equivalence, punitive damages must be available in the national courts for breaches of European competition law where they would be so available for breaches of national law.
In the context of follow-on damages claims, the High Court in Devenish  EWHC 2394 refused to award punitive or exemplary damages, where the defendant had already been fined (or granted immunity from or a reduction in fines) by a regulatory authority in respect of the same behaviour. Note, however, the CAT’s award of exemplary damages in 2 Travel ( CAT 19) where the defendant had been granted immunity by the OFT (as it then was) on the basis of conduct of minor significance (see question 27). In Albion Water  CAT 6, the CAT refused to grant exemplary damages. Although Dŵr Cymru had not been subject to a fine for its infringement of the Chapter II prohibition, the CAT held that it could not conclude on the evidence that Dŵr Cymru had intended to issue an unlawfully excessive price or that it was reckless to that fact (see question 27).
Section 47C of CA 1998 provides that the CAT may not award exemplary damages in collective proceedings.
Is there provision for interest on damages awards and from when does it accrue?
As noted above, the ECJ in Manfredi v Lloyd Adriatico (Case C-295/04  ECR I-6619) held that interest should be available in respect of claims for damages based on infringements of competition law (the principle of equivalence).
The English courts have discretion to order simple interest on damages awarded. The applicable rate is normally the claimant’s borrowing rate, as assessed by the court. In the absence of such evidence, a fair commercial rate would be applied. In addition, the claimant can obtain compound interest if it can prove actual losses (eg, if it can show that it has in fact had to borrow money and pay interest on it).
Sainsbury’s v MasterCard  CAT 11, was the first time that compound interest has been awarded in a judgment regarding competition law. Following Sempra Metals, it found that interest losses are in principle recoverable, but subject to proof of loss and any other relevant rules relating to the recovery of damages. A claim for interest is a loss like any other, recoverable according to the usual rules. Precisely what must be pleaded and proved in order for a claim for interest to succeed depends on the facts of the individual case. The CAT noted that Sainsbury’s factual witnesses provided evidence as to what would have happened if the interchange fees applied by MasterCard had been lower. The CAT derived a great deal of assistance as to what would have happened had the overcharge not been demanded, from the detailed description Sainsbury’s provided of its budget process and the way in which it monitored costs and adjusted prices. It found that had the overcharge not been made, Sainsbury’s cash balances would have been higher, and Sainsbury’s would have received interest on these sums. In addition, had the overcharge not been made, Sainsbury’s borrowing needs would have been less, and it would not have incurred the costs of borrowing.
In its judgment, the CAT said that, although it had had to make assumptions, these losses had been sufficiently established by the evidence. Sainsbury’s was entitled to interest on 50 per cent of the overcharge but not in relation to any of the overcharge that was passed on (described by the CAT as being pass-on ‘in the non-legal sense’). Of this 50 per cent, the CAT awarded interest on 20 per cent of the overcharge at the rate that Sainsbury’s would have earned on its cash balances and interest on 30 per cent of the overcharge at the rate that Sainsbury’s would have saved by lower borrowing. This was despite the fact that, as set out below in response to question 35, the CAT found that MasterCard’s ‘pass on’ defence had failed because no identifiable increase in retail price had been established, still less one that was causally connected with the overcharge. In parallel proceedings in the High Court, Popplewell J found that the multilateral interchange fees charged by payment card issuers did not infringe article 101(1) of the TFEU (Asda Stores v MasterCard  EWHC 98 (Comm). Both judgments are on appeal and, as at the time of writing, judgment has not been handed down.
The CAT may also order that interest is payable on damages awarded by it for all or any part of the period between the date when the action arose and the date of decision of the award for damages, or, if the sum has been paid before the decision making the award, the date of payment (CAT Rule 105(3)). Unless the CAT directs otherwise, the rate of interest must not exceed the rate specified by any order made under section 44 of the Administration of Justice Act 1970.
Consideration of fines
Are the fines imposed by competition authorities taken into account when setting damages?
The High Court’s judgment in Devenish Nutrition Limited v Sanofi-Aventis and Others  EWHC 2394 (Ch) shows that where fines have been imposed by competition authorities (or not imposed because the defendant was a leniency applicant), neither punitive or exemplary damages, nor restitution or account of profits, will be available in follow-on damages claims. The Court of Appeal upheld the judgment as regards restitution or account of profits ( EWCA Civ 10). Note, however, the CAT’s award of exemplary damages in 2 Travel ( CAT 19) where the defendant had been granted immunity by the OFT (as it then was) on the basis of conduct of minor significance. As noted above, section 47C of CA 1998 provides that the CAT may not award exemplary damages in collective proceedings.
As set out in question 13, for claims where the loss or damage suffered from an infringement takes place before 9 March 2017, there are no provisions protecting leniency or immunity applicants from follow-on damages claims brought in England and Wales. However, for claims where the loss or damage suffered from an infringement takes place on or after 9 March 2017, paragraphs 15 and 16 of Schedule 8A (CA 1998) apply to undertakings that have been granted immunity from financial penalties under a cartel leniency programme. Paragraph 15 of Schedule 8A (CA 1998) states that an immunity recipient is not liable (either alone or jointly) to pay damages in respect of loss or damage suffered by a person as a result of the cartel infringement (whatever the legal basis of liability) except in certain circumstances (as set out at question 13).
Where loss or damage arising from competition law is the subject of a consensual settlement between an infringer and a complainant, the complainant has no cause of action against the infringer in respect of the loss or damage. However, this does not apply where another infringer is liable to the settling complainant but is unable to pay and the settling infringer’s liability is not expressly excluded by the terms of the consensual settlement (paragraph 40, Schedule 8A of CA 1998).
As the normal measure of damages in the English court is compensatory, the fact that fines have been imposed by the competition regulator would not normally lead to a reduction in the damages awarded.
Who bears the legal costs? Can legal costs be recovered, and if so, on what basis?
The rules on costs in the High Court are set out in CPR 43 to 48 and the accompanying Practice Directions. The general rule is that costs follow the event, namely, that the unsuccessful party pays the costs of the successful party (CPR 44.2). However, the courts have a general discretion in awarding costs, and will have regard to all the circumstances of the case including the conduct of the parties, whether a party was partially successful, and any payment into court or settlement offer that is drawn to the court’s attention. Note that even where a costs order is made, the successful party is generally only likely to recover around two-thirds of its costs.
In exceptional cases, a successful party may seek a costs order against a third party, for example if a third party has helped to fund litigation on behalf of the losing party. However, following Arkin v Borchard Lines Limited  EWCA Civ 655 it is necessary in this regard to distinguish between ‘pure funders’ (who have no interest personally in the litigation and do not stand to benefit from it) and professional funders. The court in Arkin held that costs orders would not be made against pure funders; against professional funders, costs orders may be made to the extent of the funding provided.
In rare cases a ‘wasted costs’ order may be made to hold legal representatives personally liable for costs. Wasted costs orders are imposed to punish lawyers for wasting the court’s time; for example, in cases of serious improper, unreasonable or negligent acts or omissions in the course of the litigation.
CAT Rule 104 addresses the issue of costs. It provides that the CAT may, at its discretion, make any order it thinks fit in relation to the payment of costs. In contrast to the provisions in relation to the High Court, in the CAT there is no general rule that costs follow the event. However, the CAT Rules provide a number of factors that the CAT may take account of when determining the amount of costs. These factors are set out in CAT Rule 104(4) and include:
- the conduct of all parties in relation to the proceedings;
- any schedule of incurred or estimated costs filed by the parties;
- whether a party has succeeded on part of its cases, even if that party has not been wholly successful;
- any admissible offer to settle that is drawn to the CAT’s attention, and that is not a settlement offer to which cost consequences apply;
- whether costs were proportionately and reasonably incurred; and
- whether costs are proportionate and reasonable in amount.
In Merricks v Mastercard  CAT 27, the respondent sought an order for costs in their favour, following an earlier judgment by the CAT, which dismissed an application for a collective proceedings order (CPO). The applicant contended that the CAT had no jurisdiction to make an order for costs concerning an application for a CPO that was unsuccessful. They argued that CAT Rule 98 provides that costs may be awarded to or against the class representative but may not be awarded to or against a represented person who is not the class representative. The CAT rejected that submission as fundamentally misconceived. If a CPO application is unsuccessful, then Rule 98 is not engaged, but the general power concerning costs (CAT Rule 104) continues to apply.
In deciding its approach to awarding costs, the CAT said that, in private litigation, its practice is that the appropriate starting point is that the successful party should be awarded its costs (following Albion Water v Dwr Cymru Cyfngedig  CAT 16). The CAT was not persuaded that, in relation to a contested CPO application, there were good grounds why the CAT should not adopt as a starting point that the loser is in principle liable for the relevant costs of the successful party. When considering the conduct of the parties under CAT Rule 104(4) the CAT said that where neither party has behaved unreasonably the net effect of their conduct is neutral. Adopting a broad-brush approach, after deducting the fees of specialist costs counsel, the CAT considered that the respondent should be awarded 80 per cent of their costs. However, in relation to interest on those costs, the CAT considered that the applicant was correct that the CAT Rules in their current form did not enable the CAT to award interest on costs. The CAT recognised that this was a lacuna in the rules that required urgent attention.
The CAT Rules also include specific cost consequences relating to the acceptance or rejection of a settlement offer that are similar to those applicable in the High Court under the rules on offers to settle in CPR Part 36. Under the CAT Rules, an offer to settle is labelled a ‘Rule 45 Offer’.
In addition, CAT Rule 57(1)(d) states that if any party fails to comply with any direction the CAT may order that the party (or his or her representative) be subject to an order for costs as the CAT sees fit.
Joint and several liability
Is liability imposed on a joint and several basis?
Although the point has not been decided, it is generally understood that in cases before both the CAT and the High Court liability is likely to be joint and several in respect of defendants in a cartel action.
Under paragraph 12 of Schedule 8A (CA 1998), small or medium-sized enterprises are liable only to their direct or indirect purchasers if their share in the relevant market was below 5 per cent at any time throughout the infringement and the application of the normal rules of joint and several liability would irretrievably jeopardise its economic viability and cause its assets to lose all their value. This exception does not apply if the small or medium-sized enterprise:
- led the infringement;
- coerced others to participate; or
- has been found to previously infringe competition law.
Contribution and indemnity
Is there a possibility for contribution and indemnity among defendants? How must such claims be asserted?
In England and Wales, there is provision for contribution proceedings to be brought under the Civil Liability (Contribution) Act 1978, which allows any person liable for damage suffered by another to recover a contribution from a third party who is also liable in respect of the same damage. Contribution proceedings may be brought by a defendant joining another party or parties to the action, or by bringing contribution proceedings against them after judgment has been made. In relation to the Emerald Supplies case (Emerald Supplies Ltd v British Airways plc  EWHC 741 (Ch)), British Airways was sued in the High Court for damages allegedly sustained by the claimants in relation to a cartel in which British Airways and a number of other airlines were alleged to have infringed competition law. British Airways sought to join 32 other airlines to this action, not all of which were ultimately addressees of the Commission decision (British Airways later discontinued its attempts to join the airlines that were not addressees of the Commission decision).
How liability is apportioned between defendants is a matter for the court, which will make such award as it considers just and equitable in light of each person’s actual responsibility. It remains to be seen whether the court will consider parties to a cartel to be liable in equal proportions, or whether damages will be apportioned, for example, according to ‘culpability’ in relation to the operation of the cartel (eg, if one party was the ringleader), or according to the amount of sales each party made to the claimant.
If a claim is settled, the defendant can still seek to bring a claim for contribution against another party. Section 1(4) of the Civil Liability (Contribution) Act 1978, states that a person who has agreed to make any payment in bona fide settlement of any claim made against him shall be entitled to recover contribution without regard to whether or not he himself is or ever was liable in respect of the damage, provided that he would have been liable, assuming that the factual basis of the claim against him could be established. In WH Newson v IMI plc  EWHC 1676 (Ch), Rose J considered the application of this section. In 2006, the European Commission had found that IMI and Delta, among others, had participated in an unlawful price-fixing cartel in the market for copper and copper alloy fittings. WH Newson and others brought follow-on damages claims against IMI in May 2012. In October 2012, IMI served Part 20 claims on a number of other addressees of the European Commission decision including Delta. Delta defended the Part 20 claim against it, it denied that either IMI or it had caused loss to the claimants and argued that the case was time barred. By December 2014, after a number of settlements, the only remaining live substantive claim was IMI’s Part 20 claim against Delta. IMI claimed contribution to the amount for which IMI had settled. Following a hearing in May 2015, Rose J found that section 1(4) precluded Delta from arguing that the claimants’ claims were time barred. Delta appealed this judgment.
In dismissing Delta’s appeal, the Court of Appeal considered the application of section 1(4) Civil Liability (Contribution) Act 1978, WH Newson v IMI  EWCA Civ 773. The court found that section 1(4) must also be read as a whole and its major part makes clear that a contribution claim by IMI against Delta made in the wake of IMI’s bona fide settlement of WH Newson’s claim does not require any investigation into whether or not IMI was actually liable. The court noted that it was open to Delta to argue that the settlement was not a bona fide one, for example that it was collusive, corrupt or dishonest and if such a case was made good then section 1(4) would not apply. However, there was no suggestion of that in this case. IMI had to prove that it would have been liable to WH Newson assuming that the factual basis of the claim could be established. Therefore, all IMI needed to prove was that such factual basis would have disclosed a reasonable cause of action against IMI such as would make IMI liable in law to WH Newson in respect of the damage.
For claims where the loss or damage suffered from an infringement that took place wholly on or after 9 March 2017, paragraphs 16 and 38 to 41 (Schedule 8A of CA 1998) apply in relation to contribution. The amount of contribution that one person may recover from another must be determined in light of their relative responsibility for the whole of the loss or damage caused by the infringement. That amount must take into account any damages paid by the other person in respect of the loss or damage in accordance with a consensual settlement between an infringer and a claimant.
Where loss or damage arising from an infringement is the subject of a settlement between the infringer and a claimant, it is also the subject of a damages claim by the settling complainant, and an undertaking other than the settling infringer is liable to pay damages to the settling complainants, that undertaking may not recover contribution from the settling infringer. This applies regardless of the terms of the settlement.
Is the ‘passing on’ defence allowed?
It is generally understood that the passing-on defence, if it can be proved in fact (and perhaps with the assistance of expert evidence), is available to defendants. In broad terms, the damages suffered by the purchaser of a cartelised product may be reduced if the defendant can prove that the purchaser passed on the overcharge to his or her own customers.
Prior to Sainsbury’s v MasterCard  CAT 11, there was no case under English law substantively dealing with the pass-on defence, although the existence of the defence had been previously recognised. MasterCard operated a global payment scheme. When a customer bought goods with a credit or debit card, the issuing bank forwarded payment to the merchant’s bank minus an interchange fee. If the level of fee was not agreed between the two banks, MasterCard set a MIF. Sainsbury’s claimed that MasterCard had infringed article 101(1) of the TFEU and claimed damages on the basis that, but for the UK MIF, the acquiring banks would have been able to negotiate lower interchange fees with the issuing banks. The CAT found that the UK MIF was an anticompetitive agreement by effect. Without the UK MIF, the issuing banks could not have deducted any interchange fee except by agreement with the acquiring banks, and it was likely that they would have reached such agreement. In parallel proceedings in the High Court, Popplewell J found that multilateral interchange fees charged by payment card issuers did not infringe article 101(1) of the TFEU (Asda Stores v MasterCard  EWHC 98 (Comm). Both judgments are on appeal and, as at the time of writing, judgment had not been handed down.
The CAT considered whether MasterCard could benefit from the defence of pass-on. The CAT found that the pass-on defence was in reality not a defence at all; instead its thrust is to prevent the over-compensation of a claimant; and to ensure that the defendant does not pay damages for the same wrong twice. The CAT considered that, whereas an economist might define pass-on more widely (ie, to include cost savings and expenditure), the pass-on defence is only concerned with identifiable increases in prices by a firm to its customers. The increase in price must be causally connected with the overcharge, and demonstrably so. The CAT considered that the pass-on defence ought only to succeed where, on the balance of probabilities, the defendant has shown that there exists another class of claimant, downstream of the claimant(s) in the action, to whom the overcharge has been passed on. Unless the defendant demonstrates the existence of such a class, the CAT considered that a claimant’s recovery of the overcharge incurred by it should not be reduced or defeated on this ground.
In its judgment, the CAT found that Mastercard’s defence failed because no identifiable increase in retail price had been established, still less one that was causally connected with the UK MIF. It held that Sainsbury’s was entitled to recover the difference between what it had paid by way of the UK MIF during the claim period and the amount it would have paid had it agreed interchange fees bilaterally.
For claims where the loss or damage suffered from an infringement took place wholly on or after 9 March 2017, paragraphs 8 to 11 of Schedule 8A CA 1998, which deal with ‘passing on’ apply.
In terms of burden of proof, the claimant is treated as having proved that the overcharge or underpayment was passed on to the claimant if the document proves that:
- the defendant infringed competition law;
- there was an overcharge or underpayment as a result of the infringement where a person acquired a product or service directly from the defendant; and
- the claimant subsequently acquired the product or service, or the product or service was provided to the person by the claimant.
This will not apply if the defendant proves that the overcharge or part of it was not passed on to the claimant.
Where there is an overcharge or an underpayment, a person makes a competition claim in respect of loss or damage that arises from the overcharge or underpayments; and the defendant claims that the claimant passed on all or part of the overcharge or underpayment to the other person, the defendant has the burden of proving:
- that the claimant passed on the overcharge or underpayment; and
- the extent to which the claimant did so.
Do any other defences exist that permit companies or individuals to defend themselves against competition law liability?
In English law, the ex turpi causa doctrine means that a person may not benefit from relief (eg, damages) where to do so would enable him or her to benefit from his or her own illegality. This would prevent a claimant from recovering damages in respect of his or her own illegal activity. In Gibbs Mew v Gemmell  ECC 97, the court held that a party to an anticompetitive agreement under what is now article 101(1) of the TFEU is prevented from recovering damages in respect of loss suffered as a result of that agreement. That judgment predates the ECJ’s judgment in Courage v Crehan (Case C-453/99,  ECR I-6297), which held that a party to a contract that infringes article 101(1) of the TFEU can rely on a breach of that provision to obtain relief before a national court despite the existence of a national rule denying a person the right to rely on his or her own ‘illegality’ to obtain damages, in circumstances where the parties are not in positions of equivalent bargaining power.
In relation to the Safeway litigation, in which Safeway issued proceedings against its former directors and employees alleging breach of contract and negligence, seeking to recover the full amount of the fine from its directors and employees, the defendants applied for the claim to be struck out on the basis of ex turpi causa on the basis that Safeway had to rely on its own illegality (ie, the infringing conduct) in order to bring the claim. Although the application was refused at first instance (Safeway Stores Ltd v Twigger  EWHC 11 (Comm)), the Court of Appeal was unanimous in holding that Safeway’s claim should be struck out (Safeway Stores Ltd v Twigger  EWCA Civ 1472). The court concluded that the ex turpi causa maxim applied to preclude Safeway from seeking to recover from the defendants either the amount of the penalty imposed by the OFT (as it then was) or the costs incurred as a result of the OFT’s investigation. An undertaking that infringes provisions of CA 1998 relating to anticompetitive activity and is fined by the CMA therefore cannot recover the amount of such penalties from its directors or employees whose actions allegedly caused the infringement.
Alternative dispute resolution
Is alternative dispute resolution available?
Alternative dispute resolution (ADR) is available in England and Wales. CPR 1.4(2)(e) specifically refers to ADR and requires the court to further the overriding objective by actively managing cases, with active case management including ‘encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate and facilitating the use of such procedure’.
Competition law issues are arbitrable if the claim alleging an antitrust infringement falls within the ambit of a contractual arbitration clause. In ET plus SA v Welter  EWHC 2115 (Comm), the High Court considered that there was no realistic doubt that antitrust claims were arbitrable, and the Court of Appeal in Attheraces Limited v British Horseracing Board  EWCA Civ 38 has also emphasised the positive benefits of arbitrating competition disputes. In Microsoft Mobile v Sony  EWHC 374 (Ch), the High Court considered the application of an arbitration clause in a tortious claim arising from allegations of anticompetitive conduct and determined that the claim should be stayed under section 9 of the Arbitration Act 1996.
The CAT appears to be less willing to embrace arbitration. In Claymore Dairies v OFT ( CAT 3) the CAT emphasised the public law nature of CA 1998 (ie, that proceedings before the CAT are there also to protect the public interest). Where parties in the CAT wish to withdraw their dispute and transfer to private arbitration, it is necessary to obtain the tribunal’s consent to a stay of the proceedings, although proceedings can be withdrawn without the tribunal’s permission, provided the defendant gives consent (CAT Rule 44(1)(a)).
The Damages Directive seeks to encourage consensual dispute resolution.
The UK government’s proposals ‘Private Actions in Competition Law: A consultation on options for reform - government response’ (January 2013) also strongly encouraged ADR in competition cases but stopped short of making it mandatory.