UK: English Court Of Appeal Holds That Cartel-Related Private Claims Not Time-Barred Until All Related EU Court Challenges Over

In a ruling of 31 July 2012, the English Court of Appeal (the "CA") overturned an earlier Competition Appeals Tribunal (the "CAT") judgment, in which claimants had been found time-barred in relation to follow-on private damage claims brought before the CAT arising from an earlier European Commission cartel decision. At the heart of the dispute was the precise moment in time when the two-year limitation period for making a follow-on claim before the CAT under section 47A of the UK Competition Act began to run.

In December 2003, the European Commission imposed fines totalling € 101.44 million on several undertakings for having participated between 1988 and 1999 in the carbon and graphite products cartel. The companies involved in the cartel were Carbon Lorraine, Morgan Crucible, Schunk, SGL, Hoffmann and Conradty. One company, Morgan Crucible, benefited from total immunity from fines under the Commission's 1996 Leniency Notice for having revealed the existence of the cartel to the Commission. A number of the addressees of the Commission Decision appealed before the EU's General Court (the "GC"). Morgan Crucible, however, did not challenge the Commission Decision. The appeals before the GC regarding the Commission's finding of an infringement were dismissed in 2008 (see VBB on Competition Law, Volume 2008, No. 10, available at www.vbb.com).

In December 2010, Deutsche Bahn and others (the "claimants") brought follow-on claims against the cartel members before the CAT under section 47A of the UK Competition Act 1998 for losses suffered as a result of the activities of the cartel. Section 47A gives parties that have suffered loss or damage due to infringements of EU and UK competition law the right to bring damage claims before the CAT on the back of the Commission's or the Office of Fair Trading's infringement decision. Morgan Crucible (the "defendant"), which had not appealed against the Commission Decision before the GC, applied to strike out the claims against it on the grounds that they had not been brought against it within the time limit set out in Rule 31 of the CAT Rules 2003. This provision states that a claim for damages must be made within the later of a period of two years from the "relevant date" (i.e. the date on which the right to bring an appeal against the relevant decision expires, or the date on which such an appeal is determined) or the date on which a cause of action accrued.

Morgan Crucible contended that, in relation to the claims brought against it, this two-year time limit had expired on 13 February 2006 (i.e., two years after the time that Morgan Crucible could have appealed against the Commission's Decision before the GC). In its judgment of 25 May 2011, the CAT accepted this narrowly construed interpretation of section 47A and dismissed the claimants' arguments that the claims were not time-barred as these were brought before 18 December 2010 (i.e., two years from the date on which the time for appeals to the ECJ by the other defendants against the GC ruling upholding the finding of infringement expired). The claimants subsequently appealed against the CAT judgment before the CA.

In its judgment, the CA disagreed with the CAT's earlier findings.

The CA reasoned that the actual wording of section 47A was critical. According to the CA, the provision generally referred to a "decision" that a relevant prohibition had been infringed, rather than a decision that a particular party or addressee had infringed competition law. According to the CA, the appeal by undertakings against an infringement was an appeal against the basic decision that the relevant prohibition had been infringed, and not an appeal against a decision addressed to a particular party. The CA therefore considered that the "decision" actually referred to in Section 47A was a decision by the Commission that an infringement situation existed. The liability of particular parties did not feature in that decision.

Thus, the CA held that the appeal which deferred the trigger date for the limitation period was the appeal to the GC against the decision that there had been an infringement, not against the addressing of that decision to the particular undertakings. For the CA, this interpretation was consistent with the way in which the word "decision" was used in other parts of the Competition Act 1998. Consequently, the CA concluded that the claimants' claim against Morgan Crucible had not been brought out of time and could proceed along with the claims against the other defendants.

It is understood that Morgan Crucible has applied to the UK's Supreme Court for permission to appeal the CA's judgment.

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