UK: Claimants In Competition Damages Claims Put To Proof On Causation - Court Of Appeal Upholds CAT Decision In Enron Coal Services v EWS

Last Updated: 17 March 2011
Article by Peter Scott

January 2011


On 19 January 2011 the English Court of Appeal dismissed an appeal in Enron Coal Services Ltd v English Welsh & Scottish Railway Ltd1 - the first damages action to have gone to trial in the Competition Appeal Tribunal (CAT). The Court of Appeal confirmed that findings of fact in an infringement decision by a competition authority are binding on a court2 considering a damages claim, but held that this does not mean that a claimant can rely upon a finding that the claimant has been the target of infringing conduct to establish causation. The judgment emphasises that claimants in "follow-on" actions must prove that the infringing conduct has resulted in the loss claimed. This has significant implications for companies looking to recover damages on the back of decisions by the European Commission, the Office of Fair Trading and the UK sectoral regulators, as well as defendants.


The appeal concerned a claim issued in the CAT by Enron's administrators, seeking damages from English, Welsh & Scottish Railway (EWS) for practices on the rail haulage market for coal in Great Britain. The claim followed a decision of the Office of Rail Regulation (ORR) that EWS had infringed Article 82 of the EC Treaty (now Article 102 of the Treaty on the Functioning of the European Union) and the Chapter II Prohibition in the Competition Act 1998 by abusing its dominant position in rail haulage. The ORR's decision stated that EWS's abusive conduct included discriminatory treatment of Enron Coal Services Ltd (ECSL) and that this had placed ECSL at a competitive disadvantage in its contractual negotiations with Edison Mission Energy. The Enron administrators sought to recover damages arguing, among other things, that EWS's conduct had deprived ECSL of the chance of winning a lucrative contract to supply coal to one of Edison's power stations.

As a follow-on action, the claim relied upon the ORR's decision that EWS had infringed competition law to establish liability. The Enron administrators also sought to rely upon the ORR decision to prove causation (i.e. that EWS's abusive conduct in breach of the competition rules had caused ECSL to suffer loss), arguing that causation could be inferred from the ORR's finding that EWS's abusive conduct had put ECSL at a disadvantage and from other statements in the decision that referred to ECSL's business. The Enron administrators asserted that these inferences were binding on the CAT due to section 58 of the Competition Act, which states that a finding of fact by a competition authority3 made in the course of its investigation is binding unless the court decides otherwise.

The CAT decision

The CAT rejected the argument that causation was proved by the ORR's findings, and held that the claim failed. Specifically, the CAT concluded that the ORR's finding of discrimination resulting in competitive disadvantage was not in itself a finding that ECSL had suffered loss. Reviewing the additional evidence put forward by the parties, the CAT did not accept that ECSL had suffered any loss because ECSL had no real or substantial prospect of supplying coal to Edison regardless of EWS's conduct4.

The Enron administrators subsequently appealed to the Court of Appeal.

The Court of Appeal's decision

The Court of Appeal considered two questions:

  • a broader question concerning the extent to which findings in an infringement decision by a competition authority are subsequently binding on the High Court and the CAT when considering a damages claim that relies upon the decision; and
  • a narrower question concerning whether the claimant could rely upon inferences drawn from the ORR decision to establish that an infringement has caused loss.

On the broader question, the Court of Appeal confirmed that section 58 equally applies to damages claims before both the High Court and the CAT, requiring that findings of fact in an infringement decision are binding, subject only to the court's power to direct that a particular finding shall not be binding. However, for a statement to be binding the party seeking to rely on it must be able to demonstrate that the competition authority has made "a clearly identifiable finding of fact to a given effect". Not every statement in the ORR's decision will be a binding finding of fact, and it is not enough to point to passages in the decision from which a finding of fact might arguably be inferred. An inference that might arguably be made from a statement in the decision could not therefore be a finding that is binding on the court.

Answering the narrower question, the Court of Appeal agreed with the CAT that the ORR's specific reference to ECSL having been at a competitive disadvantage was not sufficient to demonstrate that the infringement established by the ORR's decision had caused ECSL any loss.


The distinction the Court of Appeal has drawn is a fine one. But it is important. It meant that the CAT could not disagree with the finding that ECSL had suffered a disadvantage as the result of EWS's unlawful conduct, but it could not be inferred from this that the disadvantage had result in loss.

The Court of Appeal's judgment emphasises that while claimants in follow-on actions can rely upon an infringement decision for a cause of action on which to base a claim, they will need to adduce clear evidence of causation and loss to recover damages. This means showing that "but for" the infringement a different outcome would have resulted, where the claimant would have been in a more favourable position. It will not be enough to assert that the losses and/or the causal link between the infringement and loss are established by inferences drawn from statements made about market effects in the competition authority's decision.

This case also demonstrates that statements about an infringement being targeted at, or even having effects on, a particular company are not really that helpful in proving that loss has been caused by that conduct. To be binding in a damages case, the competition authority would have to make a finding that the infringement actually caused damage to specific companies. However, this type of conclusion is unlikely to be made in an infringement decision, where findings on specific effects are not generally required for a competition authority to make an infringement finding and impose sanctions.

The failure of the ECSL claim may give cause for potential claimants to think more carefully about whether they can prove causation and loss, before they issue a claim. Relying merely upon assertions drawn from isolated phrases contained in the infringement decision will not be enough.


1. 2011] EWCA Civ 2.

2. Including the CAT.

3. Including one of the UK sector regulators (e.g. Ofcom, the ORR and Ofwat) exercising its competition powers.

4. [2009] CAT 36.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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