On 26 January 2015, the English High Court issued a judgment dismissing lawsuits brought by a tobacco manufacturer, Gallaher Group Limited and Gallaher Limited (Gallaher), and a retailer, Somerfield Stores Limited and Co-operative Group Food Limited (Somerfield), in an attempt to recover £ 54 million in antitrust fines from the Competition and Markets Authority ("CMA").
The fines were originally imposed in 2010 by the Office of Fair Trading ("OFT") in relation to its investigation into anti-competitive practices concerning the sale of tobacco. The investigation began in 2003 and involved Gallaher and Somerfield as well as 11 other parties – six of whom entered into 'early resolution agreements' (i.e., settlements) in 2008. Under the settlements, the settling parties admitted liability and agreed to cooperate with the OFT in exchange for a reduction in fines. However, the OFT's decision was successfully challenged before the Competition Appeal Tribunal by a number of other parties, leaving those who had not appealed against the decision without a remedy against the imposition of fines, even though the OFT's case had effectively collapsed.
Despite this, the OFT made a subsequent payment to one of the non-appealing parties involved, TM Retail, which had opted for settlement. This provided the foundation on which Gallaher and Somerfield launched their action, arguing that they should be put in the same position as TM Retail on the basis of the principles of fairness and equal treatment. Although the proceedings were initiated against the OFT, they continued against its successor, CMA, after 1 April 2014.
The High Court's judgment addressed the fairness argument and indicated that the OFT should not have given assurances to TM Retail and should have rejected its request to repay the fine on the basis of the European Court of Justice's ruling in Wood Pulp II, which held that parties who fail to appeal cannot subsequently benefit from decisions which are favourable to those who did appeal. In light of this factor as well as the protection of public funds and unjust enrichment, the Court held that the OFT's refusal to apply the same approach to the claimants Gallaher and Somerfield was justified and their claims were therefore dismissed.
Reacting to the judgment, the CMA said that the judgment "recognises the importance of finality and legal certainty in competition investigations and inquiries". Yet, the Court's critical comments on the OFT's unfair treatment of the claimants in this case will most certainly provide an incentive for the CMA to re-examine its conduct in the future as regards early resolution agreements, particularly in relation to third party appeals on liability and the repayment of penalties.
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