First published on 15 January 2015 in Global Competition Law Review.
Co-authored by Tom Bolster and Oliver Bartholomew
Case Background
On 9 November 2010, the European Commission issued a decision1 fining 11 major airlines almost €800 million for operating a global cartel that affected air cargo services within the European Economic Area between December 1999 and February 2006. The case of Emerald Supplies & Ors v British Airways is one the first and largest of many private damages actions that have now been brought against British Airways Plc, and other airlines in this regard. The claim brings together 565 direct and indirect purchasers of air freight services who claim they paid inflated prices for their air freight as a result of the cartel.
2014 was a very eventful year in the case, resulting in the unprecedented disclosure to the Claimants of a redacted version of the EC's decision before the publication of any version of that decision to the world at large, as well as the handing down of a judgment on the topical issue of the use and viability of economic torts in cartel damage claims. Finally, the year ended with an eventful four day case management conference (CMC) in December, during which the Court imposed wide ranging disclosure Orders on all parties in the proceedings. This article summarises and comments on these developments, considering their potentially wider impact on similar claims in the future.
Court's ruling on redacted version of European Commission's Decision
Faced with a refusal from BA to voluntarily disclose to the Claimants its version of the EC's decision, and the Commission's inability, despite repeated assurances, to disclose a non-confidential version of that decision in a timely manner, the Claimants issued in February 2014 a formal application against BA, in order to access the decision. Following a first CMC in March 2014, the airlines were ordered to make available a first redacted version of the decision, for examination by the Claimants. This was eventually done on 10 July 2014 after the airlines had had an opportunity to redact material they argued could not be disclosed on the grounds that it constituted leniency material or material covered by the protections against disclosure contained in the case of Pergan v Commission.2
In the first of two judgments handed down of 28 October 20143, which arose out of a hearing held on 31 July 2014 following the Claimants' Application dated 22July 2014 for many of the airlines' redactions to be lifted, the English High Court assessed the appropriateness and lawfulness of the redactions made by BA and the other airlines named in the decision. The Court ruled that it would be an impossible task for the judge, even with the help of a judicial assistant, to read the entirety of the decision and decide which redactions were and were not validly claimed. The judgment indicated that if the parties could not decide among them what should be redacted, it was not possible to see why the judge, who was deprived of detailed background information, would be expected to do so.4 On this basis, the Court held that there should be disclosure of the full decision (save for privileged or leniency material) into a confidentiality ring between the parties, among whose members the decision could be shared, with the added safeguard that the claimants would be barred from using the decision to initiate any further proceedings.5 The judgment is currently under appeal by a number of the airlines.
Court's ruling on summary judgment/strike out applications
The High Court's second judgment of 28 October 2014 in the same case6 illustrates the difficulty of seeking the summary determination or striking out of complex claims early in the procedural history of the case, especially where those applications rely at least in part on questions of fact that are unlikely to be revealed prior to disclosure. This judgment arose out of a hearing which took place in early October 2014 following applications that BA and the Claimants had issued seeking the striking out or summary judgment of part of the other's case. The first application, issued in December 2013, was made by BA and concerned the striking out and/or summary dismissal of the claimants' claims in the torts of unlawful means conspiracy and unlawful interference. In the second application, issued in April 2014, the Claimants requested that two contentions of law in BA's Defence be declared incorrect, struck out or summarily dismissed.
The two applications raised three main issues: (1) whether the claimants had adequately pleaded, the necessary intention by BA to injure them for the purpose of the unlawful means conspiracy claims; (2) whether unlawful means in a foreign jurisdiction counted for the purposes of those claims; and (3) if the answer to point 2 is affirmative, whether the claimants were entitled to claim damages in relation to the loss suffered outside of that foreign jurisdiction.
The Judge refused to decide on any of these issues and adjourned both applications, setting them aside to be determined at some point after disclosure and before trial (assuming either party revived them). Most notably, BA's application for strike out and/or summary judgment was adjourned as the judge took the view that it was inappropriate to consider the complicated legal arguments raised by the dispute at the preliminary application stage, particularly without the assistance of documentation that, if available, would likely be relevant to the claims against the airline founded on unlawful means conspiracy and unlawful interference.
Analysis of the Court's two October 2014 Judgments
It is clear that the absence of any published decision from the Commission in this high-profile cartel case, particularly so long after the decision was made, is less than satisfactory. Mr Justice Peter Smith, the author of both judgments, was unsurprisingly critical of the "one speed molasses" approach of the Commission, stating that: "It is a matter of great concern to me that this action has been stymied for many years because of the EC's failure to proceed with anything like reasonable time for making its decisions".7 In relation to a letter the Commission sent to the Judge regarding the delay in publishing a non-confidential version of the Decision, the Judge further expressed his dissatisfaction by outlining that: "It must be self-evident that 4 years even just to consider working out the non-confidential part of the Decision is completely unacceptable, no steps are being made to speed up that process and no indication is given as to when the whole process will be finalised". These arguments are now likely to be debated all over again before the Court of Appeal in the first half of 2015. It will be interesting to see whether that Court shares or distances itself from these strongly-worded views.
Whilst the second judgment was ultimately a simple case management decision to adjourn the applications, prospective claimants may still take heart from the fact that the claimants' economic tort claims in this case were not struck out at this stage. As a result, unless and until this issue is finally determined in BA's favour, new claims are likely to continue to include such economic claims in the near future.
December 2014 Case Management Conference
Following these two judgments of 28 October 2014, a four-day case management conference took place in early December 2014 during which the airlines who are addressees of the Commission Decision were ordered to disclose the Commission's full Case File. In addition, BA and each contribution defendant8 were ordered to disclose the air cargo case files of the other competition regulators that fined the airlines in the US, Canada, Korea, Australia, New Zealand, Brazil, South Africa and Switzerland. The claimants were also ordered to complete an extensive disclosure exercise disclosing their processed air freight spend data, as well as providing expert reports setting out whether they passed-on any overcharge they suffered as a result of the cartel.
Further case management conferences are scheduled to take place in April and July 2015. Should the case go to trial, it is expected that this may happen in the first part of 2016.
1 Summary of Commission Decision of 9 November 2010 relating to a proceeding under Article 101 of the Treaty on the Functioning of the European Union, Article 53 of the EEA Agreement and Article 8 of the Agreement between the European Community and the Swiss Confederation on air transport (Case C.39258 — Airfreight).
2 Case T-427/04 Pergan Hilfsstoffe Fur Industrielle Prozesse GmbH v Commission [2007] ECR II-4225.
3 [2014] EWHC 3513 (Ch)
4 [2014] EWHC 3513 (Ch), para. 41
5 Ibid, para. 51, 52, 56
6 [2014] EWHC 3514 (Ch)
7 [2014] EWHC 3513 (Ch), para.3
8 Air Canada, Société Air France, KLM NV, Cargolux Airlines International SA, Cathay Pacific Airways Ltd, Lufthansa Cargo AG, Deutsche Lufthansa AG, Martinair Holland NV, Qantas Airways Ltd, Singapore Airlines Cargo PTE Ltd, Singapore Airlines Ltd, Swiss International Air Lines AG, Scandinavian Airlines System Denmark-Norway-Sweden, Air France KLM, SAS AB, SAS Cargo Group A/S, LAN Cargo SA, LATAM Airlines Group SA, Japan Airlines Co Ltd, Korean Airlines Co Ltd, Thai Airways International Public Co Ltd, Asiana Airlines Inc, Polar Air Cargo LLC.
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.
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.
