UK: UK Private Enforcement

Originally Published by Global Competition Review

The private enforcement of competition law has been one of the most dynamic areas of law in the UK over the past few years. This has in large part been due to a number of changes to procedural rules in the UK designed to facilitate private enforcement of the competition rules. These legislative changes provide a framework around which a body of case law has begun to develop. There has been a steady increase in the number of antitrust claims lodged before the English courts. A substantial proportion of cases have been settled prior to trial which, while reducing the number of published judgments, suggests that defendants increasingly recognise the likelihood of their being found liable to pay substantial damages.² All of these developments take place against a background of intense policy debate at the European level, most notably the Commission's Green and White Papers on damages actions.³

The UK regime includes a number of specific provisions for competition law claims, most notably the specialist Competition Appeal Tribunal. Save for these rules, private actions in relation to competition law are subject to the regime applicable to other civil commercial actions, the cause of action for competition claims being the tort of breach of statutory duty.⁴ Below we set out the most important features of the current regime in the UK, before undertaking a review of the most recent case law.

The Competition Act 1998

The Competition Act 1998 introduced two new competition prohibitions into the UK regime, which mirror articles 81 and 82 of the EC Treaty, namely a prohibition against anti-competitive agreements (the Chapter I prohibition) and a prohibition against an abuse of a dominant position (the Chapter II prohibition). Both prohibitions require there to be an effect on trade within the UK.

The Enterprise Act 2002

The Enterprise Act 2002 amended the Competition Act 1998 substantially. The principal changes designed to facilitate private antitrust actions were as follows:

• The Competition Appeal Tribunal (CAT) was created.⁵ The CAT is a specialist judicial body that has jurisdiction to hear actions for damages and other monetary claims under the Competition Act 1998.⁶ Cases are heard before a panel consisting of three members: either the president⁷ or a member of the panel of chairmen (which includes judges of the High Court and other senior lawyers) and two lay members (who are drawn from a panel of economists, accountants and other competition policy experts).
• Third parties now have the right to bring claims for damages and other monetary claims before the CAT for loss or damage suffered as a result of an infringement of either UK or EC competition law.⁸ Claims can only be brought before the CAT in reliance on an OFT⁹ or Commission infringement decision and following the exhaustion of the appeals process. Where there is no prior decision of the OFT or Commission, claims must be brought in the High Court (known as 'stand-alone actions').

In determining a claim for damages, the CAT is bound by the relevant infringement decision and so, in principle, the issue of liability should be settled and the sole issues for the CAT will be causation and quantum.¹⁰ These claims are referred to as 'follow-on actions' since liability arises from the prior infringement decision. A number of follow-on actions have now been brought before the CAT.¹¹

• The Competition Act now provides that in damages claims and other monetary claims, the courts are bound by findings of infringement made by the OFT and the CAT¹² provided that the time for an appeal against a decision has elapsed, or, where an appeal has been filed, it has been determined.¹³ The courts are also bound by any finding of fact made by the OFT during the investigation of the infringement.¹⁴ This mirrors the position that applies in cases where there has been a prior decision of the Commission.¹⁵ This provision places follow-on claimants in the same position before the CAT and the High Court.
• The right to bring a claim for damages before the CAT does not affect the right to bring other proceedings in relation to that claim.¹⁶ As such, the choice of whether to pursue a claim for damages in the CAT or the civil courts rests with the claimant.
• Specified bodies have a right to bring an action for damages or other monetary claims before the CAT on behalf of consumers where they have suffered loss or damage as a result of an infringement of either UK or EC competition law.¹⁷ At present, the Consumers' Association is the only specified consumer body.¹⁸

The OFT's recommendations

Concern has been expressed by the OFT that more could be done to facilitate private damages actions. In November 2007, following the publication of a discussion paper,¹⁹ the OFT published a number of recommendations²⁰ to the government on the steps it thought should be taken at the domestic level to improve the effectiveness of redress for those who have been harmed by breaches of competition law.

The OFT's recommendations build on some of the ideas identified by the Commission in its 2005 Green Paper on damages actions,²¹ and are to a large extent consistent with the conclusions in the more recent White Paper.²² The OFT's recommendations included that the government should consult on the following:

• introducing conditional fee arrangements in representative actions, which allow for an increase of greater than 100 per cent on lawyers' fees;
• codifying the courts' discretion to cap parties' costs liabilities and to provide for the court's discretion to give the claimant cost-protection in appropriate cases;
• modifying existing procedures or the introduction of new procedures so as to allow representative bodies to bring standalone and follow-on representative actions for damages and applications for injunctions on behalf of consumers and businesses; and
• requiring UK courts and tribunals to have regard to UK national competition authorities' decisions and guidance.

It is unclear if or how the OFT's policy recommendations will be taken forward. Since publication of these recommendations, no further action has been taken.

Jurisdictional issues

Many antitrust cases involve multiple claimants and defendants domiciled in different member states engaged in cross-border trade. The jurisdiction of courts to hear cases brought against defendants domiciled in member states is governed by Regulation 44/2001 (known as the Brussels I Regulation).²³ Under the Brussels I Regulation, ²⁴ where a claim is made in tort, claimants have a choice of bringing an action in the courts of the state where the defendant(s) are domiciled or in the courts of the state where the harmful event occurred.²⁵ The place where the harmful event occurred can be either the place where the event giving rise to the damage occurred, or the place where the damage itself occurred. Again, this is at the election of the claimant. Article 6(1) of the Brussels I Regulation provides for EU domiciled co-defendants to be brought together in a single jurisdiction: co-defendants may be sued in a state where any one of them is domiciled provided that the claims are 'closely connected'.²⁶

A claimant therefore has a potentially wide variety of jurisdictions from which to choose when deciding to commence an action.

The extent of the English courts' jurisdiction was considered in the case of Provimi,²⁷ which arose out of the Commission's vitamins cartel decision.²⁸ The Commission's vitamins cartel decision was addressed to a number of parties including Hoffman La Roche and Aventis SA. In the context of a preliminary hearing of an application to strike out the claim, the court was asked to consider whether a claim by a German domiciled purchaser against a German domiciled subsidiary of one of the cartelists could be heard in England. The claimant argued that it was able to bring a claim on the basis that an English subsidiary (in the same corporate group as the German domiciled subsidiary) had, albeit perhaps unknowingly, implemented the cartel price. Had the English subsidiary not implemented the cartel price, the German domiciled purchaser would have been able to purchase from it at non-cartel levels. If the court agreed that it had jurisdiction to hear the claim, the claimant would be able to join other defendants (including the German domiciled subsidiary) to the claim on the basis of article 6(1) of the Brussels I Regulation. Without determining the substantive claim, the court accepted that the claim was arguable and refused to strike out the proceedings.

Another issue in Provimi was that some of the purchases of the cartel product were made under contracts containing jurisdiction clauses. The jurisdiction clauses provided that disputes should be dealt with by the courts of Switzerland, Germany or France. Under the Brussels I Regulation²⁹ and the Lugano Convention,³⁰ jurisdiction clauses confer exclusive jurisdiction to the courts of the chosen member state in the event of a dispute arising under the contract. However, having considered expert evidence from each of these jurisdictions, the court found that the jurisdiction clauses in the purchase agreements were insufficiently wide to include claims based on tort.³¹ The English courts were therefore able to assert jurisdiction over these claims.

It can be seen that the ruling in Provimi enables a wide range of purchasers of products and services who have suffered loss as a result of anti-competitive conduct to seek redress in the UK courts.³² However, there are limits on the jurisdiction of the English courts. In SanDisk³³ a US importer and seller of unlicensed MP3 players in the EU, brought proceedings in the High Court against a number of non- UK domiciled defendants alleging that the terms of the defendants' licences, together with conduct such as alleged harassment through the enforcement of patents, amounted to an abuse of a dominant position. The court, however, refused to accept jurisdiction in circumstances where none of the defendants were UK companies, none of the alleged acts of harassment nor negotiations for licences had taken place in the UK, and no immediate damage had been caused to the claimant in the UK as a result of these alleged abuses. In those circumstances, the court considered that courts in other EU jurisdictions were better placed to hear the claim.

Limitation issues

The general limitation rules (those applicable to tortious claims) mean that actions for breach of the competition rules must be brought within six years from the date on which the cause of action accrued.³⁴ If a tort is continuing in nature, then a fresh cause of action will accrue from day to day for as long as the tort continues to be committed.³⁵ Where an action is based upon the fraud of the defendant or any fact relevant to the claimant's right of action has been deliberately concealed from him by the defendant, the limitation period will not begin to run until the claimant has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.³⁶

In contrast, the CAT's procedural rules provide that follow-on actions must be brought within a two year 'window'. The limitation period starts on the date (known as the 'relevant date'³⁷), which is the later of the date on which the period to appeal to the courts has lapsed, or the date on which any appeal has been determined.³⁸ The CAT retains the discretion, however, to grant permission for a claim to be brought prior to the relevant date where the circumstances justify it.

The issue of when time starts to run against a defendant, who has not appealed an infringement decision of the Commission to the CFI, in circumstances where the other addressees of the decision have appealed that decision, was resolved as a preliminary issue in Emerson.³⁹ Emerson involves a claim by five direct purchasers of electrical and mechanical carbon and graphite products following on from the Commission's decision that the defendants, together with a number of other undertakings, had breached article 81(1) by participating in an EEA-wide price-fixing and market-sharing cartel in respect of the sale of electrical and mechanical carbon and graphite products.⁴⁰ One of the three defendants, Morgan Crucible, had not appealed the infringement decision (no doubt because it applied for and received 100 per cent leniency from the Commission). The remaining defendants lodged appeals before the CFI. Given the uncertainty as to whether the limitation period for Morgan Crucible had started to run, the claimants filed an action for damages against Morgan Crucible before the CAT. It also sought permission from the CAT to bring its action against two of the defendants who had lodged appeals (Schunk and SGL) before the expiry of the normal time limits.

The CAT held that the time limit for bringing a claim for damages against any of the defendants, including Morgan Crucible, had not yet begun to run because of the pending appeals by Schunk and SGL before the CFI. The CAT decided that time does not start to run against any defendant until any relevant appeals process is exhausted, even in circumstances where one defendant has not lodged an appeal. The claim was therefore premature and the CAT's permission to bring the action was required. At a subsequent hearing the CAT decided to exercise its discretion so as to allow the action against Morgan Crucible to be brought while the appeals to the CFI were underway, citing 'legitimate concerns' raised by the claimants about the disclosure and retention of documents by Morgan Crucible. In April 2008, the CAT refused permission to bring actions against the other defendants prior to receiving a judgment of the CFI on the basis that the claimants had failed to establish that they were likely to suffer particular prejudice if permission was refused and if the proposed claim did not proceed until the conclusion of the CFI appeals.⁴¹

The Court of Appeal recently held in BCL Old Co & Others v BASF & Others⁴² (on appeal from a decision of the CAT) that, for the purposes of applying the limitation period in follow-on actions before the CAT, there is a distinction between appeals brought against the Commission's substantive finding of infringement and the decision to impose a penalty. In that case the defendant had only appealed the level of the fine imposed and not the finding of the existence of a cartel. Accordingly, the two-year period in which to bring an action was deemed to have commenced on the day on which time to appeal against the infringement decision had expired, irrespective of the fact that an appeal had been lodged against the fine that had been imposed by the Commission. On the facts of that case the limitation period had expired.

Collective actions

As explained above, specified bodies now have the right to bring representative actions on behalf of consumers where there is already a finding of infringement by the OFT or Commission (follow-on actions). Certain limitations of the regime, however, have been highlighted by the first case brought under the relevant provisions, The Consumers' Association v JJB Sports.⁴³

One of the main difficulties faced by the Consumers' Association was identifying a sufficient number of named claimants to make it worthwhile to bring the action. This difficulty has resulted in further debate as to whether an 'opt-in'⁴⁴ or 'opt-out'⁴⁵ system of collective actions is more appropriate. The OFT believes that 'opt-in' and 'opt-out' systems can co-exist and has recommended that it should be open to the court to decide, in the circumstances of each case, whether given claims should be brought as a representative action on behalf of consumers at large (opt-out model), as a representative action on behalf of named consumers (opt-in model), or as individual actions.

The Commission's White Paper supports the use of representative actions by consumer bodies and 'opt in' collective actions. In the High Court, procedural rules (which are not specific to competition claims) permit claimants to represent a class of persons having the same interest – ie, a common interest and common grievance. ⁴⁶ In Emerald Supplies⁴⁷ a claim was brought against British Airways for 'direct or indirect purchasers or both of air freight services the prices for which were inflated by one or more of the agreements or concerted practices'. Emerald therefore wanted to represent other purchasers for whom prices had been inflated as a result of the air freight cartel. However, the court agreed to strike out aspects of the claim on the basis that:

• A requirement of the procedural rules is that it must be possible to identify at the outset of the proceedings those parties that fall within the class represented by the claim. However, the judge held that it would not be possible to determine who was in the class until the outcome of the case. This was because an integral part of the claim was proving that loss and damage had been suffered by the direct and indirect purchasers of air freight services. Without knowing who had suffered loss and damage, the class could not be defined.
• The relief sought was not equally beneficial for all members of the class as the class included direct and indirect purchasers operating at different levels of the distribution chain. The judge noted that there would be an inevitable conflict between the claims of different members of the class (for instance, in relation to passing on of losses within the distribution chain).

As a result, the claimant was denied the right to act as the representative of the entire class of claimants described in the claim. The decision is currently on appeal to the Court of Appeal.

Stay of proceedings

An issue that has arisen in respect of follow-on actions is whether, and if so under what circumstances, claims should be stayed pending the outcome of appeals against the infringement decision on which the claim is based. The ECJ's judgment in Masterfoods⁴⁸ sets out the basic rules on this issue, providing that national courts should take all steps required to ensure that a trial in a follow-on action should not be heard before all appeals to the CFI or, if appropriate, the ECJ have been concluded.

The ECJ's decision in Masterfoods has recently been applied by the High Court. In National Grid⁴⁹ the High Court decided that an immediate stay of a follow-on claim was not appropriate and allowed the claim to proceed, at least partially, notwithstanding ongoing appeals before the Community courts. The court balanced the potential prejudice of delay to the claimants with the potential prejudice to the defendants in terms of wasted time and costs should their appeals to the CFI or ECJ be successful. The court ordered that the claim be allowed to proceed to the close of pleadings at least and that the parties' advisers should meet and attempt to agree the scope and basis for proceeding with disclosure. Moreover, the court would reconsider next steps in the action at a further case management conference. The judge concluded that 'the need for the follow on action to be processed so as to be as ready for trial as soon after the conclusion of the proceedings before the CFI and ECJ are concluded as is reasonably possible outweighs the need to avoid expenditure which may be wasted if and to the extent that it is not compensated for by an award of costs.'

'Passing-on' defence and indirect purchaser standing

One issue that remains to be determined in the UK and, indeed, at EU level, is the applicability of the passing-on defence in antitrust cases, since to date there has been no UK or EU judgment in the antitrust context on this issue.⁵⁰

The passing-on defence concerns the extent to which it is possible for a defendant to resist a claim for damages on the basis that the claimant has 'passed on' any overcharge to its own customers. The defendant would argue that in such circumstances the claimant has not personally suffered any loss since it has charged higher prices to its own customers and that it is therefore not entitled to compensation by way of damages. A key question that remains to be answered definitively is whether the burden of proof is on the defendant to establish that the overcharge has been passed on or whether the claimant is required to establish that it has not, in fact, passed on the overcharge.

Passing on was raised before the CAT in BCL Old Co & Others v Aventis SA & Others, where it was referred to as a 'novel and important issue', but the case settled prior to the substantive hearing and the CAT was not called upon to issue a ruling. The OFT takes the view that, as a matter of policy, it is appropriate to place the burden of proof in respect of establishing a passing-on defence on the defendant but, where established, that the defendant should not be liable for loss where that loss has been passed on in whole or in part. The Commission's White Paper adopts the same approach.

Although the passing-on issue was not directly before it, the Lords Justice in the Court of Appeal case of Devenish Nutrition⁵¹ stated that damages should only be available in cartel claims for losses actually suffered (see further below), suggesting that the passing-on defence is likely to apply in competition law claims.

Another issue is whether indirect purchasers, to whom an overcharge may or may not have been passed on, should have standing to bring a claim. The OFT's view is that it would be inappropriate for there to be any limitation on the standing of consumers and other end users to bring claims as any limitations could have the unintended consequence of discouraging private actions. Collective actions are one way of ensuring that indirect purchasers have a form of redress.

Damages issues

A number of recent cases in the CAT and High Court have addressed the issue of damages in antitrust cases.

In terms of the form of damages available, in BCL Old Co Limited & Others v Aventis SA & Others, the CAT stated that it would need to consider whether the claims before it should be assessed on the basis of the question 'what has been lost [due to the breach]?' or the question 'what has been unjustly gained by the defendant?'. However, in Devenish Nutrition⁵² Lewison J held that a restitutionary award was not available in the case and noted that even in cases where a restitutionary award is available, it is generally only awarded where compensatory damages would be inadequate to compensate the claimant for the infringement of his rights.⁵³ Similarly, the judge held that an account of profits was not an appropriate remedy on the facts of the case.⁵⁴ The Court of Appeal upheld the first instance ruling, finding that restitutionary damages are not available for nonproprietary torts (ie, torts not arising out of an interference with a property right) and that even if they were, a cartel claim would not constitute sufficiently exceptional circumstances to merit the grant of restitutionary damages as compensatory damages will be an adequate remedy for victims of a cartel.

The question of the availability of exemplary damages for breaches of competition law was also addressed in Devenish Nutrition. Lewison J rejected a claim for exemplary damages citing a number of factors which together suggest that there will be limited circumstances in which an award of such damages will be available:

• the principle of non bis in idem55 precluded an award of exemplary damages in circumstances where the defendants had already been fined by the Commission in respect of the same unlawful conduct;⁵⁶
• an award of exemplary damages by a national court on a successful leniency applicant would undermine the public policy behind the leniency programme;⁵⁷
• article 16 of the Modernisation Regulation⁵⁸ precludes a national court from taking a decision running counter to that of the Commission, which had in this case already determined the appropriate level of fine to punish and deter; and
• it is difficult to assess the appropriate level of exemplary damages where there are multiple claimants⁵⁹ and in light of the scale of the fines imposed.⁶⁰

The question of exemplary damages was not appealed to the Court of Appeal. However, the Court of Appeal's finding that claimants in cartel damages actions should be 'entitled to be compensated for any loss it suffered as a result of the cartel, no more and no less'⁶¹ is clearly relevant to the issue.

Another issue is whether follow-on claimants are entitled to claim for damages in respect of a period longer than the duration of the finding of infringement by the OFT or Commission. The CAT considered this issue in Healthcare at Home v Genzyme Limited.⁶² The CAT concluded that on the true construction of the legislation⁶³ the claimant could claim for a period of loss greater than that found in the infringement decision as the defendant had not ceased its infringing conduct immediately at the date of the OFT's decision and neither the OFT nor the CAT had made any such finding of fact.

However, the Court of Appeal's more recent judgment in Enron Coal Services⁶⁴ casts doubt on the validity of the CAT's approach. In Enron Coal Services the defendant to the damages claim in the CAT sought to strike out parts of the claim on the basis that there had been no finding of infringement by the regulator (in this case the Office of Rail Regulation) in respect of those parts of the claim. The Court of Appeal confirmed that the CAT only had jurisdiction to award damages in respect of conduct for which there has been a prior finding of infringement. In follow-on claims it is not possible for claimants to rely on other findings of fact made by the regulator that could possibly amount to an infringement. As such, those parts of the claimant's claim were bound to fail and should be struck out.

The CAT also has the power under its procedural rules to require a defendant to make an interim payment on account of any damages (except costs), which the CAT may hold the defendant liable to pay. In order to do so, the defendant against whom the order is sought must have admitted liability to pay damages to the claimant or the CAT must be 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 from whom he is seeking damages'.⁶⁵ Any payment that the CAT orders must be limited to a reasonable amount of the likely final damages award.⁶⁶

The first award of interim damages in the CAT was made in Healthcare at Home Limited v Genzyme Limited.⁶⁷ This was a follow-on action arising from the decision of the director general of fair trading that Genzyme had abused its dominant position by engaging in margin squeeze tactics.⁶⁸ The CAT awarded £2 million by way of interim relief to Healthcare at Home in respect of loss of revenue, representing approximately 70 per cent of the loss of revenue (one of the several heads of damage claimed) calculated by the CAT to be at the lowest end of an estimate of damages. The case has subsequently been settled.

Costs issues

One obstacle to greater private enforcement is the cost of such actions, including the risk of being required to pay the other party's costs in the event a claim is unsuccessful. Costs in the UK courts, for example, usually 'follow the event'. This means that the successful party will usually recover a proportion of its costs from the losing party.

In its 2007 discussion paper the OFT identified the principal ways in which a claimant lacking the resources or willingness to bear all the risk himself may fund litigation, namely through conditional 'no win, no fee' arrangements,⁶⁹ after the event insurance⁷⁰ or loans. The OFT recommended that the government consults on the following issues:

• Allowing conditional free arrangements in competition cases to exceed an uplift of more than 100 per cent subject to appropriate judicial supervision. The OFT suggests that the default position should be for an increase of up to 100 per cent to be recoverable from the losing party and for any further increase to be met by the claimant from the damages recovered.
• The possibility of codifying the court's discretion to cap parties' costs liabilities⁷¹ in competition cases and, in appropriate cases, to give cost-protection. The OFT suggests that such proposals could be confined to representative actions given the greater public interest dimension involved in such cases.

Unlike the civil courts the CAT has no specific rule that costs should follow the event. The CAT has absolute discretion to make any order it thinks fit in respect of costs at any stage of the proceedings. In determining how much a party is required to pay, the CAT may take into account the conduct of all parties in relation to the proceedings. ⁷² The CAT has shown itself to take a flexible approach in relation to the issue of costs, the appropriate level of costs orders and what fairness requires in the circumstances of the case.⁷³

The CAT considered the issue of security for costs in BCL Old Co & Others v Aventis SA & Others.⁷⁴ In that case, the defendant to the claim for damages sought security for costs from the claimant. The purpose of such an application is to protect a defendant in relation to any potential costs order it may be awarded (generally in circumstances where it successfully defends a claim), in specific circumstances, for example, where there is reason to believe that a claimant will be unable to pay the defendant's costs if ordered to do so. Although the CAT accepted that there was reason to believe that the claimants would be unable to pay any costs order made, it noted that a pre-requisite for an order for security for costs was that it had to be 'just in all the circumstances of the case'. The CAT concluded that it would not be just to make such an order where the claimants had a good claim, primarily because liability had been prima facie established as a result of the Commission's vitamins cartel infringement decision, the only issue being whether or not the passing on defence raised by the defendants would be accepted by the CAT.

Footnotes

1 It should be noted that while similar legal principles apply throughout the UK , different procedural rules may apply depending on whether proceedings are brought before the courts in England & Wales, Scotland or Northern Ireland. For the purpose of this article, the focus is primarily on the position in the English courts.

2 Cases that have settled before the Competition Appeal Tribunal include BCL Old Co and others v Aventis SA and others, Healthcare at Home v Genzyme and Freightliner Limited v English Welsh & Scottish Railway Limited. In the High Court, a claim by Kellogg's as a consequence of the participation of one of Holmen's subsidiaries in the carton board cartel was settled. Also, defendants have settled damages actions brought by the Department of Health, Scottish ministers and the Northern Irish Health Board against a number of pharmaceutical companies for alleged cartel activity.

3 COM (2005) 672 final, Brussels 19.12.2005. Green Paper; COM (2008) 165 final: White Paper on Damages actions for breach of the EC antitrust rules

4 The House of Lords ruled in Garden Cottage Foods v Milk Marketing Board that third parties can sue for damages for breach of competition law (1984) 1 AC 130, (1983) 3 CM LR 43.

5 Section 12 and Schedule 2 Enterprise Act 2002.

6 The CAT also has jurisdiction to hear appeals from regulatory and/or competition decisions taken by the OFT and sectoral regulators.

7 Mr Gerald Barling QC was appointed as President with effect from 5 November 2007. He replaced Sir Christopher Bellamy who retired in February 2007.

8 Section 47A Competition Act 1998, inserted by section 18 Enterprise Act 2002.

9 Claimant's can also bring follow-on actions from decisions taken by the UK 's sectoral regulators; eg, Case 1105/5/7/08 (1) Freightliner Limited (2) Freightliner Heavy Haul Limited v English Welsh & Scottish Railway Limited, which arose out of the O ffice of Rail Regulations infringement decision of 17 November 2006 against EW&S Ltd for an abuse of a dominant position.

10 Section 47A(9) Competition Act 1998.

11 Deans Foods Limited v Aventis and Hoffman-La Roche; BCL Old Co Limited & others v Aventis SA and others (settled); Healthcare At Home Limited v Genzyme Limited (settled); Emerson Electric Co and others v Morgan Crucible Company & others (on-going); JJ Burgess and Sons v W Austin and Sons (Stevenage) Limited and Harwood Park Crematorium Limited (settled); BCL Old Co and others v BASF AG and others (on-going); Grampian Country Food Group and others v Sanofi-Aventis SA and others (on-going). Freightliner Limited and Freightliner Heavy Haul Limited v English Welsh & Scottish Railway Limited (settled), Enron Coal Services Limited (in liquidation) v English Welsh & Scottish Railway Limited (ongoing), N J and D M Wilson v Lancing College Limited (settled).

12 The CAT's powers include the ability to make its own finding of infringement on any appeal from the OF T (or other sectoral regulators).

13 Section 58A Competition Act 1998.

14 Section 58 Competition Act 1998.

15 See Commission Notice on the Co-operation between the Commission and the Courts of the EC Member States in the application of Articles 81 and 82 EC (2004/C 101/04). See also Iberian UK Ltd v BPB Industries and British Gypsum (1996) 2 CM LR 601, in which it was held that it would be an abuse of process to allow the defendants to challenge the Commission's findings in national court proceedings, thus making clear that decisions of the Commission are admissible in English court proceedings as evidence of the correctness of their conclusions. However, also note the House of Lords decision in Courage v Bernard Crehan [2004] EWCA C iv 637 C A in which it was found that there is no obligation to treat the factual and/or economic analysis in 'parallel' decisions that concern the same economic market as established facts. This means that third parties who are considering bringing an action for damages caused by anyone but the party to whom an existing Commission decision is addressed, cannot rely on the economic and factual conclusions in such decisions in order to bind the English courts. This judgment severely curtails the already limited assistance provided to claimants by parallel decisions, at least as regards the English courts.

16 Section 47A(10) Competition Act 1998.

17 Section 47B Competition Act 1998, inserted by section 19 of the Enterprise Act 2002.

18 The Consumers' Association has to date brought one damages action under this provision against sports retailer JJB, which followed on from the OFT decision that JJB and a number of other retailers infringed the Chapter I prohibition by fixing the prices of replica England and M anchester United football kits. The case was settled and the claim was subsequently withdrawn. Under the settlement agreement, the 130 customers who joined the damages action and who purchased relevant football shirts during the relevant period will receive a payment of £20 each. In addition, consumers who did not join the action will be entitled to claim up to £10 if they provide proof of purchase of one of the affected shirts or the shirt itself at a JJB store before 5 February 2009.

19 OFT Discussion Paper 916 Private actions in competition law: effective redress for consumers and business April 2007.

20 Private actions in competition law: effective redress for consumers and business – Recommendations from the Office of Fair Trading – November 2007 – OF T916resp.

21 COM (2005) 672 final, Brussels 19.12.2005.

22 COM (2008) 165 final: White Paper on Damages actions for breach of the EC antitrust rules.

23 Council Regulation (EC) N o 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

24 The Commission instigated a review of the provisions of the Brussels I Regulation on 21 April 2009 with the publication of Green Paper and Commission Working Document (COM (2009)175 & COM (2009)174)). The Commission has sought to instigate discussion on how to abolish conflicts of jurisdiction and impediments to the enforcement of court decisions in the international legal order.

25 The rules of jurisdiction are founded on the principle that jurisdiction is generally based on the defendant's domicile (see recital II of Regulation 44/2001).

26 Article 6 Regulation 44/2001 requires the claims to be so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

27 Provimi Ltd v Roche Products and Others [2003] EWHC 961 (Comm).

28 Case COM P/E-1/37.512.

29 Article 23(1).

30 Article 17.

31 The French jurisdiction clauses provided, for example, either: 'Any dispute relating to the fulfilment or interpretation of our sales agreements will fall within the competence: for sales in France: exclusively of the 'Tribunal de Commerce de Nanterre, for export sales: exclusively of the 'Tribunal de Paris', even if the commercial documents of our customers include stipulations to the contrary ...' or 'Law and jurisdiction – The commercial court having jurisdiction over the locality in which our registered head office is situated shall have exclusive jurisdiction over all and any disputes arising herefrom, whatever stipulations to the contrary may be contained in our customer's commercial documents ...'

32 Also see F Hoffman-La Roche Limited v Empagran SA [2004] 5 US 1.

33 SanDisk Corpn v Koninklijke Philips Electronics NV and others [2007] EWHC 332 (Ch).

34 Section 2 Limitation Act 1980.

35 However, any claim is confined to that part of the wrong committed in the six years prior to the date upon which the claim form was issued.

36 Section 32 Limitation Act 1980.

37 Rule 31, CAT Rules.

38 See Rule 31(2) of the CAT Rules, which refers to sections 47A(7) and 47A(8) of the Competition Act 1998.

39 Emerson Electric Co and others v Morgan Crucible Company Plc and others Case Number 1077/5/7/07.

40 Decision C (2003) 4457 in Case C.38.359. The Commission's decision was addressed to Morgan C rucible Company plc, Hoffman & Co Elektrokohle AG, Le Carbone Lorraine SA, Schunk, SGL and C.Conradty Hurnberg GmbH.

41 On 8 October 2008 the CFI issued a judgement upholding the Commission's decision in its entirety: Case T-73/04 Le Carbone Lorraine v Commission and Case T-68/04 SGL Carbon AG v Commission respectively. Appeals have been lodged before the European Court of Justice by Le Carbone Lorraine (Case C-554/08 P) and SGL Carbon AG (Case C - 564/08 P). On 2 April 2009, the president of the Tribunal ordered that the proceedings be stayed until 21 days from the handing down of the judgments by the Court of Justice.

42 BCL Old Co Limited, DFL Old Co Limited, PFF Old Co Limited and Deans Food Limited v BASF SE (formerly BASF AG), BASF PLC and Frank Wright Limited ([2009] EWCA C iv 434), judgment of 22 May 2009.

43 C ase 1078/7/9/07 The Consumers Association v JJB Sports PLC. Although the Consumers' Association was successful in securing a settlement, the level of the award was low and there was considerable difficulty in signing up individuals to the group actions.

44 Cases in which the claimants are required to express their wish to participate in the proceedings.

45 Cases in which the claimants are required to express their wish not to be bound by the outcome of the proceedings.

46 Civil Procedure Rule 19.6.

47 [2009] EWHC 741 (Ch).

48 Case 344/98, Masterfoods v HB Ice Cream Ltd [2000] ECR-I – 11369.

49 National Grid Electricity Transmission plc v ABB Limited and others [2009] EWCH 1326. The case concerned a follow-on action filed in November 2008 which sought damages arising out of the gas-insulated switchgear cartel.

50 However, there have been a number of cases at the EU level, primarily tax-related, which have involved the over-payment of a charge and in which the issue has arisen as to whether the authority that is liable to repay the money can rely on the claimant being unjustly enriched in the event that the claimant has been able to pass on some of its losses in its selling prices. In those cases, the European Court of Justice has required a number of cumulative conditions to be satisfied in order for the defence of passing on to be successful and has as a consequence made it difficult in practice for the defence to be relied upon.

51 [2007] EWHC 2394 (Ch).

52 [2007] EWHC 2394 (Ch) (first instance), [2008] EWCA Civ 1086 (Court of Appeal).

53 Page 281, paragraph 108 at d.

54 A number of factors were taken into account including that (i) the claimants were part of an EU-wide class of persons affected by the cartel, not all of whom were before the court; (ii) the claimants included both direct and indirect purchasers which would make it difficult to allocate an award due to issues of pass-through of the overcharge to other parties not before the court; (iii) the defendants had already been fined by the Commission; and (iv) difficulties in determining the overcharge.

55 A fundamental principle of Community law prohibiting a person from being punished twice for the same wrong.

56 Similarly, as a matter of domestic law, the fact that a defendant had been fined for his conduct was a powerful indicator against the award of exemplary damages, although it might not be conclusive of itself.

57 Page 266, paragraph 51 at f.

58 Article 16 provides as follows:
1. When national courts rule on agreements, decisions or practices under article 81 or article 82 of the Treaty which are already the subject of a Commission decision, they cannot take decisions running counter to the decision adopted by the Commission. They must also avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings it has initiated. To that effect, the national court may assess whether it is necessary to stay its proceedings. This obligation is without prejudice to the rights and obligations under article 234 of the Treaty.
2. When competition authorities of the member states rule on agreements, decisions or practices under article 81 or article 82 of the Treaty which are already the subject of a Commission decision, they cannot take decisions which would run counter to the decision adopted by the Commission.

59 The cartel identified by the Commission affected the market in the whole of the EU. The court noted that if exemplary damages were awarded to the claimants by reference to the cartel as a whole, it would in effect be awarding a remedy that could not be awarded in most member states. Even if were to attempt to limit the exemplary damages to the activities of the cartel within England and Wales, the claimants are not the only ones affected by the unlawful conduct and why, therefore, 'should they scoop the pool?' (see paragraph 68).

60 The court queried how it should take into account the fines that have been imposed. If it deducts the fines from the exemplary damages, there is no practical utility in the claim for exemplary damages given the scale of the fines imposed by the Commission. By way of example, the court noted that the fine on BASF had been e236 million and that there is no real prospect that exemplary damages would exceed this figure.

61 Devenish Nutrition Ltd and Ors v Sanofi-Aventis SA (France) and Ors [2008] EWCA C iv 1086, at page 75, para 161.

62 Healthcare at Home v Genzyme Limited 1060/5/7/06.

63 ie, section 47A Competition Act 1998.

64 English Welsh & Scottish Railway Limited v Enron Coal Services Limited [2009] EWCA C iv 647.

65 Rule 46(4), CAT Rules.

66 Rule 46(4), CAT Rules.

67 Case 1060/5/7/06.

68 CA 98/3/03.

69 A conditional fee arrangement is where solicitors and counsel agree to receive no payment or less than normal payment if the case is lost but normal or higher than normal payment if the case is won. Currently, the percentage increase on the normal fees if the case is won can be no more than 100 per cent.

70 A claimant can take out an insurance policy against the risk of losing the case. If the case is lost, his disbursements and the other party's costs are covered by the insurance.

71 s51(3) Supreme Court Act 1981; rule 3.1(2)(m) C PR.

72 CAT Rules, Rule 55(2).

73 In cases involving the imposition of a penalty, for example, the CAT has indicated that absent exceptional circumstances, it will 'lean against' costs orders against unsuccessful applicants since such appeals impose a significant cost on the public purse (see Aberdeen Journals Ltd v Office of Fair Trading supported by Aberdeen Independent Ltd (Case Nos 1005/1/1/01 and 1009/1/1/02) [2003] CAT 21, [2004] CompAR 189 at paragraph 20). Also see the Judgment on Costs dated 8 February 2006 in The Racecourse Association and Others and The British Horseracing Board and Others v Office of Fair Trading Case Nos 1035/1/1/04 and 1041/2/1/04, in which the OFT was ordered to pay, in respect of the second appellant, only £65,450 in respect of the £327,288 of fees incurred by PricewaterhouseCoopers and 50 per cent of the remainder of the fees amounting to £624,042.30. This was because the arguments of the second appellant largely duplicated those of the first appellant and thus added 'relatively little' and yet their costs were significantly in excess of those incurred by the first appellant.

74 Case 1028/5/7/04 (1) BCL Old Co Limited (2) DFL Old Co Limited (3) PFF Old Co Limited v (1) Aventis SA (2) Rhodia Limited (3) F Hoffman-La Roche AG (4) Roche Products Limited.

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