United Kingdom: Private Enforcement
1Lesley Farrell and Sarah Ince
SJ Berwin LLP
Although the House of Lords ruled more than 20 years ago in Gar-den Cottage Foods v Milk Marketing Board2 that third parties are
able to sue for damages for breach of articles 81 and 82 of the EC Treaty,3 enforcement of the competition rules in the UK has until
relatively recently been primarily achieved through public enforce-ment. The introduction of the Modernisation Regulation,4 however,
which decentralised the enforcement of articles 81 and 82 by giv-ing power to both national competition authorities and national courts to apply articles 81 and 82 directly and in full, reflected the recognition on the part of the European Commission (the Commis-sion) that a more effective system of competition enforcement could be achieved by enlisting greater assistance from national competi-tion authorities and nacompeti-tional courts. Increasingly, the role of private enforcement of the competition rules as a necessary complement to public enforcement is being recognised as an essential aspect of the competition law regime in the EU.5
In the UK, there have been a number of changes to the competi-tion regime that have been designed to facilitate private enforce-ment of the competition rules. These changes undoubtedly bolster the position of claimants and put in place “most of the main struc-tural and legal elements for effective private actions in competition law”.6 Indeed, when considered in the context of recent judgments
of the English courts, such as Provimi,7 English rules of disclosure
(which are more extensive than in other European jurisdictions), the breadth of experience of the English courts in assessing damages in complex commercial disputes and the speed with which a case can be brought to trial,8 the UK is an attractive place in which to litigate
antitrust disputes.
Despite these changes, there has not as yet been the flood of pri-vate antitrust litigation predicted by some, albeit that there has been a steady increase in the number of such cases,9 in particular, in
cir-cumstances where there is an existing Office of Fair Trading (OFT) or Commission decision. We consider the most important features of the present regime in the UK together with some proposals for future change. We also review the most recent case law.
The Competition Act 1998
The Competition Act 1998 introduced two new competition pro-hibitions into the UK regime, which mirror articles 81 and 82 of the EC Treaty, namely a prohibition against anti-competitive agree-ments (the Chapter I prohibition) and a prohibition against an abuse of a dominant position (the Chapter II prohibition). Both prohibi-tions require there to be an effect on trade within the UK (or any part of it).
The Enterprise Act 2002
The Enterprise Act 2002 (the Act) amended the Competition Act 1998 substantially. The principal changes designed to facilitate pri-vate antitrust actions are as follows:
• The Act created the Competition Appeal Tribunal (CAT).10 The
CAT is a specialist judicial body that can hear, inter alia, actions for damages and other monetary claims under the Competition Act 1998. Cases are heard before a panel consisting of three members: either the president11 or a member of the panel of
chairmen (who include judges of the Chancery Division of the High Court12 and other senior lawyers) and two lay members
(who are drawn from a panel of economists, accountants and other competition policy experts).
• The Act created a right of third parties 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 competi-tion law.13 Claims may only be brought before the CAT when the
OFT or Commission has made a decision establishing that one of the relevant prohibitions14 has been infringed and any appeal
from such decision has been finally determined. Where there is no prior decision of the OFT or Commission, claims must be brought in the civil courts.
In determining a claim for damages, the CAT is bound by the OFT or Commission decision that established the infringement and thus, in theory at least, the issue of liability should be settled and the sole issues that remain for the CAT will be causation and quantum.15 These claims are consequently referred to as
‘fol-low-on actions’ since liability arises from the prior infringement decision. Three follow-on actions have to date been brought before the CAT.16
• The Act provides that in damages claims and other monetary claims before the UK courts, the courts are bound by findings of infringement by the OFT and the CAT provided that the time for an appeal against a decision has elapsed, or, where an appeal has been filed, it has been determined.17 They are also bound by
any finding of fact made by the OFT during the investigation of the infringement.18 This mirrors the position that applies in cases
where there has been a prior decision of the Commission.19 In
this regard, therefore, claimants before the CAT and the courts are in a similar position in cases where there has been a prior infringement decision of either the OFT or Commission. • 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.20 Thus, the choice of whether or not to pursue a claim for
damages in the CAT or the civil courts rests with the claimant. However, proceedings for damages may be transferred between the CAT and the High Court21 on the initiative of the High
Court as well as on an application by the parties.22, 23
• The Act created a right of specified bodies 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.24 At present, the Consumers’ Association is the only
speci-fied consumer body. It has to date brought one damages action under this new provision against sports retailer JJB, which arose from the OFT decision that JJB and a number of other retailers breached the Chapter I prohibition by fixing the prices of replica England and Manchester United football kits. The case is cur-rently adjourned pending settlement discussions.
Recent developments and possible future developments
private damages actions. In this regard, the OFT has recently pub-lished a discussion paper25 in which it puts forward proposals to
improve the existing system. This builds on some of the ideas con-tained in the Commission’s 2005 Green Paper,26 which identified
obstacles to a more efficient system of damages claims and suggested how these could be overcome.27 Although the OFT’s stated objective
is to promote a compliance culture through private enforcement, it is also concerned to ensure that such a culture does not give rise to a ‘litigation culture’ that may be harmful to legitimate business activity or compromise public enforcement.28
The OFT paper focuses on the following issues:
• how the available means of privately funding civil actions and insuring against unfavourable outcomes could be improved and widened;
• evidential issues, including the difficulties faced by claimants in obtaining information to enable them to bring private actions, the status of decisions of other EU national competition authori-ties before the UK courts, the burden of proof in respect of the ‘passing on’ defence and where it should lie, and the law appli-cable to claims involving cross-border issues;
• whether and how representative actions should play a part in an enhanced competition law system;
• how mechanisms to facilitate claims resolution in competition cases could be improved; and
• how courts considering private competition law actions take into account the evolution of competition policy, including the decisions of, and guidelines produced by, the OFT.
Some of these issues have been considered by the CAT and Eng-lish courts in the cases which have come before them. These, together with a number of other issues that have arisen, are considered below.
Jurisdiction
Many antitrust cases will concern multiple claimants and defendants domiciled in different member states engaged in cross-border trade, which will inevitably have effects in a number of member states. The jurisdiction of courts to hear cases brought against defendants domiciled in member states is governed by Regulation 44/2001.29
Defendants can either be sued in the courts of the state where they are domiciled or, at the choice of the claimant, in the courts of the state where the harmful event occurred.30 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 (at the choice of the claimant). Under article 6(1) of Regulation 44/2001, where a person domiciled in a member state is one of a number of co-defendants, that person may be sued where any one of them is domiciled provided that the claims are closely connected.31
Under Regulation 44/2001, a claimant therefore has a wide vari-ety of jurisdictions from which to choose when deciding where to commence an action.
The extent of the English courts’ jurisdiction was considered in
Provimi,32 which arose from the Commission’s vitamins cartel
deci-sion.33 The Commission’s vitamins cartel decision was addressed,
among others, to Hoffman La Roche (Roche) and Aventis SA (formerly Rhone-Poulenc) (Aventis). In a preliminary hearing of a strike-out application, 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 against the English subsidiary of that cartelist on the basis that the English subsidiary had, 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 German domiciled purchaser was able to establish a claim against the English subsidiary, it would be able to join other parties to the claim on the basis of article 6(1) of Regula-tion 44/2001. The court accepted that the claim was arguable and therefore refused to strike out the proceedings. In particular, the court noted the flexible and expansive notion of ‘undertaking’ rec-ognised in EU competition law, which encompasses separate legal entities provided they form a single economic unit. On this analysis, subsidiaries within the same corporate group formed one economic unit and were to be treated as one for the purpose of a breach of competition law.
Another issue that arose in Provimi was that some of the vita-mins were purchased under contracts containing jurisdiction clauses, providing that disputes should be dealt with before the courts of Switzerland, Germany or France. Under Regulation 44/200134 and
the Lugano Convention,35 an agreement between the parties
choos-ing the jurisdiction of a particular member state gives exclusive jurisdiction to the courts of that member state in the event of a dis-pute arising under the contract. However, having considered expert evidence from each of these jurisdictions, the judge found that the jurisdictional clauses in the purchase agreements were insufficiently wide to include these claims based as they are on tort.36 The English
courts were therefore able to assert jurisdiction over these claims. The extent to which jurisdiction clauses can be drafted to assist or resist the jurisdiction of the English courts in relation to claims aris-ing from antitrust violations remains to be seen.37
The ruling in the Provimi case enables a wide range of purchas-ers of products and services who have suffered loss as a result of anti-competitive conduct to seek redress in the UK courts.38
How-ever, there are limits on the jurisdiction of the English courts. In the recent SanDisk39 case, SanDisk, 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 certain pat-ents, amounted to an abuse of a dominant position in the market for the licensing of patents essential to the production, sale and importa-tion of MP3 players and memory cards. 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 immedi-ate 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 (where there had been border detentions as a result of legal and administrative actions) were better placed to hear the claim.
Limitation issues
Follow-on actions before the CAT must be brought within two years of the relevant date.40 The relevant date is the later of either the date
on which the period to appeal to the European Court lapses, or if an appeal has been instituted, the date on which it is determined.41
The CAT may give permission for a claim to be brought before the relevant date after hearing from any proposed defendant.
The issue of when time starts to run against a defendant who has not appealed an infringement decision of the Commission to the European Court, in circumstances where the other addressees of the decision have appealed that decision, is currently under con-sideration by the CAT in the Emerson case.42Emerson is a claim
price-fixing and market-sharing cartel in respect of the sale of electri-cal and mechanielectri-cal carbon and graphite products (the decision).43
One of the three defendants, Morgan Crucible has not appealed the decision to the Court of First Instance (because it applied for and received 100 per cent leniency from the Commission), whereas other companies have lodged an appeal of the Decision in the Court of First Instance. It is possible therefore that the CAT limitation period would start to run against Morgan Crucible from the date of the decision and against the other defendants from the date on which their appeal is determined. If that is correct, it is equally possible that the CAT limitation period may expire in relation to Morgan Crucible when it has not yet even begun to run as against the other defendants. Faced with this prospect, the claimants filed an action for damages against Morgan Crucible before the CAT and also sought permission from the CAT to bring the action against two of the defendants (Schunk and SGL), who have lodged appeals, before the expiry of the normal time limits.
The claimants argue that it would be an inefficient use of the CAT’s time and resources and contrary to the interests of justice if they were to proceed with their claims against Morgan Crucible alone, without the participation of the other major addressees of the cartel decision.44 To do so would also in their view run the risk
of irreconcilable findings of fact and judgments. This issue is yet to be determined.45
Before the UK courts, damages actions for breach of the compe-tition rules (ie, the cause of action is the tort of breach of statutory duty) must be brought within six years from the date on which the cause of action accrued.46 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.47 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 defend-ant, the limitation period will not commence until the claimant has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.48
Costs
One obstacle to greater private enforcement is the cost of such actions, including the risk of being required to pay the other par-ty’s costs in the event that a claim is unsuccessful. Costs in the UK courts, for example, usually ‘follow the event’. This means that the successful party will usually recover costs from the losing party.
In its recent paper, the OFT identifies the primary 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,49 after the event insurance50 or loans and suggests
improving all three options. In particular, the OFT considers: • whether, in relation to conditional fee arrangements, a
percent-age increase of more than 100 per cent should be allowed and in particular whether the percentage increase up to 100 per cent should be recoverable from the losing party and any fur-ther increase should be met by the claimant from the damages recovered;
• a more flexible operation of the ‘costs follow the event’ rule to encourage well-founded claims being brought; and
• the need for the current criteria and procedure for cost-capping orders which allow the court to cap the parties’ liability for each other’s costs,51 to be codified.
In the CAT, as distinct from the civil courts, there is no specific rule that costs should follow the event. In determining how much a party is required to pay, the CAT must take account of the conduct of all parties in relation to the proceedings.52 The CAT has shown itself
to take a flexible approach in relation to the issue of costs and the
appropriate level of costs orders and what fairness requires in the circumstances of the case.53
In the light of concerns regarding costs, it is interesting to note the approach taken by the CAT in BCL Old Co & Others v Aventis & Others on the issue of security for costs. In that case, the defend-ant to the claim for damages sought security for costs from the claim-ant. 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 prerequisite 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 infamous 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.
‘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.54
In the UK, the issue 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 substan-tive hearing and therefore the CAT did not rule on it. The passing on defence raises the extent to which it is possible for a defendant to resist a claim for damages suffered as a result of its anti-competitive conduct on the basis that the claimant has ‘passed on’ to its own customers any overcharge imposed by the defendant. The defendant would argue that in such circumstances the claimant cannot have suffered loss since it has recouped the overcharge from its own cus-tomers. Arguably, the primary justification for the recognition of the passing on defence is to prevent what would otherwise be regarded as the unjust enrichment of the claimant.55
Connected with the issue of the passing on defence is whether indirect purchasers to whom an overcharge may or may not have been passed should have standing to bring a claim. The OFT in its recent discussion paper expressed the following views:
• it is likely to be inappropriate in policy terms to deny consumers and other end-users the right to sue for damages where they are often the ones suffering the effects of infringements;
• EC law may require that all persons harmed by an infringement of articles 81 and 82 should be able to recover their loss pro-vided that the other requirements to obtain compensation are met;56 and
• limitations on claims by indirect purchasers may have the unin-tended consequence of discouraging private actions.
However, to ensure that ‘passing on’ does not become a shield for defendants to escape liability, the OFT suggests that the burden of proof of passing on should always lie with the defendant.
In the US, defendants are not able to raise passing on as a defence because it is considered too complicated to calculate the passing on of the overcharge along the supply chain.57 As a
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 (ie, follow-on actions). This is an important step forward for private enforcement because otherwise it would be unlikely for practical reasons, if not impossible, for consumers and purchasers with small claims to bring an action for damages for breach of the competition rules.59
The OFT has suggested that it might be appropriate to broaden the availability of representative actions. In particular, it suggests allowing designated bodies to bring stand-alone representative actions on behalf of consumers and also giving representative bodies the power to bring follow-on and stand-alone representative actions on behalf of businesses.
Damages
There are a number of issues that remain to be decided in relation to damages in antitrust cases. These include the basis upon which damages should be calculated, whether exemplary damages are available, the period in relation to which damages can be awarded and the circumstances in which defendants are entitled to interim payments. Clarity on such issues may make private enforcement more attractive by assisting claimants in predicting what they might recover in a claim for damages. The current position in relation to these issues is described below.
A claim for damages for breach of competition law is a claim in tort for breach of statutory duty and the object of an award of damages is to compensate for the damage, loss or injury suffered. However, compensation for loss will not always provide a sufficient incentive for would-be claimants to bring damages actions before the courts. The Commission’s Green Paper raises the issue of whether there are other methods of approaching damages that may be appro-priate, eg, damages assessed on the basis of recovery of illegal gain made by the infringer as a result of the infringement.60 The OFT, in
its recent discussion paper, questions whether restitutionary damages, which aim to strip away some or all of the gains made by a defendant which arise from a civil wrong, exemplary damages (see below) and the equitable remedy of accounting for profits may need to be consid-ered in some cases.61 Indeed, in BCL Old Co Limited and Others v Aventis SA and 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 ‘What has been unjustly gained by the defendant?’, and suggested that section 47A of the Competition Act 1998 (which creates the right of third parties to bring follow-on actions) may cover both possibilities.62
Another issue that remains to be resolved as a matter of English law is whether exemplary damages are available for breach of com-petition law. As a matter of general principle, one instance in which exemplary damages may be awarded is where “the defendant’s con-duct has been calculated by him to make a profit for himself which may well exceed the compensation payable to the Plaintiff”.63 On
this basis, there are good arguments to support claims for exemplary damages for antitrust infringements.64 It is notable that to date all
of the damages claims filed before the CAT have requested relief by way of exemplary damages.
In the context of a follow-on action,65 the CAT considered
whether the period for which damages could be awarded should be determined solely by reference to the dates specified in the prior OFT infringement decision. The CAT concluded that on the true con-struction of section 47A of the Competition Act 1998, the claimant could bring a claim for a period of loss greater than that found in the original infringement decision since the defendant had not ceased its infringing conduct immediately at the date of the OFT’s decision and neither the OFT nor CAT had made any such finding of fact.
Under the CAT rules, the CAT can 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 his 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 judg-ment for a substantial amount of money (other than costs) against the defendant from whom he is seeking damages’.66 Any payment
that the CAT orders must be limited to a reasonable amount of the likely final damages award.67
The first award of interim damages in the CAT was made in the
Healthcare at Home Limited v Genzyme case.68 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 mar-gin squeeze tactics.69 The CAT awarded £2 million by way of interim
relief to Healthcare at Home in respect of loss of revenue.70
* * *
Predictions of a rapid expansion in private antitrust litigation in the UK following the coming into force of the Act have not been borne out, possibly reflecting the degree of uncertainty surround-ing a number of important procedural and substantive issues arissurround-ing in antitrust litigation in the UK, as described above. However, the number of damages claims coming through the CAT and UK courts has shown a marked increase and there also appears to be an increase in the number of cases that are being settled out of court. Slowly, therefore, a culture of private enforcement in the UK appears to be developing, albeit more slowly than anticipated, and this is likely to be reinforced if further legislative changes are introduced by the OFT or Commission following their respective consultations. Certainly, the ability of third parties to bring follow-on damages actions in the UK is a significant step forward in encouraging private antitrust litigation. However, if private enforcement is to act as an effective complement to public enforcement, greater focus is now needed on the means by which stand-alone actions, where there is no prior infringement deci-sion of the Commisdeci-sion or OFT, can be encouraged.
Notes
1 It should be noted that although similar legal principles apply throughout the UK, different procedural rules may apply depending on whether proceedings are brought before the courts in England and Wales, Scotland or Northern Ireland. For the purpose of this article, the focus is primarily on the position in the English courts.
2 (1984) 1 AC 130, (1983) 3 CMLR 43.
3 A general EC right to damages for loss occasioned by a breach of article 81 on establishment of a causal relationship between the infringement and the harm suffered was established by the European Court of Justice in Courage Ltd v Bernard Crehan (Case C-453/99 [2001] ECR I-6297).
4 Regulation 1/2003.
5 See Neelie Kroes’ speech SPEECH/07/128 ‘Reinforcing the fight against cartels and developing private antitrust damage actions: two tools for a more competitive Europe’, Commission/IBA Joint Conference of EC Competition Policy, Brussels, 8 March 2007 at p4: “An increased level of private actions will also have the effect of increasing deterrence, complementing public enforcement”. Also, see Philip Collins, chairman of the OFT, Law Society European Group speech 2006 at page 15: “We regard private enforcement as an essential complement to public enforcement. At the OFT we strongly support the development of private enforcement – both follow-on and direct actions.”
7 [2003] EWHC 961 (Comm).
8 There were the factors that led to the claimants in Provimi Ltd v Roche Products and Others ([2003] EWHC 961 (Comm)) choosing the UK as their preferred jurisdiction.See Competition Law Insight of September 2003, ‘Jurisdiction over civil claims’, at p28.
9 However, it should be noted that many cases are settled before a substantive hearing. Cases that have settled before the Competition Appeal Tribunal include BCL Old Co and Others v Aventis SA and Others and Healthcare at Home v Genzyme. In the High Court, a claim by Kelloggs as a consequence of the participation of one of Holmen’s subsidiaries in the carton board cartel was settled. Also, four out of seven defendants have settled damages actions brought by the Department of Health against a number of pharmaceutical companies for alleged cartel activity, although claims by the Scottish ministers and the Northern Irish Health Board in relation to the same conduct are continuing.
10 Section 12 and Schedule 2 to the Act.
11 Until 5 February 2007, this post was held by Sir Christopher Bellamy. Since his retirement, the position has been vacant pending the appointment of a successor by the Judicial Appointments Commission.
12 Chancery Division judges are therefore likely to build up a significant expertise and experience of competition-related litigation.
13 Section 47A of the Competition Act 1998, inserted by section 18 of the Act.
14 The relevant prohibitions are: Chapter I and Chapter II of the Competition Act 1998; articles 81(1) and 82 of the EC Treaty; and articles 65(1) and 66(7) of the ECSC Treaty.
15 Section 47A(9) of the Competition Act 1998.
16 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
(ongoing).
17 Section 58A of the Competition Act 1998.
18 Section 58 of the Competition Act 1998.
19 See Commission Notice on the Cooperation 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 CMLR 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 Civ 637 CA in which it was found that there is no obligation to treat the factual 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.
20 Section 47A(10) of the Competition Act 1998.
21 Section 16 of the Act.
22 This applies only to proceedings in which damages for breach of articles 81 and 82 of the EC Treaty or Chapter I and II Competition Act 1998 are claimed, in circumstances where an infringement decision has been made by either the OFT, the Commission or the CAT (in relation to an appeal of an OFT decision).
23 In considering whether to make an order for transfer, the High Court shall take into account whether a similar claim is being dealt with by
the CAT, or whether the CAT has previously ruled on a similar claim or, whether the CAT has developed considerable expertise by dealing with a significant number of cases arising from the same or similar infringements (see section 8.4 of the Practice Directions to the Civil Procedure Rules Part 30).
24 Section 47B of the Competition Act 1998, inserted by section 19 of the Act.
25 OFT Discussion Paper 916 ‘Private actions in competition law: effective redress for consumers and business’, April 2007.
26 COM(2005) 672 final, Brussels 19.12.2005. The Commission’s anticipated follow on White Paper is expected to be published around the turn of the year.
27 Such obstacles were set out in Ashurst’s Comparative Report Study on the conditions of claims for damages in the case of infringement of EC competition rules dated 31 August 2004. This study concluded that this area of the law presents a picture of ‘total underdevelopment’.
28 Paragraph 1.3, OFT Discussion Paper 916 ‘Private actions in competition law: effective redress for consumers and business’, April 2007.
29 Council Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
30 The rules of jurisdiction are founded on the principle that jurisdiction is generally based on the defendant’s domicile (see recital 11 of Regulation 44/2001).
31 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.
32 Provimi Ltd v Roche Products and Others [2003] EWHC 961 (Comm).
33 Case COMP/E-1/37.512
34 Article 23(1).
35 Article 17.
36 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”.
37 It seems likely that in future, jurisdiction clauses will be drafted to include claims based on tort.In some instances, this may be done to preclude English courts asserting jurisdiction.
38 Also see F Hoffman-La Roche Limited v Empagran SA [2004] 5 US 1.
39 SanDisk Corpn v Koninklijke Philips Electronics NV and Others [2007] EWHC 332 (Ch).
40 Rule 31, CAT Rules.
41 See Rule 31(2) of the CAT Rules, which refers to sections 47A(7) and 47A(8) of the Competition Act 1998.
42 Emerson Electric Co and Others v Morgan Crucible Company Plc and Others, Case Number 1077/5/7/07.
43 Decision C(2003) 4457 in Case C.38.359. The Commission’s decision was addressed to Morgan Crucible Company plc, Hoffman & Co Elektrokohle AG, Le Carbone Lorraine SA, Schunk, SGL and C.Conradty Hurnberg GmbH.
44 Paragraphs 24 and 25 of the Application for Permission to initiate a claim for monetary loss pursuant to section 47A of the Competition Act 1998.
period should be extended, can amend Rule 31 of the CAT Rules, which requires claims to be brought within two years of the relevant date, that is, the later of the date on which the period to appeal to the European Court has lapsed, or if such proceedings have been instituted, the date on which they are determined.
46 Section 2 of the Limitation Act 1980.
47 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.
48 Section 32 of the Limitation Act 1980.
49 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.
50 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.
51 s 51(3) Supreme Court Act 1981; Rule 3.1(2)(m) CPR.
52 CAT Rules, Rule 55(2).
53 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.
54 However, there have been a number of cases at the EU level, primarily tax-related, which have involved the overpayment 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.
55 At paragraph 30 of Courage Ltd v Bernard Crehan (Case C-453/99 [2001] ECR I-6297), the European Court of Justice held that “Community law does not prevent national courts from taking steps to ensure that the protection of rights guaranteed by Community law does not entail the unjust enrichment of those who enjoy them”.
56 The OFT notes in this context that national courts are able to take steps to ensure that claimants are not unjustly enriched.
57 Hanover Shore Inc v US Machinery Corp 392 US 481 (1968).
58 Illinois Brick Co v Illinois 431 US 720 (1977).
59 In its discussion paper, the OFT has also suggested encouraging the bringing of lower value private actions by providing for county courts at Chancery District Registries in England and Wales to hear smaller individual competition cases (see paragraph 3.3, OFT Discussion Paper 916 Private actions in competition law: effective redress for consumers and business, April 2007).
60 See the Commission’s Green Paper COM(2005) 672 final, Brussels 19.12.2005 at paragraph 2.3 and the Commission Staff Working Paper at section IV.
61 OFT Discussion Paper 916 ‘Private actions in competition law: effective redress for consumers and business’, April 2007 at paragraph 2.11: “In terms of the type of damages that may be recoverable, it is well established that private actions involve claims for damages that are compensatory in nature. In certain circumstances, the courts may award restitutionary damages, which aim to strip away some or all of the gains made by a defendant which arise from a civil wrong. Furthermore, exemplary damages might be available in certain circumstances in England and Wales.Other forms of relief, such as the equitable remedy of accounting for profits, may also need to be considered in some cases.It will be for the courts to determine how the general principles for determining loss or damage in various types of case apply to actions for infringement of competition law.”
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SJ Ber win’s EU and competition department has extensive experience in EU and member state level competition-related litigation, including judicial review, as well as applications for injunctions and damages. SJ Ber win represents clients in a number of significant cases before the European Cour t of Justice as well as the national cour ts of the Member States. It also has extensive experience of advising on and defending alleged car tel cases before the European competition authorities, includ-ing the European Commission and the National Competition Authorities of the Member States. This includes advising on compliance programmes, fines, leniency applications and strategy, handling on-site inspections, and subsequent investigations by the authorities.
SJ Ber win’s EU and competition depar tment has been a core practice area of the firm since its establishment. The depar tment is widely recognised as one of the leading practices in EU regula-tor y and competition law, operating from Brussels, London, Madrid, Milan, Munich and Paris. Three times voted ‘Competition Team of the Year’ in the UK Legal Business Awards, the team regularly features in the Global Competition Review’s ‘GCR 100’, a sur vey of the world’s leading competition practices.
Unlike many other European law firms, SJ Ber win’s EU and competition practice spans not only competition law but also a broad range of other areas of EU law, which includes an active regulator y practice in pharmaceuticals, telecoms, energy and chemicals, an established trade law practice and a cutting edge EU/competition law litigation practice before both national and EU cour ts.
62 See page 2 of the transcript of the Case Management Conference on 26 July 2004.
63 Rookes v Barnard (1964) AC 1129.
64 Moreover, in Manfredi (Manfredi and Others v Lloyd Adriatico Assicurazioni SpA and Others (Joined Cases C-295/04, C-296/04, C-297/04 and C-298/04)), although the European Court of Justice did not recognise an EC right to such damages, it said that “in accordance with the principle of equivalence, it must be possible to award particular damages, such as exemplary damages or punitive damages, pursuant to actions founded on the Community competition rules, if such damages may be awarded pursuant to similar actions founded on domestic law.” (Paragraph 93). Also see Brasserie du Pecheur [1996] ECR I-I029).
65 Healthcare at Home v Genzyme Limited 1060/5/7/06.
66 Rule 46(4), CAT Rules.
67 Rule 46(4), CAT Rules.
68 1060/5/7/06.
69 CA 98/3/03.
