UK: Private Enforcement

Lesley Farrell and Sarah Ince

SJ Berwin

Private enforcement in the UK¹

Despite the fact that the House of Lords ruled over 20 years ago in Garden Cottage Foods v Milk Marketing Board² that third parties are able to sue for damages for breach of articles 81 and 82 EC Treaty,³ enforcement of the competition rules in the UK has until relatively recently been primarily achieved through public enforcement. The introduction of the Modernisation Regulation,⁴ however, which decentralised the enforcement of articles 81 and 82 by giving 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 Commission) that a more effective system of competition enforcement could be achieved by enlisting greater assistance from national competition authorities and national 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 competition regime that have been designed to facilitate private enforcement of the competition rules. More changes are promised. The aim of the current and future changes is to bolster the position of claimants and put in place ‘most of the main structural and legal elements for effective private actions in competition law’.⁶ 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, however, ‘the regime is not yet delivering the productivity and competitiveness benefits to the UK economy that were originally contemplated’.⁹ Although there has been a steady increase in the number of antitrust claims before the courts in England,¹⁰ in particular, in circumstances where there is an existing Office of Fair Trading (OFT) or Commission decision, there has not as yet been the flood of cases predicted by some.
We consider below the most important features of the current 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 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 (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 private antitrust actions were as follows.
The Act created the Competition Appeal Tribunal (CAT).¹¹ 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 president¹² or a member of the panel of chairmen (who include judges of the Chancery Division of the High Court¹³ 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 competition law.¹⁴ Claims may only be brought before the CAT when the OFT or Commission has made a decision establishing that one of the relevant prohibitions¹⁵ 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 which will remain for the CAT will be causation and quantum.¹⁶ These claims are consequently referred to as ‘follow-on actions’ since liability arises from the prior infringement decision. Eight such follow-on actions have to date been brought before the CAT.¹⁷
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.¹⁸ They are also bound by any finding of fact made by the OFT during the investigation of the infringement.¹⁹ This mirrors the position which applies in cases where there has been a prior decision of the Commission.²⁰ 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.²¹ Thus, the choice of whether or not to pursue a claim for damages in the CAT or the civil courts rests with the claimant.
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.²² At present, the Consumers’ Association is the only specified consumer body. It has to date brought only 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 Manchester United football kits. The case however settled and the claim was withdrawn in January 2008.²³

Recent developments and possible future developments

Notwithstanding these changes, concern has been expressed by the OFT that more could be done to facilitate private damages actions. In this regard, in November 2007, the OFT published a paper outlining recommendations²⁴ to the government as to the steps, which in its view, following its consultation on ‘Private actions in competition law: effective redress for consumers and business’²⁵ (the Discussion Paper), should be taken at the domestic level.²⁶ Its Discussion Paper and subsequent recommendations build on some of the ideas contained in the Commission’s 2005 Green Paper,²⁷ which identified a number of obstacles to more efficient systems of damages claims for antitrust infringements in all member states and suggested how these could be overcome.²⁸ Much of the focus in the Discussion Paper is on the need to facilitate stand-alone actions, although it could be argued that the steps thus far taken to facilitate follow-on actions have still not yet led to an effective and coherent legal framework for such proceedings.²⁹
The OFT has recommended, inter alia, that the government consult on the following:
(i) the introduction of conditional fee arrangements in representative actions that allow for an increase of greater than 100 per cent on lawyers’ fees;
(ii) the codification of 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;
(iii) the modification of existing procedures or the introduction of new procedures 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
(iv) the UK courts and tribunals being required to ‘have regard’ to UK NCA’s decisions and guidance.

Notwithstanding its stated aim ‘to improve the effectiveness of redress for those who have been harmed by breaches of competition law’; the OFT remains concerned to protect the leniency programme it operates which it regards as ‘an essential tool in the investigation of cartels’. Thus, the OFT has recommended that the government should consult on conferring a power on the secretary of state to:
• exclude leniency documents from use in litigation without the consent of the leniency applicant; and
• to remove and or circumscribe the joint and several liability of immunity recipients in private actions in competition law.

The OFT suggests either the complete removal of joint and several liability for immunity applicants or alternatively, the introduction of a procedure by which the immunity recipient may seek contributions of up to 100 per cent from non-leniency recipients.³⁰
Some of the issues raised in points (i) to (iv) above have been considered by the CAT and English courts in the cases which have come before them. These, together with a number of other issues that have arisen, are considered further below.

Jurisdiction

Many antitrust cases will involve 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 44/2001.³¹ 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.³² 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.³³
Under Regulation 44/2001, a claimant therefore has a wide variety of jurisdictions from which to choose when deciding where to commence an action.
The extent of the English courts’ jurisdiction was considered in the case of Provimi,³⁴ which arose out of the Commission’s vitamins cartel decision.³⁵ The vitamins cartel decision was addressed, inter alia, 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, 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 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 Regulation 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’ recognised in EU competition law which encompasses separate legal entities provided they form a single economic unit. On such an 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 in Provimi arose from the fact that some of the vitamins were purchased under contracts containing jurisdiction clauses, providing that disputes should be dealt with before the courts of Switzerland, Germany or France. Under Regulation 44/2001³⁶ and the Lugano Convention,³⁷ an agreement between the parties choosing the jurisdiction of a particular member state gives exclusive jurisdiction to the courts of that member state in the event of a dispute arising under the contract. However, having considered expert evidence from each of these jurisdictions, the judge found that the jurisdiction clauses in the purchase agreements were insufficiently wide to include these claims based, as they are, on tort.³⁸ 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 arising from antitrust violations remains to be seen.³⁹
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.⁴⁰ However, there are limits on the jurisdiction of the English courts. In the SanDisk case,⁴¹ a US importer and seller of unlicensed MP3 players in the EU, SanDisk, 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 patents, amounted to an abuse of a dominant position in the market for the licensing of patents essential to the production, sale and importation of MP3 players and memory cards. The court, however, refused to accept jurisdiction in circumstances where none of the defendants was a UK company, 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 (where there had been border detentions as a result of legal and administrative actions) were better placed to hear the claim.
It seems likely that the issue of jurisdiction will become an increasingly important battleground in antitrust litigation in the UK and elsewhere in the EU, in particular, in claims which involve EU-wide cartels or other cross-border anti-competitive conduct, where any one of a number of jurisdictions might be said to be well placed to determine a claim.⁴²

Limitation issues

Follow-on actions before the CAT must be brought within two years of the relevant date.⁴³ The relevant date is the later of the date on which the period to appeal to the European Court has lapsed, or if an appeal has been instituted, the date on which it is determined.⁴⁴ The CAT may give permission for a claim to be brought prior to 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 Court of First Instance (CFI), in circumstances where the other addressees of the decision have appealed that decision, was resolved as a preliminary issue in the Emerson case.⁴⁵ The Emerson case 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 (the Decision).⁴⁶ One of the three defendants, Morgan Crucible, had not appealed the Decision to the Court of First Instance (no doubt because it applied for and received 100 per cent leniency from the Commission), while other defendants had lodged an appeal of the Decision in the Court of First Instance. Concerned that while the CAT limitation period would start to run against the other defendants from the date on which their appeal is determined, it would run against Morgan Crucible from the date of the Decision (and if so, was about to expire), the claimants filed an action for damages against Morgan Crucible before the CAT. It also sought permission from the CAT to bring an action against two of the defendants (Schunk and SGL) before the expiry of the normal time limits, despite the fact that they had lodged appeals to the CFI.
The CAT’s conclusion was that time limits 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. 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. The CAT at a subsequent hearing decided to exercise its discretion so as to allow the action against Morgan Crucible to be brought while the appeals were underway, not least because of ‘legitimate concerns’ raised by the claimants about the disclosure and retention of documents by Morgan Crucible. However, on 28 April, the CAT refused permission to bring actions against the other defendants (including Schunk and SGL) 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.⁴⁷
Before the UK courts, damages actions for breach of the competition rules (ie, the cause of action is the tort of breach of statutory duty) must be brought within 6 years from the date on which the cause of action accrued.⁴⁸ 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.⁴⁹ 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.⁵⁰

Costs

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 costs from the losing party.
In its Discussion Paper, the OFT identified 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,⁵¹ after-the-event insurance⁵² or loans. As indicated above, the OFT has recommended as follows to the government:
• that it consult on the possibility of allowing a percentage increase of more than 100 per cent in conditional fee arrangements in competition cases, subject to judicial supervision of the funding arrangement (whereby the court would have the power to enquire into the fairness and adequacy of any arrangement and disallow any excessive element). The OFT suggests that the default position should be that the percentage increase up to 100 per cent should be recoverable from the losing party and any further increase should be met by the claimant from the damages recovered, but that the court could be given the power to order that it should be paid by the defendant in appropriate cases; and
• that it consult on the possibility of codifying or, in Scotland, introducing measures allowing for, the court’s discretion to cap parties’ costs liabilities⁵³ in competition cases and, in appropriate cases, to give cost-protection. The OFT suggests that such proposals could be confined to representative actions as they have a greater public interest dimension and the alternative is often that no action is brought at all or a small number of those who have been harmed are compensated.

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.⁵⁴ 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.⁵⁵
In the light of concerns regarding costs, it is interesting to note the approach taken by the CAT in BCL Old Co and others v Aventis SA and others on the issue of security for costs. 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 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.⁵⁶
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 can have suffered no loss since it has recouped the overcharge from its own customers. 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.⁵⁷ 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 with 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. In the UK, the issue was raised before the CAT in BCL Old Co and others v Aventis SA and others, where it was referred to as a ‘novel and important issue’, but the case settled prior to the substantive hearing and therefore the CAT did not rule on it.
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 Discussion Paper indicated that it would not seem appropriate for there to be any limitation on the standing of consumers and other end users to bring a competition claim, such limitations possibly having the unintended consequence of discouraging private actions. The majority of respondents to the consultation were supportive of such view.
In view of the complexity of the above issues and divergence of opinion as to what should be done, the OFT concludes in its recommendation that the most appropriate forum in which to deal with these issues is in the context of discussions on the Commission’s White Paper and that any reforms implemented at national level should be consistent with the approach adopted at EU level.

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). The introduction of such a right was initially hailed as an important step forward for private enforcement because it would allow consumers and purchasers with small claims to bring an action for damages for breach of the competition rules which might otherwise, for practical reasons, be unlikely to be brought. Certain limitations of the regime,⁵⁸ however, were brought into focus by the first case brought under the relevant provisions, Consumers’ Association v JJB Sports.
One of the main difficulties faced by the Consumers’ Association was identifying sufficient named claimants to make it worthwhile to bring the action. This difficulty has resulted in further debate as to whether an opt-in⁵⁹ or opt-out⁶⁰ system is more appropriate. Whilst in the past, commentators have favoured the opt-in model, support for the opt-out model appears to be increasing. The OFT in its recommendations indicated that ‘the current evidence suggests that representative actions exclusively on behalf of named consumers continue to fail to optimise economies of scale and give rise to unnecessary costs and complexity’⁶¹ and that ‘the absence of a representative action which may be brought on behalf of consumers at large is a significant shortcoming of the present system.’⁶²
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. It has further recommended that the Government should consult on the procedures, criteria, and filters which are required to ensure that, where a representative action on an opt-out basis (in particular) is contemplated, the aims of fairness, efficiency and cost-effectiveness are achieved.
In addition to the above, the OFT has recommended that businesses should be able to bring stand alone and follow on representative actions on the same bases as consumers.
A research paper by the Civil Justice Council of England and Wales which calls for reform of collective redress mechanisms in English civil procedure will add pressure for change.⁶³

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 restitutionary or 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.
The OFT, in its Discussion Paper, raised the issue of 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 considered in some cases.⁶⁴ Indeed, in BCL Old Co and others v Aventis SA and others,⁶⁵ 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?’ 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 However, in the case of Devenish Nutrition Ltd and others v Sanofi-Aventis SA (France) and others, 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 awarded where an award of compensatory damages would be inadequate to compensate the claimant for the infringement of his rights.⁶⁶ Similarly, he held that an account of profits was not an appropriate remedy on the facts of the case.⁶⁷ The case is currently being appealed on these two points.
As indicated above, another issue that remains to be resolved as a matter of English law is whether exemplary damages are available for breach of competition law. As a matter of general principle, one instance in which exemplary damages may be awarded is where ‘the defendant’s conduct has been calculated by him to make a profit for himself which may well exceed the compensation payable to the Plaintiff.’⁶⁸ On this basis, there are good arguments to support claims for exemplary damages for antitrust infringements.⁶⁹ However, again in Devenish,⁷⁰ Lewison J rejected a claim for exemplary damages on the following bases:
• the principle of non bis in idem⁷¹ precluded an award of exemplary damages in circumstances where the defendants had already been fined (or had had fines imposed and then reduced or commuted) by the Commission in respect of the same unlawful conduct;⁷²
• an award of exemplary damages by a national court on a successful leniency applicant would undermine the public policy behind the leniency programme;⁷³
• article 16 of the Modernisation Regulation⁷⁴ precludes a national court from taking a decision running counter to that of the Commission, which had in this case, had 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 claimants⁷⁵ and in light of the scale of the fines imposed.⁷⁶

In the light of the above, it is arguable that exemplary damages are likely to be awarded for antitrust infringements only where:
• there is no prior decision of the Commission or the OFT imposing financial penalties; and
• the claimants represent the whole class of claimants or where there are a limited number of claimants and those claimants can be ring-fenced under a group litigation order.⁷⁷

In the context of a follow-on action,⁷⁸ 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 construction 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 judgment for a substantial amount of money (other than costs) against the defendant from whom he is seeking damages’.⁷⁹ Any payment that the CAT orders must be limited to a reasonable amount of the likely final damages award.⁸⁰
The first award of interim damages in the CAT was made in the Healthcare at Home Ltd v Genzyme case.⁸¹ 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.⁸² The CAT awarded £2 million by way of interim relief to Healthcare at Home in respect of loss of revenue.⁸³

***

There remains a degree of uncertainty surrounding a number of important procedural and substantive issues arising in antitrust litigation in the UK, as described above. However, the number of damages claims coming through the CAT and UK courts has shown an 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.

Notes

1 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 (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’s 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, 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, p15: ‘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.’ Also, see OFT Discussion Paper: ‘private competition law actions should exist alongside, and in harmony with, public enforcement’ and its later recommendations (OFT916resp) at paragraph 3.6: ‘… public enforcement and private actions are complementary and mutually reinforcing in securing productivity and competitiveness benefits for the UK economy.’
6 Paragraph 1.2, OFT Discussion Paper 916 Private actions in competition law: effective redress for consumers and business, April 2007.
7 [2003] EWHC 961 (Comm).
8 These 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, September 2003, ‘Jurisdiction over civil claims’, p28.
9 Private actions in competition law: effective redress for consumers and business - Recommendations from the Office of Fair Trading - November 2007 - OFT916resp paragraph 2.2, p5.
10 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 and two out of eight defendants have settled damages actions based on the same facts and matters brought by the Scottish ministers and the Northern Irish Health Board.
11 Section 12 and schedule 2 to the Act.
12 Mr Gerald Barling QC was appointed as president with effect from 5 November 2007. He replaced Sir Christopher Bellamy, who retired in February 2007.
13 Chancery Division judges are therefore likely to build up a significant expertise and experience of competition-related litigation.
14 Section 47A of the Competition Act 1998, inserted by section 18 of the Act.
15 The relevant prohibitions are: chapters I and 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.
16 Section 47A(9) of the Competition Act 1998.
17 Deans Foods Limited v Aventis and Hoffman-La Roche; BCL Old Co Ltd & others v Aventis SA and others (settled); Healthcare At Home Ltd v Genzyme Ltd (settled); Emerson Electric Co and others v Morgan Crucible Company & others (ongoing); JJ Burgess and Sons v W Austin and Sons (Stevenage) Ltd and Harwood Park Crematorium Ltd (settled); BCL Old Co and others v BASF AG and others (ongoing); Grampian Country Food Group and others v Sanofi-Aventis SA and others (ongoing); and Freightliner Ltd and Freightliner Heavy Haul Ltd v English Welsh and Scottish Railway Ltd (ongoing). This list does not include the Consumer’s Association case against JJB.
18 Section 58A of the Competition Act 1998.
19 Section 58 of the Competition Act 1998.
20 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 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 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.
21 Section 47A(10) of the Competition Act 1998.
22 Section 47B of the Competition Act 1998, inserted by section 19 of the Act.
23 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.
24 Private actions in competition law: effective redress for consumers and business – Recommendations from the Office of Fair Trading, November 2007, OFT916resp.
25 OFT Discussion Paper 916, Private actions in competition law: effective redress for consumers and business, April 2007.
26 HM Treasury has stated in its 2007 Pre-Budget Report that the government intends to consult on, inter alia, measures to reduce barriers preventing those suffering loss as a result of anti-competitive behaviour from obtaining redress, through the courts where necessary, without encouraging ill-founded claims.
27 COM(2005) 672 final, Brussels 19.12.2005. The Commission’s follow-on White Paper was published in April 2008.
28 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’.
29 For a discussion of the difficulties faced in bringing follow-on actions in the UK, see Kon & Barcroft, ‘Aspects of the Complementary Roles of Public and Private Enforcement of UK and EU Antitrust Law and Enforcement Deficit?’, [2008] Global Competition Litigation Review, 11/23.
30 These recommendations relating to the OFT’s leniency programme, as detailed above, reflect the ever-present tension faced by all competition authorities between the promotion of private antitrust litigation, whilst at the same time ensuring that the system of public enforcement is protected.
31 Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
32 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)
33 Article 6 of 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.
34 Provimi Ltd v Roche Products and Others [2003] EWHC 961 (Comm).
35 Case COMP/E-1/37.512
36 Article 23(1).
37 Article 17.
38 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.…’
39 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.
40 Also see F Hoffman-La Roche Ltd v Empagran SA [2004] 5 US 1.
41 SanDisk Corpn v Koninklijke Philips Electronics NV and others [2007] EWHC 332 (Ch).
42 In relation to the applicable law in EU competition matters, the position is now subject to Regulation 864/2007 on the law applicable to non-contractual obligations (Rome II) 2007 OJ L199/40.
43 Rule 31, CAT Rules.
44 See Rule 31(2) of the CAT Rules, which refers to sections 47A(7) and 47A(8) of the Competition Act 1998.
45 Emerson Electric Co and others v Morgan Crucible Company Plc and others, case no. 1077/5/7/07.
46 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.
47 The CAT noted that ‘whereas there was substantial evidence of particular prejudice in the case of Morgan Crucible, the claimants had not established that the evidential difficulties of proof in respect of the losses allegedly caused by these proposed defendants are any different from those which normally arise.’
48 Section 2 of the Limitation Act 1980.
49 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.
50 Section 32 of the Limitation Act 1980.
51 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.
52 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.
53 Section 51(3) Supreme Court Act 1981; rule 3.1(2)(m) of the CPR.
54 CAT Rules, Rule 55(2).
55 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 no. 1005/1/1/01 and 1009/1/1/02) [2003] CAT 21, [2004] Competition Appeal Reports (CompAR) 189, 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 OFT, case no. 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.
56 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.
57 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’.
58 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.
59 Cases in which the claimants are required to express their wish to participate in the proceedings.
60 Cases in which the claimants are required to express their wish not to be bound by the outcome of the proceedings.
61 Recommendations, paragraph 7.12
62 Recommendations, paragraph 7.29
63 Civil Justice Council, Reform of Collective Redress in England & Wales: A Perspective of Need (2008)
64 OFT Discussion Paper 916, Private actions in competition law: effective redress for consumers and business, April 2007, 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.’
65 [2007] EWHC 2394 (Ch). This case is under appeal on the question of restitutionary damages.
66 Page 281, paragraph 108 at d.
67 A number of factors were taken into account, including:
• that the claimants were part of an EU-wide class of persons affected by the cartel, not all of whom were before the court;
• that 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;
• that the defendants had already been fined by the Commission; and
• difficulties in determining the overcharge.
68 Rookes v Barnard (1964) AC 1129.
69 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)), while 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).
70 [2007] EWHC 2394 (Ch). This case is under appeal on the question of restitutionary damages.
71 A fundamental principle of Community law prohibiting a person from being punished twice for the same wrong.
72 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.
73 Page 266, paragraph 51 at f.
74 Article 16 provides as follows:
• when national courts rule on agreements, decisions or practices under article 81 or 82 of the EC Treaty that 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 EC Treaty; and
• when competition authorities of the member states rule on agreements, decisions or practices under article 81 or 82 of the EC Treaty that are already the subject of a Commission decision, they cannot take decisions which would run counter to the decision adopted by the Commission.
75 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).
76 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 €236 million and that there is no real prospect that exemplary damages would exceed this figure.
77 See Scott Campbell, ‘Recent Developments in the Civil Remedies Available in England and Wales in Respect of Breaches of EC Competition Law, [2008] Global Competition Litigation Review, 39-45.
78 Healthcare at Home v Genzyme Limited, 1060/5/7/06.
79 Rule 46(4), CAT Rules.
80 Rule 46(4), CAT Rules.
81 1060/5/7/06.
82 CA 98/3/03.
83 This represents about 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 estimates. The case has since settled.

An extract from The European Antitrust Review 2009