UK: Competition Damages Litigation In London Pre - And Post- Brexit

Last Updated: 9 November 2017
Article by Vannin Capital

Authored by Aidan Robertson QC, Brick Court Chambers

While many of these claims are being brought by large commercial organisations (often with the support of third party litigation funders), there is now also the first application to bring a major collective damages claim before the Competition Appeal Tribunal ('CAT') on behalf of consumers under a procedure introduced by the Consumer Rights Act 2015. This is also supported by third party litigation funding.

There are essentially two types of damages claim for anti-competitive practices.

  • First are claims which 'follow on' from a finding of infringement of EU and/ or national competition laws by the European Commission or national competition authorities.
  • Second are claims which are independent of any such infringement finding. These are known as standalone claims.

In practice, many claims combine follow on and standalone claims and are known as hybrid claims.

Claims with a follow on element normally arise out of cartels, i.e. covert agreements to fix prices and share markets, which are typically uncovered following a cartel member's decision to blow the whistle on the claim and seek leniency from a competition authority. A successful leniency application which is first to reveal the cartel to an authority can lead to complete immunity from fines, and as competition fines at EU level can now run into billions of euros, that is a substantial incentive to cooperate.

For example, in the European Commission's Truck Cartel decision, total fines of €2,926,499,000 for price-fixing were imposed on Volvo/Renault, Daimler, Iveco, and DAF, while the fifth truck manufacturer found to have participated, MAN, escaped any fine as it was the whistleblower. A number of damages claims following on from this cartel are already under preparation in London (as well as one which has already been commenced in Ireland).

However, not all competition damages claims relate to cartels. There are a considerable number of claims currently being brought against the MasterCard and Visa organisations arising out of commercial arrangements between those businesses and their member banks to fix the price for settling credit and debit payment card transactions, known as the 'Multilateral Interchange Fee' (MIF). MasterCard had formally notified the MIF agreements to the European Commission for approval (an option which ceased to be available in 2004) and this led to a long-running investigation before the Commission adopted an infringement decision against MasterCard in 2007 condemning the MIF as unlawful price fixing.

MasterCard failed in its appeal to the EU's General Court in 2012 and further appeal to the EU Court of Justice in 2014. MasterCard is now being sued in London by a number of retailers on the basis that costs they were charged for processing payment card transactions were unlawfully inflated by the MIF. While many of these claims are being brought by large commercial organisations (often with the support of third party litigation funders), there is now also the first application to bring a major collective damages claim before the Competition Appeal Tribunal ('CAT') on behalf of consumers under a procedure introduced by the Consumer Rights Act 2015. This is also supported by third party litigation funding.

Judgment in the first of the MIF damages claims to go to trial, Sainsbury's Supermarkets v MasterCard was handed down [to] the CAT, to which the case had been transferred from the High Court, in July 2016, after a 23-day trial in January to March 2016. Sainsbury's was successful in its claim and awarded damages of £68,582,245 in respect of the overcharge in relation to credit cards and £760,406 in respect of the overcharge in relation to debit cards, together with interest to be calculated. A number of similar claims are also being brought against Visa in London on a purely standalone basis as there has been no European Commission decision equivalent to that against MasterCard.

The Sainsbury's case is notable in that it is the first claim for anti-competitive price-fixing to proceed to trial and an award of damages. However, it should not be concluded from this that such claims are unusual. In fact, in the past decade there has been an explosion of cartel damages litigation in the English Courts. A notable feature has been that, after some interlocutory skirmishes (particularly on limitation and jurisdictional points), all claims have been settled either before trial (which is normally the case – for example, damages claims in which I have acted and which settled include cartels in Vitamins, LCD Panels, Copper Tubes, Copper Fittings and Refrigeration Compressors) or shortly after commencement of trial (National Grid, Cooper Tire – the rubber cartel).

Furthermore, successive governments have intervened to legislate to reduce the scope for interlocutory skirmishing in order to improve the ease with which damages claims can be brought. The jurisdiction of the CAT to hear damages claims, first introduced by the Enterprise Act 2003, had been limited to pure follow on claims (so that any hybrid or standalone claim had to be brought before the High Court) and a separate limitation period for such claims led to a swathe of satellite litigation on its interpretation. The Consumer Rights Act 2015 swept away the limits on the CAT's jurisdiction as to which claims it could hear, giving it effectively as broad a jurisdiction as the High Court, and allowed cases to be transferred from the High Court to the CAT (as was done for the first time in Sainsbury's). This means the CAT can operate in effect as a specialist division of the High Court, where hearings are before judges with a high degree of competition expertise, sitting together with wing members chosen for their expertise in economics and business. Because of its specialist expertise, bringing cases in the CAT does not involve the risk of having to educate a judge in an area of law with which the judge might not previously have been familiar. The CAT also has considerable administrative resources in the form of judicial assistants (référendaires) and its own expert registry, while not being burdened with the daily lists of business encountered in the High Court. It is therefore able to hear cases more speedily than the High Court. It is likely to become the favoured venue for competition damages claims.

The European Commission has drawn upon features of the UK approach to competition damages litigation and has sought in the Antitrust Damages Directive (2014) to identify the key features which ought to be implemented throughout all EU Member States by the end of 2016. These include rules allowing for disclosure of documents, a powerful weapon for claimants in common law litigation which is unknown to most continental civil law jurisdictions. However, the lack of experience in continental jurisdictions with dealing with disclosure – particularly with the issues of electronic disclosure which are now meat and drink to the English Bar and judiciary – means that claimants will continue to wish to bring claims in London in order to get the most extensive disclosure possible. London's other great advantages for claimants remain the availability of third party funding and the English costs regime. Neither of these are addressed by the 2014 Damages Directive and so it remains to be seen in practice how much practical difference its implementation in continental Europe will have. Indeed, there is a school of thought that the uncertainties in its drafting will prove a disincentive to litigation, due to the risk of continental courts making Article 267 TFEU references to the EU Court of Justice as to the Directive's interpretation and thus delaying claims.

Will Brexit place a dampener on the rapid growth of London as the preferred centre for cartel litigation? In my view, no. Even if there is a hard Brexit (i.e. the UK does not remain subject to EU legislation through an arrangement based on the European Economic Area) and the underlying laws are different, the fundamental practical advantages of litigating in London – disclosure, funding, costs – will still apply.

The main changes in the law will concern rules as to establishing the jurisdiction of the English courts and the basis in the law of tort for bringing a claim. Jurisdiction is currently governed by the Recast Brussels Regulation 1215/2012. Post-Brexit, we will revert to the Civil Jurisdiction and Judgments Act 1982, which applies the pre-Regulation version of the Brussels Convention as between the UK and other EU Member States. As for other States, the normal common law jurisdictional rules will continue to apply. As is currently the case, once a claim is anchored by a defendant within the jurisdiction of the English Courts, other defendants can be joined in if they participated in the same cartel. While EU law on anti-competitive practices will have ceased to be directly applicable in the UK, breach of EU law elsewhere can still be litigated as breach of a foreign tort under the Private International Law (Miscellaneous Provisions) Act 1995. Foreign tort claims are a regular feature of commercial litigation in the English courts. Enforcement of judgments will be governed, not by EU law, but [by] relevant international treaties or the normal common and local law rules (for example, as remains the case to this day between UK and USA).

However, all of this deals with claims whether the cause of action arises post-Brexit. Where the cause of action relates to cartel or other anti-competitive conduct prior to the date of Brexit, English limitation rules mean that current rules on jurisdiction and applicable law continued to apply for at least a further six years. And in the case of covert conduct, that six years does not begin running until it is uncovered. The pre- Brexit regime thus still has many years to run.

Originally published in Funding In Focus, Issue 4: 2017

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions