Actions for damages in antitrust cases

The outlook for 2016 - new and anticipated developments in the UK and the implementation of the EU damages directive.

New and anticipated developments in the UK

2016 is likely to see substantial developments in the antitrust damages actions brought before the UK Competition Appeal Tribunal (CAT), following the far reaching changes to the private actions for damages regime under the Consumer Rights Act 2015 (CRA 2015) which came into effect on 01 October 2015. The scope of the CAT’s powers has been significantly expanded, and now also includes standalone actions, opt out collective actions (essentially class actions), collective settlements, injunctions, and fast track procedures.

A big bang start to the opt-out collective regime was effectively stymied by a late amendment to the CAT Rules on limitation which appears to bar a number of the claims that were expected to be brought in October 2015. However, two aspects of the revisions have been taken up more immediately. First, provisions also came into effect enabling cases, or parts of cases, dealing with antitrust infringements to be transferred into the CAT from the High Court. A transfer can be made on the court’s own initiative or on the application of the claimant or the defendant. The first case to be transferred on 30 November 2015 (on the Court’s initiative) will see the trial of Sainsbury’s v MasterCard, a damages claim in excess of £100m, heard on 25 January 2016 by the CAT rather than the English High Court. In making the transfer ruling, Mr Justice Barling noted the specialist nature of the CAT and the ability for the panel to have a “multi-disciplinary constitution” which could include lawyers, economists, accountants and industry experts. His ruling also dispenses with some of the major concerns raised in relation to the transitional limitation periods in the CAT for standalone individual claims that arose before 01 October 2015. The Judge emphasised that the CAT’s more restrictive limitation periods only apply to cases started in the CAT, not to those launched in the High Court under more generous limitation rules and subsequently transferred. We speculate that Mr Justice Barling took this opportunity to circumvent the confusion introduced by the transitional rules and to pave the way for cases to be transferred from the High Court. We therefore anticipate further cases being transferred in the year ahead – one candidate, for example, could be the case brought by Foundem against Google for abuse of a dominant position, which is currently on hold pending a European Commission decision.

The second aspect that has been seized upon is the fast track procedure. On 17 December 2015, the first application for a claim to be fast-tracked was received by the CAT from NCRQ Ltd (NCRQ). NCRQ develops qualifications, training material and courses in health and safety, including a diploma, and sought damages and an injunction against the Institution of Occupational Safety and Health (IOSH). The claimant alleged that IOSH holds a dominant position in the market for the accreditation of health and safety qualifications and had abused its dominant position by refusing to accredit NCRQ’s diploma, thereby restricting competition in the health and safety qualifications market. The fast-track procedure is intended largely for use by small or medium-sized enterprises (SMEs) and also for claims where a longer procedure is not necessary, such as where the issues are not overly complex or the scale of documentary evidence and disclosure is anticipated to be limited. The procedure is particularly appropriate for abuse of dominance cases, and cases in which an injunction is sought, as it was in this case.

The injunction hearing was scheduled for 12-13 January, but the day before the hearing, the matter settled, with the NCRQ diploma being granted accreditation. Such a swift resolution to the dispute at an early stage demonstrates the value of this procedure for SMEs. From a practical perspective, all eyes were on whether the CAT would grant an interim injunction, and if it did so, whether it would exercise its new discretion either to cap the cross-undertaking in damages by the claimant, or to waive it entirely. It will now be left to subsequent cases to illustrate the CAT’s approach.  

The changes to the regime have clearly broadened the options for access to redress, even though the anticipated launch of opt-out collective damages actions has been deferred. The CMA, for example, has also gained the right to authorise voluntary redress schemes. We anticipate that in the course of 2016, cases will begin to come on stream and the CAT and CMA will begin to grapple with their new powers.

EU cases that have implications for ongoing damages claims in the UK

Two developments in late 2015 have implications for ongoing cases in the English High Court. First, the annulment by the General Court of the European Commission’s air freight cartel decision, and second, the announcement by the Commission that it will not pursue an investigation into the possible price fixing of LCD panels.

On 16 December 2015, the General Court annulled the air freight cartel decision in 13 almost identical judgments. It found that there was a contradiction between the grounds for the decision and the (legally binding) operative part of the decision. The operative part of the Commission’s decision found four separate infringements of Article 101 TFEU, based on different periods and different categories of routes and committed by different carriers. However, the grounds of the Commission’s decision referred to one single and continuous worldwide infringement covering all the routes and all the carriers. There were also some inconsistencies in the grounds of the Commission's decision, in particular between the attribution of the starting date of the infringement to some carriers and the application of the case law for establishing participation in a single and continuous infringement. The internal inconsistencies in the decision were liable to infringe the airlines' rights of defence and also to prevent the General Court from exercising its power of review. It is not yet clear whether the Commission will take an amended decision correcting the failures identified by the General Court or will appeal the Court’s decision. One thing is clear - the ongoing litigation in the UK against British Airways (BA), which partly followed on from the Commission decision, will inevitably be affected by the General Court’s judgment.

On 18 December 2015, it was reported that the European Commission had dropped an informal investigation into possible price fixing of LCD panels. Lucia Caudet, the spokeswoman for the Internal Market, Industry, Entrepreneurship and SMEs, confirmed to the press that the European Commission sent so-called “no action” letters to several LCD producers.

Without a decision of the European Commission to rely upon, a claimant in any antitrust damages claim must prove that a defendant committed the infringement that allegedly caused loss to the claimants. The extent of the impact of these two cases on the multi-party suit against BA in relation to the air freight case and on ongoing damages actions deriving from the LCD cartel (including those brought by Iiyama and London Councils) respectively should become apparent in 2016.

Across the EU

The EU Damages Directive sets out a series of minimum requirements for antitrust damages actions that will provide victims of antitrust infringements equivalent access to redress across the EU. The Directive should be implemented in each Member State by 27 December 2016. All Member States will need to make some adjustments to their court procedures, although in some well-developed private enforcement regimes such as England, Germany and the Netherlands, fewer changes will be required. These countries could therefore consolidate their positions as the three preferred fora for damages claims. A public consultation on the legislative changes needed to implement the directive in the UK will be issued in the first half of 2016.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.