Damages In Private Cartel Actions: The Position In England
Competition authorities in Europe have sought to encourage
private law actions against cartelist as part of effective
antitrust law enforcement. In its White Paper of April this year,
the Commission stated that:
to date in practice victims of EC
antitrust infringements only rarely obtain reparation ...The amount
of compensation that these victims are foregoing is in the range of
several billion euros a year1.
In on-going High Court litigation in England, some of the
victims of the vitamins cartels of the 1990s have sought to recover
exemplary damages and/or restitutionary awards (as described below)
in an attempt to recover an amount in excess of the amount they
lost. This would inevitably make such claims more attractive to
victims. However, on 14 October 2008, the Court of Appeal in
England upheld a decision from last year that only compensatory
damages are available to cartel victims. This is a setback for
private antitrust plaintiffs in the UK, which generally is one of
the most attractive EU jurisdictions in which to bring a private
cartel action.
Background to the Court of Appeal's Decision
In October 2007, in a judgment of Mr Justice Lewison in the High
Court in England2, it was held that only compensatory
damages were available to cartel victims who, in reliance upon a
Commission decision, brought private law claims. Exemplary damages
and restitutionary awards were not available.
The claimants concerned were victims of the vitamins cartels of
the 1990s. The defendants were companies in the Aventis, Hoffman-La
Roche and BASF groups of companies. With the exception of Aventis,
which had obtained leniency for whistleblowing, the cartelists had
paid very substantial fines to the European Commission.
One claimant, Devenish Nutrition Limited, appealed the High
Court's decision that a restitutionary award was unavailable.
In its judgment of 14 October 20083, the Court of Appeal
dismissed the appeal holding that (i) it was bound by the previous
Court of Appeal decision in Wass4 that a
restitutionary award was not available to the victim of a
non-proprietary tort and (ii) in any event, compensatory damages
were an adequate remedy.
In so holding, the Court of Appeal addressed two issues that
have been the subject of legal debate in this area. First, Lord
Justice Tuckey indicated that the "pass on" defence
should be available to defendants where the claimant had mitigated
its loss by passing on all or part of the illegal overcharge to its
own downstream customers. Secondly, Lady Justice Arden, who
reviewed the authorities in relation to restitutionary awards,
indicated that in principle an account of profits (a form of
restitutionary award) should be available as a remedy in tort in
exceptional circumstances, as it is in contract, in order to give
coherence to the court's range of remedial responses. The House
of Lords would have to overrule the Court of Appeal's decision
in Wass in order for that to happen.
Why Sue in England?
The claimants were companies domiciled in England and the
Republic of Ireland. The defendant companies were domiciled
variously in England, France, Germany and Switzerland. Cartels give
rise to joint and several liability, with each cartelist being
responsible for the losses of each and every victim, since each
cartelist was party to the same offending agreement or practice.
Consequently, under EC law the claimants were entitled to sue in
any jurisdiction where one of the cartelist was domiciled and then
to join the others as necessary parties.
In England, breach of Article 81 of the EC Treaty is a statutory
tort, and a claim in this respect can be brought in reliance upon
the European Commission decision which establishes liability.
At the outset of the proceedings, bringing claims in England
would have seemed attractive to the claimants. The Commission had
found in November 2001 that the defendants had seriously breached
Article 81, which prohibits cartels. It was therefore
uncontroversial that compensatory damages would be available
subject to proof of damage and loss. Compensatory damages would be
assessed so as to put the claimant in the position it would have
been in but for the illegal cartel and the claimant would therefore
recover the illegal overcharge, with damages adjusted to take
account of such things as taxation.
A number of the features that the Commission White Paper
...
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