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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