Private Enforcement In The UK

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)...