UK Private Enforcement1

Originally Published by Global Competition Review

The private enforcement of competition law has been one of the most dynamic areas of law in the UK over the past few years. This has in large part been due to a number of changes to procedural rules in the UK designed to facilitate private enforcement of the competition rules. These legislative changes provide a framework around which a body of case law has begun to develop. There has been a steady increase in the number of antitrust claims lodged before the English courts. A substantial proportion of cases have been settled prior to trial which, while reducing the number of published judgments, suggests that defendants increasingly recognise the likelihood of their being found liable to pay substantial damages.2 All of these developments take place against a background of intense policy debate at the European level, most notably the Commission's Green and White Papers on damages actions.3

The UK regime includes a number of specific provisions for competition law claims, most notably the specialist Competition Appeal Tribunal. Save for these rules, private actions in relation to competition law are subject to the regime applicable to other civil commercial actions, the cause of action for competition claims being the tort of breach of statutory duty.4 Below we set out the most important features of the current regime in the UK, before undertaking a review of 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.

The Enterprise Act 2002 The Enterprise Act 2002 amended the Competition Act 1998 substantially. The principal changes designed to facilitate private antitrust actions were as follows:

The Competition Appeal Tribunal (CAT) was created.5 The CAT is a specialist judicial body that has jurisdiction to hear actions for damages and other monetary claims under the Competition Act 1998.6 Cases are heard before a panel consisting of three members: either the president7 or a member of the panel of chairmen (which includes judges of the High Court and other senior lawyers) and two lay members (who are drawn from a panel of economists, accountants and other competition policy experts). Third parties now have the right 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.8 Claims can only be brought before the CAT in reliance on an OFT9 or Commission infringement decision and following the exhaustion of the appeals process. Where there is no prior decision of the OFT or Commission, claims must be brought in the High Court (known as 'stand-alone actions'). In determining a claim for damages, the CAT is bound by the relevant infringement decision and so, in principle, the issue of liability should be settled and the sole issues for the CAT will be causation and quantum.10 These claims are referred to as 'follow-on actions' since liability arises from the prior infringement decision. A number of follow-on actions have now been brought before the CAT.11

The Competition Act now provides that in damages claims and other monetary claims, the courts are bound by findings of infringement made by the OFT and the CAT12 provided that the time for an appeal against a decision has elapsed, or, where an appeal has been filed, it has been determined.13 The courts are also bound by any finding of fact made by the OFT during the investigation of the infringement.14 This mirrors the position that applies in cases where there has been a prior decision of the Commission.15 This provision places follow-on claimants in the same position before the CAT and the High Court. 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.16 As such, the choice of whether to pursue a claim for damages in the CAT or the civil courts rests with the claimant. Specified bodies have a right 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.17 At present, the Consumers' Association is the only specified consumer body.18 The OFT's recommendations Concern has been expressed by the OFT that more could be done to facilitate private damages actions. In November 2007, following the publication of a discussion paper,19 the OFT published a number of recommendations20 to the government on the steps it thought should be taken at the domestic level to improve the effectiveness of redress for those who have been harmed by breaches of competition law.

The OFT's recommendations build on some of the ideas identified by the Commission in its 2005 Green Paper on damages actions,21 and are to a large extent consistent with the conclusions in the more recent White Paper.22 The OFT's recommendations included that the government should consult on the following:

introducing conditional fee arrangements in representative actions, which allow for an increase of greater than 100 per cent on lawyers' fees; codifying 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; modifying existing procedures or the introduction of new procedures so as 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 requiring UK courts and tribunals to have regard to UK national competition authorities' decisions and guidance. It is unclear if or how the OFT's policy recommendations will be taken forward. Since publication of these recommendations, no further action has been taken.

Jurisdictional issues Many antitrust cases involve multiple claimants and defendants domiciled in different member states engaged in cross-border trade. The jurisdiction of courts to hear cases brought against defendants domiciled in member states is governed by Regulation 44/2001 (known as the Brussels I Regulation).23 Under the Brussels I Regulation, 24 where a claim is made in tort, claimants have a choice of bringing an action in the courts of the state where the defendant(s) are domiciled or in the courts of the state where the harmful event occurred.25 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. Again, this is at the election of the claimant. Article 6(1) of the Brussels I Regulation provides for EU domiciled co-defendants to be brought together in a single jurisdiction: co-defendants may be sued in a state where any one of them is domiciled provided that the claims are 'closely connected'.26

A claimant therefore has a potentially wide variety of jurisdictions from which to choose when deciding to commence an action.

The extent of the English courts' jurisdiction was considered in the case of Provimi,27 which arose out of the Commission's vitamins cartel decision.28 The Commission's vitamins cartel decision was addressed to a number of parties including Hoffman La Roche and Aventis SA. In the context of a preliminary hearing of an application to strike out the claim, the court was asked to consider whether a claim by a German domiciled purchaser against a German domiciled subsidiary of one of the cartelists could be heard in England. The claimant argued that it was able to bring a claim on the basis that an English subsidiary (in the same corporate group as the German domiciled subsidiary) had, albeit perhaps unknowingly, implemented the cartel price. Had the English subsidiary not implemented the cartel price, the German domiciled purchaser would have been able to purchase from it at non-cartel levels. If the court agreed that it had jurisdiction to hear the claim, the claimant would be able to join other defendants (including the German domiciled subsidiary) to the claim on the basis of article 6(1) of the Brussels I Regulation. Without determining the substantive claim, the court accepted that the claim was arguable and refused to strike out the proceedings.

Another issue in Provimi was that some of the purchases of the cartel product were made under contracts containing jurisdiction clauses. The jurisdiction clauses provided that disputes should be dealt with by the courts of Switzerland, Germany or France. Under the Brussels I Regulation29 and the Lugano Convention,30 jurisdiction clauses confer exclusive jurisdiction to the courts of the chosen member state in the event of a dispute arising under the contract. However, having considered expert evidence from each of these jurisdictions, the court found that the jurisdiction clauses in the purchase agreements were insufficiently wide to include claims based on tort.31 The English courts were therefore able to assert jurisdiction over these claims.

It can be seen that the ruling in Provimi enables a wide range of purchasers of products and services who have suffered loss as a result of anti-competitive conduct to seek redress in the UK courts.32 However, there are limits on the jurisdiction of the English courts. In SanDisk33 a US importer and seller of unlicensed MP3 players in the EU, brought proceedings in the High Court against a number of non- UK domiciled defendants alleging that the terms of the defendants' licences, together with conduct such as alleged harassment through the enforcement of patents, amounted to an abuse of a dominant position. The...