“It’s too late baby, now it’s too late”: limitation, competition claims and knowledge

How much knowledge does a potential claimant need before time begins to run against a competition claim against a party alleged to have breached competition law? This was the key question addressed by Mr Justice Simon in the first case in which an English Court has had to consider the effect of s.32 of the Limitation Act 1980 (“LA”) in the context of a competition claim.

The judgment is the latest instalment of the MIFs (“multi-lateral interchange fees”) saga (see, e.g. Tom Coates’ blog on the CJEU’s recent decision in the MasterCard case).

In Arcadia Group Brands Limited and others v Visa Inc and others [2014] EWHC 3561 (Comm) claims were brought by a number of major UK retailers such as Argos and B&Q against various Visa entities (e.g. Visa International and Visa Europe). The claimants alleged that Visa had charged anti-competitive MIFs since 1977, and sought over £1 billion in damages.

The defendants applied to strike out the claim for the period between 1977 and 2007 on the basis that the claimants were out of time to sue for that period. This would effectively reduce the claim by approximately £500 million (as noted at [20]). The retailers relied upon s.32 LA to argue that Visa had concealed relevant facts and that they could therefore not have sued before 2007. Indeed, their counsel argued that the limitation clock had not even started to run given that not all the relevant facts were known at the time of the hearing (at [26]).

Simon J identified the conflicting interests at issue: on the one hand, the “important public interest that claimants should not be prejudiced where they lack sufficient information to advance a claim”, on the other “the general policy of limitation legislation, the public interest in ensuring certainty and finality in litigation” (at [107]). After a clear exposition of the legal principles, the Judge found for the defendants, considering that the “[f]acts which are still unknown and are not essential to complete the cause of action cannot amount to relevant facts for the purpose of s.32(1)(b)” (at [28]). In particular, he concluded that “the trigger for the running of time for limitation purposes is not the discovery of every potentially relevant fact in the broadest sense”. He then pointed to five European Commission documents (press releases, a negative clearance decision, an exemption decision and an Article 19(3) Notice) (at [52]-[69]), three OFT documents (press releases and decisions relating to MasterCard’s MFIs) (at [76]-[86]) and the European Commission’s 2007 MasterCard Decision to accept the defendants’ case that “the Particulars of Claim derived from material which was available before” the relevant dates six years before the claims were brought.

The judge noted (at [33]-[34]) the Court of Appeal’s decision in KME Yorkshire Ltd and ors v Toshiba Carrier Ltd (UK) and ors [2012] EWCA Civ 1190 (as to which, see Tom Richards’ post here), which had recognised a ‘generous approach’ towards claimants’ pleadings when applications are made to strike out competition claims. However, he rejected a contention that a claim for breach of Article 101(1) TFEU was particularly complex or fell within a developing area of law, concluding that “competition cases […] do not fall within an exceptional category calling for a different approach to the application of s.32(1)(b)” (at [38]).

In sum, although accepting that “the full picture was not available” (at [101]), the Judge felt that “the Claimants are focussing on matters about which they might want reassurances before bringing a claim, but which do not constitute matters which are essential to pleading it” (at [103]). He emphasised that this was “not a case of a ‘secret cartel’ operating over many years without the knowledge of victims and the authorities” but one which was a matter “of public knowledge, which had been notified to the competition authorities” (at [106]).

This is now the leading case on the application of s. 31(1)(b) LA in competition damages cases. In some ways, it acts as a counterbalance to the alleged ‘special pleading’ rules applicable to competition claims, placing a considerable onus on potential claimants to be proactive when the whiff of a potential infringement of competition rules enters the public domain.

Indeed, this is an interesting result given that the claimants candidly accepted that “[t]he trigger for the proceedings was […] the dismissal of the appeal against the 2007 MasterCard Decision by the General Court in May 2012” (at [105]). This was, apparently, too late. Such a finding reinforces the sentiment that the English approach to the Masterfoods line of case-law is correct in encouraging national proceedings to go ahead as far as possible before EU proceedings are concluded.

Finally, the Court was well aware of the backdrop to the issue of limitation in the context of private damages claims. The Claimants pointed to the draft Article 10 of the new Directive on such claims (the corrected version of which the Council is expected to adopt soon). This provides that national limitation periods must (i) be at least 5 years (ii) shall not begin to run until the infringement of competition law has ceased and (iii) are triggered only when the claimant “knows or can reasonably be expected to know” of (a) the behaviour and the fact that it infringes competition law (b) the harm he has been caused by that behaviour and (c) the identity of the infringer. The Judge emphasised, however, that this was not the present state of the law and so would not affect his reasoning. Nevertheless, in the future the approach may well be more generous to claimants, particularly in cartel cases where the infringement is often ‘secret’. But even in such cases, if any public information identifies key facts, potential claimants are put on notice. Claimants will need to be proactive and defendants vigilant to challenge any perceived delays in initiating litigation.

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High Court tests the limits of confidentiality in EC infringement decisions

The European Commission came in for some stern criticism from the High Court this week, in a case which looks set to test the boundaries of confidentiality in EC infringement decisions: see Emerald Supplies v BA [2014] EWHC 3515 (Ch).

The background is the 2010 EC decision fining BA and eleven other airlines a total of €800m for operating a global cartel for air freight services. Hundreds of claimants are seeking damages, and they sought disclosure of a copy of the decision – which, remarkably, has not yet been made public by the EC.

The problem is that the decision apparently contains comments alluding to potential wrongdoing of various airlines which those airlines were unable to appeal – – either because they were not addressees of the decision, or because the offending passages were not essential to the operative part of the decision and therefore could not be challenged on appeal. Relying on the case of Pergan Hilfsstoffe Fur Industrielle Prozesse GmbH v Commission [2007] ECR II-4225, those airlines argued that disclosing such references would breach the EU “presumption of innocence”, and that it should not be permitted.

Whether Pergan does require all such references to be withheld is a complex question. The judge in Emerald (Peter Smith J) was initially prepared to accept that Pergan does impose such a requirement. Eventually, however, exasperated by the practical difficulties such a rule would create, he changed his mind.

The judge’s first order (made in April) was for affected parties to agree on redactions to protect the so-called “Pergan rights”. This resulted in a document so comprehensively redacted that it was useless to the claimants. The claimants then suggested that the judge himself carry out the redactions necessary to protect confidentiality, but he considered the task to be simply impossible in the circumstances. Instead, he ordered the disclosure of the decision – unredacted except for ‘leniency materials’ and material subject to legal professional privilege – to a confidentiality ring comprising the claimants and the Part 20 defendants (a group which includes various airlines, including non-addressee airlines who have not seen the decision).

The disclosure will be subject only to the condition that the claimants were barred from using the decision to commence proceedings without the permission of the court. That restraint, the judge thought, allays all legitimate Pergan concerns: namely, that the decision could contain observations or findings that any airline had not had an opportunity to deal with; that the decision contained material that would cause damage if it went into the public domain; and that the decision might identify other people against whom claims could be brought. Through a confidentiality ring subject to that condition, the judge thought, all the parties – the claimants, BA, and the Part 20 defendants alike – would enjoy an equality of arms in prosecuting and defending the action.

Complaining that the EC had failed to comply with the duty of sincere co-operation between the Union and Member States (Article 4(3) of the TEU), the judge rejected the submission that his approach would rob any future decision on redaction by the EC of any practical effect – placing great emphasis on a letter by the EC to the Court in which the Commission appeared to be content for the Court to decide the question.

These types of issues will arise in many cases, including cases where the EC has published a public version of the decision (since there will still be a question as to whether addressees of the decision should be required to disclose the confidential version of the decision in the context of a private damages claim). However, the fact that there was no public decision in this case undoubtedly made the judge’s job more difficult. It is difficult to disagree with his criticisms of the EC’s “one speed molasses like approach” to redacting its decisions, which he said was “completely unacceptable” (paragraph 3 and 27). The appropriateness of the Judge’s decision will be for the Court of Appeal to decide in the coming months: recognising the importance of his decision, he has granted permission to appeal.

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Competition law and public services: insights from the OFT report into higher education

Recent public sector reforms have relied on choice and competition to increase the quality and quantity of service provision, whilst also controlling cost, through a programme known as Open Public Services. The use of choice and competition gives rise to public service markets, and ensuring that these markets function effectively is one of the Competition and Markets Authority’s declared objectives. Higher education constitutes one of the larger public service markets, and to understand how the market for undergraduate education in England functions, in October 2013, the OFT launched a Call For Information. Amongst other things, the OFT wished to consider whether it was plausible for universities to have arrived at a uniform fee for all their undergraduate courses without colluding, and whether the way prospective undergraduates apply for university places could harm competition between institutions, to the detriment of students. The OFT’s higher education report, published in March 2014, provides useful insights into the role of competition law in public service markets and of the challenges of applying competition law in public service markets.

Competition Advocacy

One of the OFT’s clearest findings was that the regulatory environment, rather than service providers, may limit choice and prevent competition. There is also a perceived tension between cooperation and competition, and a more general debate over the desirability of choice and competition in the public service context. This gives an indication of just how much work the CMA, using competition advocacy powers available under section 7 of the Enterprise Act 2002, has to do in order to explain the extent to which choice and competition are an appropriate framework in which to provide public services.

The CMA has moved a long way from the OFT’s initial view, set out in its BetterCare decision and Policy note 1/2004, of competition law’s limited relevance to public service markets. Since 2004 a number of documents (for example: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, and 16) indicate just how keen the CMA and its predecessor have been to show that competition can and has been used to create incentives to improve quality; reduce cost; or innovative in the provision of public services. What we have yet to see is enforcement action.

The substantive approach

The OFT considered whether the way prospective undergraduates apply for university places using the centralised admission system, UCAS, could harm competition between institutions, to the detriment of students. Two features of the application process are that students are permitted to apply for no more that five courses in an application cycle and are prohibited from applying to both the University of Oxford and the University of Cambridge in any given application cycle (para. 6.24-6.30).

Both measures can be described as restrictions of choice. There is an idea that the fundamental purpose of competition law is to protect consumer choice, so that the examined measures would immediately be suspect. The importance of choice has also been emphasised by the CAT (see, for example, paras 255, 468 and 585 of Genzyme v OFT [2004] CAT 4). The OFT concluded that it is “unlikely” that the restrictions on choice “would result in a risk that either institution could manipulate price, quality or choice, to the detriment of students.” (para. 6.27). The OFT arrived at this conclusion by considering competition in two stages: pre-application (when applicants are choosing to which institutions they would like to apply), and post-application (once applicants have submitted their UCAS forms). The OFT report considers the freedom to choose which institutions to apply to drives the competitive response on the supply-side so that competition is most important in the pre-application phase:

“the main factors on which higher education institutions compete to attract students – course features, institutional facilities and tuition fees, for example – are generally set in the pre-application period” (para. 6.27).

Pre-application there is no restriction on choice or competition, since: “Applicants are free to apply for any course offered across all UK higher education institutions, and institutions compete to attract students.” (6.34).

The OFT’s benign treatment of the Oxbridge restriction raises the question of whether it is open to other institutions to adopt similar restrictions. For example, would it be compatible with competition law for LSE, UCL, KCL, Imperial, and QMUL to enter into an agreement whereby a student may apply only to one of the institutions? The OFT analysis suggests that it would be entirely compatible with competition law because there is plenty of pre-application competition and post-application there remains competition from the four other institutions to which the student has applied (6.27). Even if restrictive, the OFT report suggests that the agreement would be justified if it enabled “a more in-depth assessment of each candidate” (6.29). This does not seem to be the correct answer, but the OFT report does not indicate why it is incorrect, or how to distinguish the Oxbridge limitation from this hypothetical case.

Since competition is not for applications but for acceptances, it would seem sensible to consider three phases in the process: in phase I the student makes an application; in phase II universities issue offers to applicants; in phase III the student compares offers and decides which, if any, to accept. The institution’s chance of success in phase III is determined by the offer it makes in phase II. Further, the fewer offers a student receives in phase II the greater the chance of an institution’s offer being accepted in phase III. The potential dampening of competitive fervour that might result from both measures can then be seen from a letter published in the THES to justify the prohibition on applying to both Oxford and Cambridge, claiming:

“If a significant proportion of the applicants to whom [Oxford] offered places were liable to go instead to Cambridge, then to avoid lots of places going to waste, we would have to treat admissions as a central university process, playing the statistics of large numbers rather than selecting the students for our own colleges.”

The justification I see is that a student may not apply to both Oxford and Cambridge because in phase III an offer of a place at Oxford may be spurned in preference for a place at Cambridge. In order to ensure that the offer were not rebuffed the institution would need to increase the attractiveness of its offer or accept applicants may decide to take up a more attractive offer. Perhaps the student would be swayed to accept the offer if it included a scholarship or other discount on the cost of completing the course; or if the fees were generally lower; or because the offer included a guarantee of accommodation for the duration of the course—i.e., competition on things that matter, over and above that which occurred in phase I.

There is both US experience of competition law being applied to similar measures, and a debate as to whether the competition that exists is of the wrong sort (1, and 2). The OFT consider that even if the measures do restrict competition the restriction may be justified on the grounds that “since each additional choice that an applicant makes puts a cost on the institution, it may be efficient to restrict the number of choices that each applicant can make” (6.35), particularly since this may enable “a more in-depth assessment of each candidate” (6.29). The number of applications to Oxford has increased by 46% in the past 10 years. Cambridge has also seen an increase. It is thus not clear that the restrictions are necessary to limit the number of applications, particularly since there is no absolute limit on the number of applications institutions can receive and institutions are actively engaged in attracting applicants.

Further, even in public service markets, any restriction must be “to the benefit of students” or users (6.35). The identified benefits would appear to accrue to the institutions rather than to the students. The OFT held over 50 meetings and analysed over 80 submissions (1.5; and 2.12). Who the OFT met and the content of the written submission is not intended to be disclosed, the OFT stating: “For reasons of commercial confidentiality, material may appear in an anonymous, aggregated, or otherwise redacted form” (para. 2.9). This prevents the veracity and strength of the submissions being tested or countered through public debate.

The OFT approach may be compared to antitrust action currently playing out in the US—CollegeNet, Inc., v The Common Application, Inc., filed on 8 May, 2014. CollegeNet is challenging measures it considers to prevent or discourage applications to institutions other than through Common Application, to the detriment of students. This action may provide a useful review of the benefits of a single application system and of the restrictions necessary for such benefits to be obtained. In any event, the CMA response to the OFT report is eagerly awaited.

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Skyscanner: CAT quashes commitments in the online booking sector

In a judgment handed down on Friday, the Competition Appeal Tribunal has quashed the Office of Fair Trading’s decision to accept commitments in the online hotel booking sector. As the first case to consider such commitments, Skyscanner Ltd v CMA [2014] CAT 16 contains some helpful guidance, albeit that Skyscanner’s success actually hinged on a fairly narrow point of regulatory law.

The OFT spent three years investigating the online hotel booking market, concerned about agreements which restricted the ability of online travel agents to discount the price of hotel rooms. Eventually, a couple of online agents and hotel groups offered commitments. Under the commitments, the agents would be allowed to offer limited discounts, but only to customers who had previously booked through that agent and then joined a “closed group” of customers entitled to a discount. The size of the discount would only be visible to members of the closed group.

Under section 31A of the Competition Act 1998, the OFT (now the CMA) may accept commitments to address its competition concerns. When commitments are accepted, the OFT’s investigation comes to an end. A decision to accept commitments can be appealed to the CAT, but only on judicial review grounds.

The CAT heard much debate about how far commitments have to go towards meeting the OFT’s concerns: must they “fully address” the OFT’s concerns, or could the OFT accept commitments which only partially address their concerns? The Tribunal’s answer, at paragraph 119, is that:

commitments will normally be accepted where the competition concerns are readily identifiable and fully addressed by the commitments; and the proposed commitments are capable of being implemented effectively and, if necessary, within a short period of time.

However, this statement of principle needs to be seen in context. On one view, the commitments in this case did not actually “fully address” the OFT’s concerns – – they did not completely remove the restrictions identified in the Statement of Objections. The commitments allow online agents to discount a bit, but do not give them unrestricted freedom to discount. No matter, says the Tribunal: the OFT is entitled to “strike a balance” between its initial position, as set out in the Statement of Objections, and the opposing views of the parties under investigation.

So much for the general principles – now for Skyscanner’s victory, which I (perhaps unfairly) described above as hinging on a narrow point of regulatory law.

Skyscanner is not an online travel agent, and it was not involved in the OFT’s investigation. It is a price comparison website for consumers to compare prices offered by various online agents and hotels. The problem with the commitments, from Skyscanner’s point of view, is that the “discounted” prices would only be visible to members of the agents’ “closed groups”. So, if a consumer were to search for a hotel room on Skyscanner, he would only see the non-discounted prices. If he wanted to know the discounts offered by any online agents, he would need to log in to that agent’s website (assuming he is a member of their group) and see what price they could offer him.

Skyscanner made these points during the statutory consultation which the OFT was required to undertake before accepting the commitments. It argued that the commitments would lead to a lack of transparency, damage price comparison sites, and therefore harm inter-brand competition (i.e. competition between online agents).

The public law duties of regulatory bodies when they consult are well known. Among other things, they must conscientiously take consultation responses into account when they make their ultimate decision. The unusual feature of this case was that the OFT indicated to Skyscanner that it could not take its concerns further without evidence of possible harm, which Skyscanner did not provide. Thus, the OFT said, it did take Skyscanner’s response into account, but in the absence of further evidence, it was given little weight.

The Tribunal held that the OFT’s approach was unfair. It was not right to require Skyscanner to provide further evidence for its concerns. Rather, the Tribunal held at paragraph 90:

If a consultation response raises an important and obvious point of principle, it is for the authority to examine it further. This is particularly so where the authority has not carried out an analysis of the economic effects of the practices which it proposes to address with its commitments decision and where that decision itself may generate its own economic effects within the market.

The matter will now go back to the CMA for reconsideration. Cynical observers of judicial reviews like to emphasise that winning a case on a procedural point is often a pyrrhic victory, as you may end up with a better procedure but the same ultimate decision. In this case, however, Skyscanner may take some comfort from the CAT’s clear sympathy for its concerns. The smart money may be on the commitments being tweaked to make the discounted prices accessible to price comparison sites – or otherwise on the investigation being reopened.

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MasterCard miffed as CJEU dismisses appeal

Yesterday’s CJEU judgment in the MasterCard case is a major defeat for a company which faces a huge number of private damages actions from retailers. The judgment also examines some interesting legal points, including in particular relating to the use of “counterfactuals” in competition cases.

The background is the Commission’s decision of 19 December 2007 holding that the multi-lateral interchange fees (“MIFs”) set by MasterCard unlawfully infringed Article 101 TFEU. MIFs are fees charged in relation to cross-border bank card payments. Specifically, banks which issue cards to their customers (issuing banks) charge MIFs to banks which provide merchants with services enabling them to accept card payments (acquiring banks). MasterCard, formerly owned by banks participating in the MasterCard payment system, is responsible for setting the MIFs.

The Commission found that the MIFs were passed on in full by the acquiring banks to their merchants. By setting a MIF, MasterCard had essentially set a minimum charge which acquiring banks would charge merchants. The MIFs therefore distorted competition in the market in which acquiring banks compete for merchants’ business.

MasterCard’s application to annul the Commission’s decision was dismissed by the General Court in its judgment of 24 May 2012. Its appeal to the CJEU, and the cross-appeals of several intervening banks, raised four central points.

First, MasterCard argued that it had not been an association of undertakings since 2006, when it became a publicly listed company and underwent changes to its governance and structure. The CJEU rejected this argument. The General Court had rightly considered that there continued to exist a commonality of interest between MasterCard and the participating banks. MasterCard’s further argument that it could not be regarded as an association of undertakings where it was required to pursue the interests of shareholders and not solely the interests of participating banks was also dismissed. Only a body with regulatory powers which had to have regard to public interest criteria in making decisions could, according to established case-law, fall outside Article 101 TFEU in this way.

Secondly, MasterCard argued that the General Court wrongly determined that the MIF was not objectively necessary to the operation of the card payment scheme. MasterCard claimed (among other things) that the General Court had applied the wrong test: the correct test was that a restriction was objectively necessary if it was impossible or difficult to achieve the end in question without it. The CJEU dismissed that argument, confirming that a restriction is only objectively necessary if the beneficial goal it serves is impossible to achieve without it.

The third central point relates to the use of counterfactuals – in other words, hypothetical scenarios showing what would or could have happened if it were not for the anti-competitive conduct. The CJEU confirms that, when deciding whether a restriction is objectively necessary, a counterfactual simply has to be “realistic” and “economically viable” (paragraph 111).

However, when deciding whether there is a restriction of competition, different considerations arise. The CJEU emphasises that it is important, when addressing that issue, to look at the “actual context” in which competition would apply in the absence of the alleged restriction (paragraph 164). It is not entirely clear what degree of plausibility should be required of a counterfactual for the purposes of assessing whether there is a restriction of competition, but it is clear that it is a higher threshold than that which applies in the context of objective necessity.

Fourthly, Lloyds Banking Group argued in its cross-appeal that the General Court had erred in determining that no exemption under Article 101(3) applied. In particular, it considered only benefits to merchants, and not the benefits of the MasterCard payment system in general. The CJEU again rejected this argument. It was the advantages of the MIF itself which had to be weighed, not those resulting from the MasterCard payment scheme in general. Moreover, the General Court had considered benefits accruing to cardholders and correctly concluded that they were not of such a character as to outweigh the competitive disadvantages in the separate market for acquiring banks.

The determination of the appeal will now allow private actions against MasterCard to proceed in earnest. Time began to run yesterday for follow-on claims in the CAT, and many retailers are already pursuing MasterCard in the High Court. The High Court claims tend to take the Commission’s decision as a starting point, and then apply its reasoning by analogy to cover not only the kinds of cross-border payments in issue in the decision, but also all domestic payments. The only real crumb of comfort for MasterCard may be the thought that, unusually in this type of case, retailers are also seeking to rely on the reasoning in the decision to sue its main competitor, Visa.

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The Cost of Collusion

The Competition Bulletin is pleased to welcome a guest blog from Louise Freeman of King & Wood Mallesons LLP. Louise specialises in (among other things) complex competition litigation. In this blog, she addresses the implications of the recent CJEU decision in Case C‑557/12 Kone AG and others v ÖBB-Infrastruktur AG.

***

Anyone with even a cursory awareness of the existence of competition law will know that engaging in anti-competitive behaviour can be a costly exercise.  If one were to imagine a thoughtful and well-informed potential cartelist weighing up the cost/benefit analysis before deciding whether to pick up the phone to his competitors to kick off a cartel in the European market for widgets, just what would he be weighing up in that analysis and how does the recent Kone decision affect his analysis?

The potential benefits of collusive activity will, of course, be market and infringement-specific but may well include increased selling prices, certainty of market share, and avoiding competitive pressures.  Those anticipated benefits would have to be significant, however, to outweigh the potential downside cost risk if the cartel is uncovered.  Our potential cartelist could be exposing his company not only to the significant fines that could be levied by the relevant competition authority but also to the full and expanding scope of civil liability for his actions (as well as exposing himself to the risk of imprisonment in the UK or potentially elsewhere).

That civil liability will include liability to his customers for the increase in the price charged by his company for the widgets.  In addition, across most of Europe it will also include potential liability for the price increases levied by those competitors to whom he picks up the phone or has a chat over dinner, on the basis of joint and several liability of joint tortfeasors.  Although this remains untested in England, the better view would seem to be that one cartelist can be pursued for loss caused by all cartelists.

This is the case even if some or all of those competitors manage to overturn the decision against them in light of the Supreme Court decision in Deutsche Bahn (see the blog here).  In that case, the Supreme Court applied ECJ caselaw that a non-appealing party does not take the benefit of a successful appeal by another addressee and so remains bound by the original decision identifying the scope of and parties to the cartel, regardless of other successful appeals.

Now our potential cartelist should also very seriously consider the risk that his competitors to whom he does not pick up the phone will increase their prices as well, under the protective umbrella of the cartel (an “umbrella effect”), and that customers who buy from those competitors will also look to his company for redress (claiming “umbrella damages”).  This risk is enhanced as a result of the recent decision of the Court of Justice of the European Union in Kone.  The CJEU found that national courts are precluded from excluding liability of cartelists for umbrella effects.  Umbrella damages have long been debated in academic literature but this was the first time that the CJEU has had to tackle them.

The judgment makes it clear that the question of whether umbrella damages are available is a question of fact.  Whilst acknowledging that it is for domestic courts to lay down rules as to the application of the concept of a causal relationship (at paragraph 24 of the judgment), it goes on to find that a “victim of umbrella pricing may obtain compensation for the loss caused by the members of the cartel… where it is established that the cartel in issue was, in the circumstances of the case and, in particular, the specific aspects of the relevant market, liable to have the effect of umbrella pricing being applied by third parties acting independently, and that those circumstances and specific aspects could not be ignored by the members of that cartel” (paragraph 34).

As the Court also found that umbrella damages are “one of the possible effects of the cartel, that the members thereof cannot disregard” (paragraph 30), the decision seems likely to impact the application of national tests of foreseeability.  The decision is an important example of how the EU principle of effectiveness may require national rules to be reconsidered, to ensure that a remedy is available (or could be, depending on the facts) in such circumstances.

Kone therefore gives our potential cartelist even more food for thought and adds an additional weight to the “cost” side of his scales.  Whether this, together with less readily quantifiable effects such as reputational damage and the impact on commercial relationships, would lead our potential cartelist to conclude that the costs outweighed the benefit would no doubt depend on his own and his company’s current situation – as everyone knows, cartels are often borne of difficult economic pressures.  Certainly, for a company uncovering anti-competitive behaviour within its ranks, Kone indicates that the cost of civil liability for collusion may be even higher than many commentators had once believed.

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Dogma in telecoms, cream for the CAT: 08- numbers in the Supreme Court

The Supreme Court yesterday handed down judgment in British Telecommunications plc v Telefónica O2 UK Ltd & Ors [2014] UKSC 42. Reversing the decision of the Court of Appeal (blogged on here by Emily Neill), Lord Sumption for a unanimous Supreme Court held that there had been no basis for Ofcom to disallow BT’s introduction of “ladder pricing” in wholesale termination charges for certain non-geographic telephone numbers (specifically 080, 0845 and 0870, whence the litigation’s popular name among telecoms lawyers: “08- numbers”). Continue reading

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