Recovering penalties from directors and employees: Safeway revisited

Can a company which has been fined for anticompetitive conduct seek to recover the fine from the directors and employees responsible by suing them for damages?

The question is moot in light of last week’s Supreme Court judgment in Jetivia SA and another v Bilta Ltd (in liquidation) and others [2015] UKSC 23, which casts some doubt on the Court of Appeal’s decision on this issue in Safeway Stores Ltd v Twigger [2010] EWCA Civ 1472.

Safeway had settled an OFT investigation into the alleged dairy cartel and agreed to pay a penalty. It then sought to recover the penalty from the directors and employees who had engaged in the anti-competitive conduct, alleging breaches of various contractual, fiduciary and tortious duties. On the question of whether it was entitled in principle to recover the penalty as damages, Safeway succeeded in the High Court but lost in the Court of Appeal. The problem was that its claim relied on its own unlawful act and was therefore barred by the illegality defence, ex turpi causa.

Although the illegality defence has been the subject of a series of House of Lords and Supreme Court decisions over recent years, there is still a surprising lack of consensus on certain fundamental points.

The most important area of disagreement for these purposes relates to the scope of what used to be known as the “fraud exception”. I say it “used to be known” that way because there are passages in Jetivia that suggest that, since the exception is wider than just fraud, it should now be known as the “breach of duty exception”. There are also passages which suggest that it isn’t really an exception at all, but rather an aspect of the general rule. It may be best simply to call it the Hampshire Land principle, after the 1896 case in which it was first clearly stated. What it amounts to is the proposition that, in certain circumstances, an agent’s knowledge of his breach of duty cannot be attributed to his principal in order to invoke the ex turpi causa principle to prevent the principal from suing the agent for breach of duty.

The question is whether the breach of duty exception would allow a company fined for an anti-competitive infringement to recover the penalty as damages from its employees and officers.

The essential reasoning in Safeway Stores was that, since the statutory infringements could be committed only by Safeway “directly” or “personally”, and not by the directors and employees, to allow Safeway to rely upon the breach of duty exception would be inconsistent with the statutory scheme and could not be permitted. It is that reasoning which the Supreme Court’s judgment in Jetivia calls into question.

Lords Toulson and Hodge offer the most critical analysis. At paragraph 160 they note that Safeway’s “direct” liability under the Competition Act arose through the acts of its employees as its agents, but agreed with an article by Professor Watts that:

“… it simply does not follow that because under the law of agency a principal becomes directly a party to an illegal agreement as a result of its agents’ acts, it is thereby to be deprived of its rights under separate contracts, not otherwise illegal, with its employees and other agents to act in its interests and to exercise due care and skill. Indeed, it would not follow even if the 1998 Act were found to have invoked some sui juris concept of direct liability other than the law of agency. In the absence of some countervailing policy reason, it is not just for someone who falls foul of a statute by reason of the acts of its employees or other agents to add to its burdens and disabilities by depriving it of any recourse against those employees or other agents.”

Lords Toulson and Hodge did, however, state at paragraph 162 that Safeway Stores may have been correctly decided for another reason, namely that the policy of the Competition Act might be undermined if undertakings were able to pass on their liability to their employees.

Lord Sumption had little to say about Safeway Stores: he described its reasoning in paragraph 83 but did not explicitly endorse it. It is interesting to note that, in an extra-judicial context, Lord Sumption has previously raised a doubt over whether the policy of the Competition Act really would be undermined if undertakings could pass on their liability to their employees. The alternative analysis would be that the best way to ensure compliance with the Act is to enable companies to take action against those responsible for breaching it.

Lord Neuberger, with whom Lord Clarke and Lord Carnwath agreed, indicated at paragraph 31 that he would take a great deal of persuading that the Court of Appeal did not arrive at the correct conclusion in Safeway Stores, but he expressed no concluded view on the topic.

Jetivia, which on the face of it had nothing to do with competition law (it concerned a VAT fraud committed by the directors of a company in liquidation), therefore sets the scene for a fresh challenge to the Safeway Stores decision.

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Fresh grounds and evidence before the CAT

On the face of it, BT was the main winner in this week’s ruling from the Competition Appeal Tribunal: see British Telecommunications plc v Office of Communications [2015] CAT 6. However, the decision, which makes interesting comments on the rights of parties to adduce new grounds and evidence on an appeal, raises important notes of caution to all parties which may wish to appeal or intervene in future cases.

The case is the latest stage in the disputes between BT and various mobile network operators (“MNOs”) over BT’s wholesale termination charges.

This particular dispute had been resolved by Ofcom in favour of the MNOs, pursuant to its dispute resolution powers in sections 185-191 of the Communications Act 2003. On BT’s appeal, however, Ofcom accepted that its determination was flawed in light of the Supreme Court’s subsequent decision in the related 08 numbers case (see our blog here). Ofcom also decided that, given that the matter was essentially a dispute between commercial parties, it was not going to take a particularly active role in the appeals. BT will therefore have to battle the appeal out against the MNOs, which have been given permission to intervene.

The principal question at this stage was what grounds and evidence the MNOs should be able to rely upon. Although the issue arose in the context of interveners, the CAT stressed that, whilst it would not lay down general rules about the rights of interveners to adduce new grounds or evidence (§51), in this particular case the MNOs are essentially in the same position as the appellant (§54). Just as any winning party in civil litigation would be able to ask the appeal court to uphold the lower court’s decision on different grounds, so too the interveners in this case must be able to ask the CAT to uphold Ofcom’s determination on grounds different to those relied on by Ofcom.

The CAT also held that, in deciding whether the interveners should be able to advance fresh grounds, it should apply “substantially the same test” as the test for fresh evidence established by the Court of Appeal in British Telecommunications plc v Office of Communications [2011] EWCA Civ 245.

Both of the above decisions – that interveners may be in the same position as appellants, and that the test for admitting new grounds is substantially the same as that for fresh evidence – establish important principles which are sure to be relied on in future cases.

Against that background, and applying the relevant principles to the facts of this case, the CAT took a rather stern approach to the question of which grounds and evidence the interveners should be able to advance. In broad summary.

  1. The first new ground was not allowed because it was not raised before Ofcom and was not within the published scope of the dispute.
  2. The second new ground was not allowed because, although it had been raised before Ofcom, it was not within the published scope of the dispute or in the provisional determination, and Ofcom could not be expected to “trawl through correspondence” to identify which points were in issue.
  3. The MNO’s third point was not allowed because, although the ground was live before Ofcom, their proposed intervention relied on fresh evidence and there was no good reason why that evidence had not been adduced before Ofcom.
  4. The MNO’s fourth point, which also relies on fresh evidence, was allowed. It is difficult to see how this decision could have gone any other way, given that the point had been live before Ofcom but further evidence was required to resolve it.

One final point of interest is that the CAT had to decide whether, given that Ofcom had admitted that the determination was legally flawed, the CAT should remit the outstanding issue for Ofcom to decide, or whether instead to decide it for itself. The CAT stated that ordinarily it would be predisposed to remit any outstanding issues to the primary decision-maker. On the facts of this case, however, given that the issue was relatively straightforward, the proceedings were well-advanced, and also that Ofcom had adopted a neutral stance, the Tribunal decided that it will resolve the outstanding issue itself at a future hearing.

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The ECJ on the Bus Lane Wars

Minicab giant Addison Lee recently suffered another defeat in the latest battle in the bus lane wars – this time at the ECJ. The outcome is no great surprise, but the Court’s approach to the question of when inter-state trade is affected is likely to be of broader interest.

On a reference from the Court of Appeal, the ECJ ruled that the policy of allowing black cabs but not minicabs to use London bus lanes did not appear to meet some of the criteria for prohibited State Aid under Art 107(1) TFEU (Eventech Ltd v The Parking Adjudicator Case C-518/13, 14 January 2015). The final decision was one for the Court of Appeal, the ECJ emphasised, but it’s now all but certain that Addison Lee’s State Aid argument will fail in that Court, as it had at the High Court.

Many will be familiar with the widely-reported background to the decision. In 2012, Addison Lee exhorted its drivers to drive in London bus lanes, in a provocative challenge to the long-standing policy of allowing only buses and black cabs but not minicabs or other vehicles to drive in such lanes. Two Addison Lee drivers took up the challenge were duly served with penalty charged notices, upheld on appeal by the Parking Adjudicator. Addison Lee (through Eventech Ltd, the registered keeper of the company’s minicabs) challenged the validity of one of the statutory orders underlying the policy, arguing that it was Wednesbury unreasonable and contrary to European and competition law, including the Art 107(1) prohibition against State Aid.

Art 107(1) provides (in summary) that any aid granted by a Member State or through State resources that distorts competition is incompatible with the internal market so far as it affects trade between Member States. Mr Justice Burton upheld the validity of the order and by extension the policy, dismissing Addison Lee’s Art 107(1) and other arguments (Eventech Ltd v The Parking Adjudicator [2012] EWHC 1903 (Admin)). Eventech was granted permission to appeal but the Court of Appeal stayed the proceedings and referred several questions on the applicability of Art 107(1) to the ECJ for a preliminary ruling. In summary, the ECJ held:

  1. The bus lanes policy did not involve the use of State Resources because there was no sufficiently direct link between the advantage given to the beneficiary (i.e. black cabs) and a reduction or risk to the State budget (§34).
  2. The policy was not selective – i.e. discriminatory between operators who were comparable – because of the factual and legal distinctions between black cabs and minicabs, such as the requirement that black cabs have wheelchair access and that their drivers have a “particularly thorough knowledge of the city of London”(§60).
  3. There was no de minimis threshold below which inter-state trade could not be affected under Art 107(1) (§68). Here, it was conceivable that that there might be an effect on trade between Member States, as the policy made it less attractive to provide minicab services in London and thereby reduced opportunities for foreign minicab operators (§70).

Much of the judgment will surprise no one, although the reasoning in parts is rather thin – how, one might ask, is The Knowledge at all relevant to selectivity?

Of broader interest is the expansive approach to the question of when inter-state trade is affected for the purposes of Art 107(1). This, after all, was a policy about a bus lane in central London, and there is no bar to citizens of any Member State driving either black cabs or minicabs – facts that the Court of Appeal took care to mention in its question to the court on the issue. Future claimants will be tempted to do exactly what Mr Justice Burton had deprecated: to invoke European law to challenge a regulation of basically domestic effect.

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Gallaher and Somerfield: will the CMA change its approach to settlement?

The latest episode in the tobacco litigation saga has seen Gallaher and Somerfield’s attempt to benefit from the collapse of the OFT’s case in November 2011 rejected by the High Court in R (Gallaher Group Limited and Ors) v Competition and Markets Authority [2015] EWHC 84 (Admin). Although the CMA will breathe a sigh of relief, Collin J’s critical judgment will give it food for thought on how it conducts early resolution negotiations in competition infringement cases in future.

The saga began with the OFT’s decision on alleged price fixing agreements between tobacco manufacturers and retailers. During the course of the OFT’s decision making process, which stretched from March 2003 to April 2010, Gallaher and Somerfield chose to enter into early resolution agreements (ERAs) admitting infringement of the Chapter I prohibition in return for reduced penalties. Other retailers and manufacturers appealed the OFT’s final decision. During the hearing of those appeals in late 2011, the OFT’s theory of harm fell apart before the CAT and its attempt to cobble together what was memorably labelled a “Frankenstein” case on liability out of its ruins failed (see here).

Gallaher and Somerfield, in opting to stick with their early resolution rather than appeal, had chosen badly. Their attempt to obtain leave to appeal out of time initially succeeded before the CAT, but the decision was overturned by the Court of Appeal, which stressed the need for legal certainty and finality (see our previous blogs on each decision: here and here).

A lifeline for Gallaher and Somerfield appeared, however, in the form of a statement on the OFT’s website in August 2012 that it was making a repayment to another retailer, TMR, which had also entered into an ERA, pursuant to assurances the OFT had made to TMR in 2008. It subsequently appeared that the OFT had assured TMR that if another party successfully appealed against the OFT’s decision, the OFT would grant TMR a corresponding reduction in its penalty. Gallaher and Somerfield sought similar payments, arguing that they should have been given the same assurances. When the OFT rejected these requests, Gallaher and Somerfield commenced judicial review proceedings, alleging unfair treatment in the negotiation of the ERAs.

On the issue of fairness, Collins J not only found for the claimants but levelled some criticism at the OFT. He found that assurances were indeed given to TMR, contrary to the OFT’s contention that the negotiations in this respect were inconclusive, and further stated that the matter had been “badly mishandled” by the OFT (§37). Moreover, the failure to notify other parties negotiating ERAs of the assurances given to TMR was contrary to the requirements of fairness and equal treatment placed on the OFT by the Competition Act and further contained in its own guidance paper on settlements. Collins J stated the principle as follows (§39):

Anything which can act as an inducement to enter into an ERA is likely, if not limited to the particular circumstances of a party, to be material and should be put to all parties. To give one party an unknown advantage where there are no special circumstances pertaining to that party is in my judgment clearly unfair.

The second issue which Collins J had to decide, however, was whether the claimants should benefit from the error the OFT had made in granting TMR the assurances and so receive payments analogous to those received by TMR. Notwithstanding his finding that the OFT had acted unfairly, Collins J held that Gallaher and Somerfield should not receive such payments. In doing so, he relied on the principle from a tax case, Customs and Excise Commissioners v National Westminster Bank plc [2003] STC 1072, that a mistake should not be replicated where public funds were concerned (§50). Accordingly, Gallaher and Somerfield’s claims were dismissed. As the Court of Appeal had done before him in its judgment refusing leave to appeal out of time, Collins J stressed that the claimants were expertly advised and fully aware that entering into the ERAs would in all likelihood make them unable to benefit from a successful third party appeal (§51).

The CMA has escaped having to make payments to Gallaher and Somerfield as it did to TMR. Its knuckles have, however, been sternly wrapped over its conduct of the early resolution negotiations. We may in future see the CMA conduct settlement processes more transparently, as it strives to ensure that all matters acting as inducements to enter into an ERA, if not limited to a party’s particular circumstances, are put before all parties.

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Eurotunnel: when buying assets is a merger

When is an asset acquisition a merger? As the Eurotunnel litigation shows, the answer is not clear-cut.

The background is the 2011 liquidation of the cross-channel ferry company SeaFrance. It could not be sold as a going concern, so instead there was an asset sale. Eurotunnel bought three ferries and various other assets including the SeaFrance logos, brand and trade name, computer software, websites and domain names, and IT systems.

The Enterprise Act 2002 provides (in summary) that there is a relevant merger situation if one business acquires, “the activities, or part of the activities, of [another] business.” At the risk of stating the obvious, the focus should therefore be on whether the acquiring enterprise has acquired all or part of the activities of its target.

The OFT decided that Eurotunnel’s acquisition of the SeaFrance assets was a merger and should be prohibited. That decision was the focus of the first Eurotunnel case ([2013] CAT 30, Eurotunnel I”). The CAT held that, to decide whether Eurotunnel had acquired all or part of SeaFrance’s activities, the OFT should have asked three questions: (a) whether Eurotunnel had obtained more than “bare assets”; (b) if so, whether that placed Eurotunnel in a different position than if it had simply gone into the market and acquired the assets; and (c) if so, whether this difference turned what would otherwise be an acquisition of bare assets into an acquisition of the “activities of a business”.

This three-stage approach might seem a rather elaborate way of answering the simple question of whether Eurotunnel acquired some of SeaFrance’s business activities. However, Eurotunnel I was not appealed, and so that is the approach which the OFT (now the CMA) had to adopt when the matter was remitted.

One thing which becomes apparent, on reading the second Eurotunnel case (Eurotunnel II, [2015] CAT 1), is that the three-stage approach endorsed in Eurotunnel I leads to a range of questions about such things as the nature of a “bare asset”, or what kinds of assets Eurotunnel could have purchased on the market, which add a level of complexity to the analysis which is not obvious from the statutory language.

The key issue – which is really the third of the Eurotunnel I questions – is whether what was purchased was the activities of a business. On this key issue, the CAT in Eurotunnel II held that it is “a question of fact and degree” which “calls for the exercise of judgment by the decision-maker for which there is not necessarily a clear-cut answer” (at [74]).

Applying that approach, the CAT upheld the CMA’s decision that Eurotunnel had acquired part of SeaFrance’s business activities. Of particular importance was the fact that the combination of assets purchased enabled Eurotunnel to establish ferry operations more quickly, easily, cheaply and with less risk than had they been purchased on the market. Although it did not purchase the SeaFrance assets as a going concern, the reality was that it obtained much of the benefit of so acquiring them.

One issue which may benefit from further clarification in light of Eurotunnel II is whether it is ever appropriate to treat assets with the potential to be turned into a business activity as though they are already a business activity. The CMA placed some emphasis on the fact that Eurotunnel could, and indeed did, use the acquired assets to resume the business activities previously undertaken by SeaFrance within a very short period of time following the acquisition. That may be an important point, but of course the CAT in Eurotunnel I had held that the fact that (after the acquisition) Eurotunnel resumed SeaFrance’s business activities was not by itself sufficient to make the acquisition a merger.

The line between (on the one hand) the acquisition of a business activity, and (on the other hand) the acquisition of assets with the potential to create a business activity, therefore remains open for debate.

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The costs of intervening

There is an interesting little point on costs buried away in last week’s decision in the “Ethernet” disputes in the Competition Appeal Tribunal (see BT plc v Cable & Wireless Worldwide Plc and others [2014] CAT 20).

Parties which intervene in CAT proceedings generally know that they are unlikely to recover their costs, even if they intervene in support of the party which is ultimately successful. There are, however, various exceptions to that principle – – and, indeed, in the Ethernet case itself some of the intervenors recovered some of their costs from the unsuccessful party.

But what is particularly unusual about the Ethernet decision is that an order was made requiring an intervenor to pay some of the successful party’s costs. As far as I am aware, that is the first time the CAT has made such an order.

The Ethernet disputes involved several appeals. BT intervened in Ofcom’s favour in the appeals brought by communications providers (Cable & Wireless and various others). Relatively early on in the proceedings, Ofcom effectively abandoned its defence on one of the issues in the appeals. BT, however, continued to defend Ofcom’s initial decision. The Tribunal said, at para 25:

“If and to the extent that Ofcom does not seek to resist an appeal but leaves the issue to be contested between the parties to the underlying dispute, we consider that the party in whose favour Ofcom determined the dispute and then intervenes in support of Ofcom’s decision will in practice perform the role of respondent in the appeal. In those circumstances, it may well be just for that intervener to be treated as regards costs in the same way as a private party to an appeal.”

BT was ordered to pay 75% of the appellants’ costs after the date on which Ofcom made it clear it was not defending the reasoning in its decision.

These are relatively unusual facts, but they do raise a further note of caution for intervening parties.

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Applying interest in damages claims

The Competition Bulletin is pleased to welcome the latest in our series of blogs by Oxera Consulting on key economic concepts for competition lawyers. In this blog, Enno Eilts, a Senior Consultant, discusses issues connected with the calculation of interest in damages actions.


Compensation for antitrust and commercial damages is often claimed after a significant delay, sometimes many years after the damage has been suffered. Interest is routinely added to such claims to account for the effects of money losing its value over time, as well as the lost opportunity to the injured party from having the capital at its disposal.

While the recently adopted European Directive on antitrust damages actions will help to iron out some cross-jurisdictional differences (for example, with regard to disclosure and limitation periods), this applies to a lesser extent to the question of applying interest.[1] Here, member states are required to lay down the rules. This makes the application of interest an important consideration for claimants—and defendants—when choosing the forum in which to bring a claim.

So how should the interest component of a damages claim be calculated? And what difference does it make?

This blog post illustrates the importance of the interest component in damages claims, and compares how interest might be applied in the UK, Germany and the Netherlands—the three jurisdictions that currently seem to attract the largest number of antitrust follow-on claims. It then discusses some of the relevant economic considerations when applying interest.

What difference does it make?

The law on applying interest in damages cases is complex and varies between countries. Apart from the period over which interest is to be applied, the central questions relate to the rate that is used (i.e. a statutory or an economic rate) and the methodology applied (simple versus compound interest).

The table below illustrates the difference that using different rates and methodologies for calculating interest can make to the value of a claim in the UK, Germany and the Netherlands. In each example, the claimant incurred a damage of £10,000,000 spread equally over the years 1999 to 2003.


Calculating interest in the UK, Germany and the Netherlands—illustrative examples using typically applied interest rates


UK Germany Netherlands
Value of the claim before adding interest £10,000,000 €10,000,000 €10,000,000
Interest rate used Bank of England base rate +2%[2] Bundesbank base rate +5%[3] European Central Bank base rate +7%[4]
Methodology applied Simple Simple Compound
Value of the claim in 2014 after adding interest £16,600,000 €18,400,000 €31,900,000


Note: The increase in the claim value is calculated on the basis of a damage that occurred between 1999 and 2003 (in equal proportions each year) and is claimed in 2014. The legal questions around calculating interest are complex. The purpose of the above table is to illustrate the effects of using different interest rates and methodologies on the value of a claim, rather than to make the case for or against the use of these rates and methodologies.

Source: Oxera.


The table illustrates that, in the case of damages that occurred between 10 and 15 years ago, the interest component of a claim brought in the UK or Germany in 2014 could increase the value of the claim by 66% or 84%, respectively if simple interest is used. In contrast, applying interest on a compound basis in the Netherlands could more than triple the value of the claim.

Why add interest?

As victims of antitrust and commercial damages tend to be unaware of having been harmed, they often claim compensation only years after the harm was suffered. For example, in the case of the car glass cartel, about a decade elapsed between the start of the cartel period in 1998 and the time when potential victims are likely to have found out that they might have been harmed—i.e. when the European Commission published its decision in 2008.[5]

From an economics perspective, adding interest to a damage amount that was incurred in the past is sensible. This is because £1 today has a greater value than £1 in ten years’ time. Damages awarded ten years ago would therefore have had a higher value to the victim at the time than if they had had to wait until today to be awarded the damage. This is partly because of the loss of value over time (due to inflation), but it is also due to the loss of opportunities (for actually using the money).

Consistent with economic principles, compensation rules in EU law mean that damages awards should include interest. The objective is to place the injured party in the position it would have been in had there been no infringement.[6] This seems to imply not only that the direct damage from the competition law infringement should be reflected when determining the damages awarded to the claimant, but also that compensation for the loss of opportunities due to the deprival of funds should be considered.

However, legal rules and practices vary significantly across jurisdictions, and across cases within jurisdictions. Some approaches to applying interest are somewhat at odds with economic principles—if the objective is, indeed, adequate compensation. One specific issue is whether interest is calculated on a simple or a compound basis. Another is that various jurisdictions stipulate the use of statutory interest rates rather than commercial/market-based interest rates.

What interest rate should be applied?

If the objective is to place an injured party in the position it would have been in had there been no infringement, the relevant question in terms of adding interest is what the party would have done with the funds that it lost at the time. One metric that takes this aspect into account is the cost of capital.

The cost of capital reflects the ‘normal’ returns that a claimant can be expected to earn in the long run. Thus, damages uprated at the cost of capital would capture the expected returns that the claimant could have earned on the amounts lost had they been available for investment.

An alternative option is the risk-free rate. This is usually approximated by the rate on a virtually risk-free investment such as a government bond. The rationale for this is that the repayment of damages is certain once awarded (subject to the defendant’s inability to pay). Using the risk-free rate therefore only compensates the claimant for the time value of money, without a risk component.

As illustrated in the table above, national courts have tended to adopt a ‘middle way’ between the cost of capital and the risk-free rate by applying statutory or quasi-statutory rates of interest. These tend to be based on a central bank’s base rate plus a premium. Using a statutory interest rate is often seen as ‘likely to do rough justice in most cases’ while avoiding the complication of enquiring into the particular financial circumstances of an individual victim.[7]

In principle, a company’s cost of capital can be higher or lower than the statutory interest rate applied by the court, depending on the relevant jurisdiction. Which rate results in a higher or lower value of claim therefore depends on the circumstances of the case and the jurisdiction in which the claim is brought. The risk-free rate, in contrast, is lower than the cost of capital and is also likely to be lower than the statutory interest rate, as the latter usually incorporates a mark-up in excess of the risk-free rate (e.g. defined as base rate + x%, as shown in the table).

Compound or simple?

Interest rates can be applied as simple and compound interest. When applying the simple methodology, interest is calculated solely as a percentage of the principal sum. When the interest is compounded, the calculation includes interest on accumulated interest from prior periods. As such, adding compound interest increases the claim value by a larger degree than adding simple interest.

From an economics perspective, compounding interest is the usual, and conceptually correct, approach. A savings bank, for example, pays interest on a whole balance, including past interest. Nonetheless, there are many instances where the legal framework requires simple interest to be applied. For example, certain provisions in German law explicitly states that interest should be calculated on a simple basis.[8]

However, there does seem to be appetite for change. For example, ten years ago the Law Commission for England and Wales recommended the application of compound interest, as it better reflects commercial reality.[9] In the Sempra Metals case, the UK House of Lords ruling also notes that a claim based on simple interest ‘will inevitably fall short of its true value’.[10]

Interest calculations in damages cases brought in the Netherlands tend to be more in tune with economic principles. Here, interest on past damages is routinely calculated on a compound basis (as illustrated in the table).

Concluding remarks

Courts generally accept that, to adequately compensate victims, interest should be added to damages suffered in the past. However, the rates used and the methodologies applied to calculate the interest component of a claim vary greatly across jurisdictions. This can have a significant impact on a claim’s value.

While some cross-jurisdictional differences will be reduced by the Directive on antitrust damages actions, a significant degree of flexibility is likely to remain with regard to applying interest. This makes the interest component an important aspect of a claimant’s choice of jurisdiction for bringing a claim.


[1] Directive of the European Parliament and of the Council on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (November 2014).

[2] Case: 1178/5/7/11 2 Travel Group PLC (in liquidation) v Cardiff City Transport Services Limited.

[3] Pursuant to §288 German Civil Code (Bürgerliches Gesetzbuch, BGB).

[4] Article 6:119a Dutch Civil Code (Burgerlijk Wetboek).

[5] European Commission (2008), ‘Summary of Commission Decision of 12 November 2008 relating to a proceeding under Article 81 of the Treaty establishing the European Community and Article 53 of the EEA Agreement (Case COMP/39.125 — Car glass)’, available here.

[6] Joined cases C-295/04 to C-298/04 Manfredi [2006] ECR I-6619, 95.

[7] Credit Lyonnais SA v Russell Jones & Walker [2003] PNLR 2, Laddie J at 27-28.

[8] § 289 Bürgerliches Gesetzbuch.

[9] Law Commission, Pre-Judgement Interest on Debts and Damages, Report Law Com No 287, 24 February 2004.

[10] Sempra Metals Ltd v. Revenue & Anor [2007] UKHL 34, 18 July 2007.

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