The White Paper which first proposed follow-on damages claims promised a “swift” and “streamlined” procedure. The idea was that when a regulator had made an infringement finding, there would be a simple way for victims to claim damages without having to prove the infringement afresh.
In reality, however, many follow-on actions have been bogged down by procedural skirmishes. The Court of Appeal has ruled on the need for the facts alleged in a follow-on claim to be part of the infringement actually found. It has ruled on the extent to which findings of fact in an infringement decision are binding in the follow-on action.
And it has on three occasions turned its attention to the time limits for bringing follow-on claims in the Competition Appeal Tribunal. The basic rule is (to simplify slightly) that time runs for two years starting from the infringement decision or, if the infringing party appealed, from the date of the final appeal decision. The Court of Appeal has held that:
(a) The start of the two-year period will only be delayed by an appeal against liability – an appeal against penalty only does not suffice to delay the start of the period: see BCL No.1.
(b) In a multi-party infringement, an appeal by one party will delay the start of the two-year period for claims against any infringing party: see Deutsche Bahn.
(c) Once the two-year limitation period has expired, the CAT has no power to extend the time limit to allow claims to be brought late: see BCL No.2.
It is striking that the first two of these judgments reversed CAT decisions, and the third reversed an assumption which had been made by the CAT. It is against that background that the BCL claimants went to the Supreme Court to argue that the rules at (a) and (c) above breach European principles of effectiveness and legal certainty.
In a decision handed down last week, the Supreme Court rejected BCL’s appeal. The Court’s essential reasoning is that the limitation rules are sufficiently foreseeable – indeed, the Court struggled to understand why BCL didn’t comply with the rules in the first place. What of the fact that the CAT had reached different conclusions on the meaning of the rules? The crucial paragraph is Lord Mance’s paragraph 39:
“Clearly, it is unfortunate if Competition Appeal Tribunals arrive at conclusions on the commencement of a limitation period and on the power to grant an extension of time which are held erroneous on appeal to the Court of Appeal. But an appellate system is there to remedy error and to establish the correct legal position. I do not accept that its ordinary operation is the hallmark of a lack of legal certainty or effectiveness. The language and effect of the Competition Act were subsequently, and rightly, held by the Court of Appeal to be clear. The Emerson Electric and BCL Tribunals gave the words “any” and “decision” significance which they could not bear. They also failed to interpret section 47A in the context of the statute and its other sections read as a whole. It was by any standard readily foreseeable that an opposite view would be taken on appeal. The Tribunal decisions do not in my view lead to a conclusion that English law was insufficiently certain or that it made the bringing of a claim in time excessively difficult.”
It is worth sounding a note of caution, lest it be thought that three Court of Appeal decisions and one Supreme Court judgment have brought finality to the question of limitation for s.47A purposes. There is plainly scope for further litigation. Three examples spring to mind.
First, a criticism of the rule at (a) above – that the start of the two-year period will only be delayed by an appeal against liability, not penalty (BCL No. 1) – is that it is not always obvious whether an appeal is against liability, penalty, or both. Lord Mance expressly recognises this problem at paragraph 30, a passage which practitioners should read with care:
“It is a question of analysis which it does. If an appeal which is nominally directed against the penalty levied in fact takes issue with the existence or nature of the infringement, it may involve an appeal against infringement as well as penalty.”
Secondly, the Supreme Court made it clear that there was no suggestion that BCL had been misled about the nature of the appeal in that case. But what if a party is misled? Such an event is a real possibility given that claimants do not necessarily have access to an infringing party’s appeal documents and may instead need to rely on the published summary. There must at least remain the possibility that, in such circumstances, the limitation rules would represent a breach of legal certainty for which the state may be liable in damages.
Thirdly, it also appears that there is an application for permission to take the Deutsche Bahn decision (at (b) above) to the Supreme Court.
The procedure for bringing claims under section 47A of the Competition Act 1998 has many virtues. It would, however, be premature to list “swift” and “streamlined” amongst them.