“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 MIFs) (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.