a legal blog on market regulation

Retrospective interpretation: DSG v MasterCard

The latest battle over limitation in Competition damages claims was a victory for the claimants – see DSG Retail Ltd v MasterCard Inc [2019] CAT 5.  In some ways it is a surprising decision, because the Competition Appeal Tribunal has decided that when s.47A of the Competition Act was enacted in 2003, certain claims which were time-barred prior to its enactment were revived.  The Tribunal frankly acknowledged that it did not find the matter straightforward, and looking at the rules it is easy to see why.

It used to be the case that competition damages claims could only be brought in the civil courts, where they would be subject to the usual six-year limitation rule (subject to extensions in various circumstances which need not concern us here).  In 2003 a new route was introduced: claimants became entitled bring follow-on claims in the CAT under s.47A, which had its own bespoke limitation regime.  That regime included this provision, which was found in rule 31(4) of the 2003 CAT Rules:

“No claim for damages may be made if, were the claim to be made in proceedings brought before a court, the claimant would be prevented from bringing the proceedings by reason of a limitation period having expired before the commencement of section 47A.”

Rule 31(4) was dropped when the rules were revised in 2015.  The position now is that claimants can still bring s.47A follow-on claims, including for periods pre-2015, but such claims are no longer subject to rule 31(4). The Tribunal had to decide the related questions of what the consequence was of dropping rule 31(4), and what the rule meant in the first place.

The most obvious interpretation of rule 31(4) is that claimants could not bring follow-on claims under s.47A if the claims would have been time-barred in 2003 when s.47A was introduced.  Thus, if an infringement lasted from 1993 to 2003 (and assuming that it was not deliberately concealed), the claimants could have brought a s.47A claim for damages going back as far as 1997 but no earlier.  That would make good sense because it would mean that the introduction of the s.47A regime did not ‘revive’ claims that had otherwise expired.

The main problem with that ‘obvious’ interpretation is that it would lead to very strange consequences when, in 2015, rule 31(4) was dropped.  One possibility is that the effect of dropping rule 31(4) was that, all of a sudden and for no apparent reason, from 2015 claimants were allowed to bring claims for damages which were time-barred in 2003 and which had remained time-barred until 2015.  That would be very surprising.  The only way to avoid such a result would be to say – and this is essentially what MasterCard said – that the rules should continue to be applied as if rule 31(4) still applies.  But that is  an ambitious argument given that the rule was deliberately dropped.

The Tribunal resolved these problems by deciding that what I have called the ‘obvious’ reading of rule 31(4) is wrong.  In fact, the Tribunal held, rule 31(4) required one to ask whether the entire proceedings would have been time-barred in 2003 when s.47A was introduced.  If the answer is that the proceedings would not have been time-barred, because some of the damage was still within the limitation period, then the claimants could have started s.47A follow-on proceedings for the entire loss.  Thus, to take my example of an infringement lasting from 1993 to 2003, the fact that the 1997-2003 period was not limitation-barred in 2003 meant that claimants were entitled to start s.47A proceedings for the entire 1993-2003 period.  Section 47A therefore did, in this limited sense, revive claims that had otherwise expired.

This approach to rule 31(4) has the particular attraction of enabling one to explain why the rule was dropped in 2015.  The explanation, according to the Tribunal, is a practical one: it is extremely unlikely that there will be an infringement decision after 2015 which relates to damages which were entirely limitation-barred in 2003.  Thus, rule 31(4) is no longer practically necessary; the problem with which it was concerned will no longer arise.

The upshot of all of this is that the Tribunal has decided that rule 31(4) never prevented claimants from pursuing claims going back as far as 1993 (or earlier), provided that some part of the damage was suffered in or after 1997, and the fact that rule 31(4) has now been dropped is entirely understandable and makes no practical difference.  Claims can still be brought going back to 1993 (or earlier).  It is undoubtedly a neat solution.

On the other hand, consider this.  It seems pretty unlikely that any claimant who had brought a claim in, say, 2004, or 2014, would have been able to persuade the Tribunal that the 2003 rules had revived claims that were otherwise time-barred.  It is only because the rule was revoked in 2015, and because the Tribunal used the fact of revocation as being relevant to its meaning when originally enacted, that the Tribunal interpreted the rule in the way that it did.  Thus, claims which were time-barred in 2003, and which would probably have been treated as time-barred up until 2015, are now to be treated as having been revived in 2003.  That may well be the least bad interpretation of the regime, but one can well understand why the Tribunal did not find the matter at all easy.



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