If the captain of a trading ship fires cannon on a canoe to prevent the canoeists trading with another boat vying for their trade, that boat’s owners can sue the captain: Tarleton v M’Gawley (1793) Peake 270. An intention to gain where your gain must be another’s loss is an intention to injure the other for the purposes of the “unlawful means” economic torts: OBG v Allen [2007] UKHL 21, [63] per Lord Hoffmann, [164]-[167] per Lord Nicholls.
What if there are two other boats competing for the canoe’s business, and the captain doesn’t care which of them will lose out? In such a case there remains an intention to injure, even though one of the victims will in fact have suffered no loss, because ‘there is the intent to damage the identifiable and known class of two boats’, competition for the canoe’s business being ‘effectively a zero-sum game’. So the Court of Appeal accepted in its judgment yesterday [2015] EWCA Civ 1024 in the Air Cargo litigation at [168]-[169].
But swap cannon for cartels; increase the number of victims; change boats for air cargo shippers and freight forwarders; exeunt the canoeists and enter The Gondoliers. In W.H. Newson [2013] EWCA Civ 1377 (blogged here by Andrew Scott), Arden LJ waxed lyrically dismissive of a cartel victim’s argument that it formed part of a class of persons against whom the cartelists intended to injure: ‘When everybody is somebody, then nobody is anybody’, to quote, as she did, Gilbert & Sullivan. Now in Air Cargo the Court of Appeal has endorsed Arden LJ’s approach and affirmed the binding nature of the Newson decision. Because the immediate victims of a cartel, or those next in the supply chain, may be able to pass on their losses to others further down the chain, the cartelists cannot be said to be seeking to gain at their expense. And while the loss must ultimately be borne by someone, to expand the class of victims ‘to anyone in the chain down to the ultimate consumers’ would open up ‘an unknown and unknowable range of potential claimants’. See the Court of Appeal’s judgment at [169]. The Court on this basis (reversing a judgment of Peter Smith J discussed in a previous blog of mine) struck out the Air Cargo claimants’ economic tort claims.
This is significant. Tort claims at common law might allow cartel victims to recover damages in respect of losses which EU/EEA law claim provides no remedy, for example where particular anti-competitive behaviour falls outside the territorial scope of EU/EEA law (see the Court’s judgment at [120]). But the Court of Appeal at [174] made no secret of their pleasure, as a matter of policy, not to let the common law expand the scope of the remedies available to cartel victims under the law of the EU/EEA.
How then will claimants seek to recover such losses? There may be other routes to (some) recovery, such as the Air Cargo claimants’ “umbrella effect” argument, or claims based upon the competition law of foreign states which can be advanced in this jurisdiction (mentioned in the Court’s judgment at [157] and [120]). But the question of intention to injure in cartel claims must now be ripe for consideration by the Supreme Court. In particular, as Andrew Scott has remarked of Newson, pass-on appears to be attributed an unusual significance in this context. The captain of the Othello could not know whether the owners of the Tarleton would pass on their losses to others further down the chain, but he was liable nonetheless.
Competition Bulletin 