This paper, which can be found here, provides an overview of recent developments, and offers an insight into the functioning of private enforcement of competition law in England and Wales.
It is structured as follows:
The first section provides an overview of the legal framework for competition damages actions in the UK.
Compensation claims for the infringement of UK or EU competition law are normally based on a breach of statutory duty. Claimants have sought to establish other causes of action in competition law, but their attempts to rely on unjust enrichment (restitution) or economic (intentional) torts have been unsuccessful so far. Economic torts, such as intentionally interfering with business by unlawful means and conspiracy to injure using unlawful means, require proof of intention to injure the claimant. Courts have found that this element is absent in competition infringements, at least in follow-on claims, since the intention to make an (illegal) profit through a cartel is not the same as the intention to injure the claimant.
Victims of anticompetitive conduct have a genuine choice to bring their claims either in the High Court (Chancery Division) or in the Competition Appeal Tribunal (CAT). The former is a generalist court that deals, inter alia, with competition law litigation. The latter is a specialist court for competition law that hears complaints against decisions of the Competition and Markets Authority (CMA) and of the sectoral regulator, but also functions as a special court for private disputes. A notable feature of the UK framework for private actions is the possibility for undertakings to set up a CMA-authorised voluntary consumer redress scheme, which should be more cost-effective than litigation and help consumers receive compensation quicker.
There are only a few differences between proceedings in the High Court and in the CAT. The CAT procedure is said to be more informal and flexible. A tribunal comprising three people, with the chairperson being a lawyer and the other tribunal members being drawn from the CAT’s ordinary members, normally hears cases in the CAT. A single judge usually hears High Court cases. Unlike the High Court, the CAT offers a fast track procedure and the possibility of bringing opt-out collective claims.
Reforms in 2015 widened the scope of the CAT’s jurisdiction, giving it competences to hear stand-alone claims, damages actions, other monetary claims and injunction requests. It also made the limitation periods the same for both the CAT and the High Court (six years).
A second section discusses access to documents in private litigation.
One attractive feature of litigation in England and Wales – at least by comparison to other European countries – is mandatory disclosure. Parties to litigation in England and Wales must disclose and allow the inspection of documents that are material to the litigation. Standard disclosure requires that parties inform the other side about the documents on which they rely, the documents that adversely affect their case, and the documents which adversely affect or support another party’s case.
Normally, the parties exchange a list of relevant documents and serve it on the other party, including a disclosure statement setting out the extent of the search that has been undertaken. The duty to reasonably disclose is limited to documents that are or have been in the party’s control. The concept of reasonableness is used to limit the search for documents a party has to conduct, for example, to certain time periods, categories of documents or documents located in certain places. What is reasonable depends on the particular facts of the case.
Before the implementation of the Damages Directive, there was no particular privilege applicable to files and information gathered by a competition authority. This raised concerns on part of the competition authorities that rely heavily on whistle-blowers to detect cartels, and fear for the attractiveness of their leniency programme should the whistle-blower be exposed to (too much) civil liability. Following the ECJ’s case law (such as Pfleiderer and Donau Chemie), which held that there is no absolute prohibition that would prevent parties to litigation from accessing leniency material, the English courts adopted a balanced approach when dealing with requests for the disclosure of leniency-related material in cases such as National Grid. Under this approach, access to some documents included in leniency applications could be allowed. Disclosure requests in the English courts have prompted the European Commission to intervene in private enforcement cases in recent years. Furthermore, the disclosure of leniency statements and settlement submissions can no longer be sought and ordered following the implementation of the Damages Directive.
The Directive was implemented in detail in the UK, with one exception: para 30 of the Implementing Regulation creates a presumption of no access to the competition file that can only be rebutted if the documents cannot be sourced from someone else, while art. 6(4) of the Directive merely requires a proportionality assessment to be carried out as regards access to this file. It remains to be seen whether the interpretation of the Implementing Regulation in the courts will be in line with the CJEU’s case law and the Directive.
A third section assesses the new framework for joint and several liability that was adopted to implement the Damages Directive.
Defendants that jointly commit a tort like, for example, breaching a competition statute (e.g. cartelists), are jointly and severally liable for all of the loss caused by the competition infringement. A defendant in a damages claim who is asked to pay for all this loss may ask fellow tortfeasors to pay contribution, in amounts that courts may find to be just and equitable having regard to the extent of each of the defendant’s responsibility for the damage in question.
In line with the Directive, there are now a number of exceptions to these rules. SMEs are liable only for the damage done to their direct and indirect purchasers. Joint and several liability is further restricted in instances where the defendant has received full immunity from fines for cooperating with a competition authority. The immunity recipient’s liability is restricted to the harm caused to its direct and indirect purchasers or providers of inputs. However, if claimants are not able to receive full-compensation from the other co-infringers, they may fall back on the immunity recipient for the outstanding loss. Settling defendants also benefit from a restriction of joint and several liability: if the claimant settles with one of the defendants, the claimant’s overall claim is reduced by the settling defendant’s share of the loss.
The new rules on joint and several liability will have a significant impact on claimants who settle their claims or who seek compensation from immunity recipients, and on defendants who seek contribution from their co-defendants. This is largely unchartered territory, as the exemptions in the Damages Directive had no predecessors in English law. Furthermore, some of the rules are problematic. As regards immunity applicants, limiting the immunity recipient’s exposure to civil liability is thought to encourage whistle-blowers to come forward with information about cartels. However, the leniency applicant is the fall back option for any unsuccessful claimant and, thus, the leniency applicant does not know until the end of all proceedings whether he will face further claims. It is also not clear how limitation periods will interact with this exception. Second, the rule reducing liability in the settling defendant’s share of the loss assumes that it is easy to work out what the co-infringer’s share of the loss is. This assumption does not hold true and the assessment of the ‘share of harm’ is bound to spawn satellite litigation.
A fourth section looks at opt-out group actions.
The Consumer Rights Act 2015 introduced an opt-out group action for competition law claims in the CAT. The opt-out action complements the already existing opt-in action, which proved rather ineffective.
The opt-in action allowed ‘specified bodies’, i.e. organisations that had received the approval from the Secretary of State, to bring claims on behalf of consumers. The consumer organisation Which? brought a claim against JJB Sports, a retailer that had participated in a price-fixing agreement regarding Manchester United and England replica football shirts. Despite a national advertising campaign, the consumer organisation only identified ca. 130 individuals who were able and willing to join the claim. The case settled and, although those who joined the claim were given £20 each if they could present proof of purchase of the shirt or present one of the affected replica shirts, it was ultimately regarded as a demonstration of the limitations of opt-in mechanisms.
The 2015 reform enabled the CAT to allow opt-out collective proceedings as regards claimants domiciled in the UK. Claims are eligible for inclusion in collective proceedings if they raise the “same, similar or related issues of fact or law and are suitable to be brought in collective proceedings”. Other factors that are used to determine whether an opt-out action ought to be certified include, inter alia, the cost and benefits of a group action, whether the claims are suitable for an aggregate award, the size and the nature of the class, whether collective proceedings are an appropriate means for a fair and efficient resolution of the dispute, and the availability of Alternative Dispute Resolution.
The most problematic aspects of the new opt-out group action concern funding arrangements and the allocation of unclaimed funds. Group actions are risky and expensive. Contingency fee agreements, i.e. fee agreements that include a success fee calculated as a percentage of the damages award, are not allowed. Conditional fee agreements, i.e. fee agreements according to which payment of fees is conditioned on winning the case (‘no-win, no-fee agreement’), and after-the-event insurance are allowed, however. An alternative funding mechanism, the third-party funding of claims, is possible in England and Wales, but it remains to be seen whether investors are likely to fund competition litigation – which is currently a rather high-risk undertaking.
This is a succinct, yet thorough overview of private competition enforcement in the UK. It may be interesting to anyone seeking to familiarise himself or herself with this regime, or who wants to understand the specific facets of the regime which the paper discusses in detail. My only comment is that there have already been two decisions on opt-out proceedings, one of which included a discussion on the conditions under which third-party funding would be allowed. This was a claim against MasterCard (Walter Hugh Merricks CBE v MasterCard Incorporated and Others  CAT 16) which I reviewed here in December 2017.