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What types of conduct and causes of action can be relied upon as the basis of a competition damages claim?
- Competition damages claims are based in tort: claimants seek to obtain recompense for damages caused by the defendant(s)’ breach of statutory duty.
The statutory duties in question arise from the Competition Act 1998 (the “CA”) and, depending on the date on which the cause of action arose, the Treaty on the Functioning of the European Union (“TFEU”). Two provisions are key: - Section 2 of the CA prohibits agreements which have as their object or effect the distortion of competition in the UK.
- Section 18 of the CA prohibits the abuse of a dominant position within a market by an undertaking if it may affect trade in the UK.
These prohibitions are mirrored in respect of the EU by Articles 101 and 102 TFEU, respectively.
A claim may be on either a follow-on or standalone basis. In a standalone claim the claimant must demonstrate that a breach of statutory duty has occurred. In a follow-on claim, the claimant relies on the decision of a regulator, typically the Competition and Markets Authority (“CMA”) or the European Commission (“EC”), as proof of the breach.
Following Brexit, EC decisions may be relied upon for follow-on claims to the extent the infringement pre-dates 31 December 2020 (the end of the Brexit transition period). This includes cases started before the end of the transition period but not completed at the end of the transition period, so-called continued competence cases.
Where a decision is relied upon, the claimant will only need to demonstrate that a loss was caused by the breach of statutory duty, and to quantify that loss. However, a follow-on claimant cannot rely solely upon the decision for alleged breaches outside of the decision’s scope, for example, for a time period outside the temporal scope of the decision. Consequently, litigation cases often include a mix of standalone and follow-on elements, so-called “hybrid” claims.
In Air Canada & Ors v Emerald Supplies Limited & Ors [2015] EWCA Civ 1024, the claimants attempted to run an argument based on the economic tort of unlawful means conspiracy. This was unsuccessful. The Court of Appeal struck out the claims advanced on this basis as the claimants, indirect purchasers of the allegedly cartelised services, were unable to demonstrate that the defendant(s) had the requisite intention to injure the claimants.
- Competition damages claims are based in tort: claimants seek to obtain recompense for damages caused by the defendant(s)’ breach of statutory duty.
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What is required (e.g. in terms of procedural formalities and standard of pleading) in order to commence a competition damages claim?
Competition litigation may be brought in the Competition Appeal Tribunal (“CAT”) on either a follow-on or standalone basis, provided that any standalone claim arose after 1 October 2015.
Claims for damages under the CA[1] are subject to the Competition Appeal Tribunal Rules (“CAT Rules”). To commence a claim, a claim form that complies with the requirements of Rule 30 must be submitted to the registrar of the CAT. Rule 30 stipulates the following formal and substantive requirements, though the structure of the claim form itself is not specified:
- Formal Requirements:
- The full name and address of the claimant(s) and those of their respective legal representatives, if any;
- A service address in the UK; and
- The name and address of the defendant(s).
- Substantive Requirements:
- A statement of whether the claim is in follow-on to an infringement decision and if that claim is final (as per s.58A CA);
- The claimant’s observations as to where in the UK the proceedings are to be treated as taking pace (see Rule 18);
- A concise statement of the facts, including cross-references to the applicable infringement decision, if any;
- A concise explanation of any contentions of law relied upon; and
- The nature of the relief sought, including a calculation of the quantum of any damages sought and, if being brought in England and Wales or Northern Ireland, a statement of any injunction being sought.
Once acknowledgement of receipt is received from the registrar, this must be served on the defendants together with the claim form.
A competition claim may also be brought in the High Court. Claims in the High Court are subject to the Civil Procedure Rules (“CPR”). Under the CPR, the appropriate claim form is the N1 Claim Form completed in compliance with Practice Direction 7A CPR Part 16. The required contents are similar to the requirements for a claim in the CAT and the Claim Form must be served upon the defendant in accordance with CPR 7.5.
In addition, when filing in the High Court, the substantive details of the claim, the Particulars of Claim, must be served upon the defendant(s) either together with the Claim Form or within 14 days.
The procedure for filing in the High Court is governed by CPR Part 7 and its associated practice directions. As is the case with all claims governed by the CPR, a pre-action protocol must be complied with, which involves providing the defendant(s) with pre-notification of the claim so that any possibility of a pre-action settlement may be explored. Once a claim is filed it is assigned to either the Chancery Division or to the Commercial Court of the King’s Bench Division if it falls under the scope of rule 58.1(2).
Proceedings that are commenced in the High Court which predominantly relate to competition claims may be transferred to the CAT, and in fact such claims are routinely transferred to the CAT following the completion of the pleadings stage of the claim.
Footnotes
[1] A&P NTD: I.E. under s.47A of the CA 1998
- Formal Requirements:
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What remedies are available to claimants in competition damages claims?
Damages:
In competition litigation, parties most commonly seek damages as compensation for loss. (Please refer to Q.4 for further details). However, both the CAT and High Court have the power to award a range of interim and final remedies.
Injunctions:
Both the CAT and the High Court are empowered to award interim and final injunctions. For both Courts, the test for whether or not to grant an interim injunction is that set out by the House of Lords in American Cyanamid v Ethicon Ltd [1975] AC 396.
Additional Payments:
Under s.47A CA, the CAT is empowered to make orders for interim and final payments of sums of money other than damages (including interest and costs). Similarly, the High Court has wide discretionary powers to make such orders.
Declaratory Relief:
Declaratory relief refers to a discretionary power of the Court to make a declaration such as that an agreement is anticompetitive. Whilst the High Court has this right, the CAT is currently not empowered to award declaratory relief. As set out at paragraph 64 of Wolseley UK Limited and Others v Fiat Chrysler Automobiles NV and Others [2019] CAT 12, parties in the CAT currently seeking declaratory relief will need to apply for permission to issue a claim in the High Court to obtain declaratory relief, following which the case would be transferred to the CAT.
Digital Markets, Competition and Consumers Bill:
Published on 25 April 2023, the Digital Markets, Competition and Consumers Bill (the “Bill”) will grant the CAT the power to make declaratory relief. The Bill is currently at the committee stage of review in parliament and is expected to pass into law at some point in 2024.
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What is the measure of damages? To what extent is joint and several liability recognised in competition damages claims? Are there any exceptions (e.g. for leniency applicants)?
Overcharge:
In general, common law damages are compensatory not punitive. This means that the objective of an award of damages is to put the claimant into the position they would otherwise have been in had the breach of competition laws not occurred. Typically, in competition claims, the loss suffered is an overcharge on goods or services as a result of the cost of these goods or services being artificially inflated by anticompetitive behavior. The overcharge is the baseline for the assessment of damages.
Pass-on:
When quantifying the damages to be awarded for a competition claim, the Court will consider “pass-on”, being the extent to which any overcharge caused by the anticompetitive conduct was passed-on by the direct purchaser through the supply chain to its own customers. This reflects the compensatory nature of damages as it aims to avoid over-compensating claimants for an overcharge they did not in fact suffer because they passed it on to others.
Joint and Several Liability:
The participants in a cartel will be jointly and severally liable for any damages caused as a result. This means that any one cartel member can be sued for the full amount of the loss caused by the entire cartel. The principle of joint and several liability may be limited in the cases of defendants who have received immunity as explained in further detail below.
Immunity/Leniency Recipients:
Under Directive 2014/104EU (the “Damages Directive”), as retained in English law through certain amendments to the CA, the default position is that the liability of an immunity recipient to pay damages is not extinguished, but rather its own liability is limited to paying damages caused to its own direct and indirect purchasers and not those caused to purchasers from other members of the cartel. (Article 11(4) Damages Directive; Schedule 8A, Paragraph 15 CA) This exemption does not extend to other leniency applicants who may have received partial reductions in fines levied by competition authorities. Recipients of immunity or leniency benefits are, therefore, still exposed to significant civil claims. Please refer to Question 16 for a more detailed analysis.
New Update – Exemplary Damages:
The Digital Markets, Competition and Consumers Bill, as introduced, would grant new powers for the CAT to award “exemplary damages”. Exemplary damages are Damages which go beyond compensating for actual loss and are awarded to show the Court’s disapproval of the defendant’s behavior. Such damages were previously prohibited by Part 8 of the CA in compliance with the Damages Directive. Part 8 of the CA would be repealed by s.122(2)(b) of the Bill if it is enacted in its present form, empowering the CAT to award exemplary damages with two key exceptions:
- Leniency/immunity recipients (s.122(2)(a)(ii) of the Bill); and
- Parties to Collective Proceedings (s.122(1) of the Bill).
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What are the relevant limitation periods for competition damages claims? How can they be suspended or interrupted?
In accordance with s.2 of the Limitation Act 1980 (the “LA”), a competition litigation claim may not be brought after the expiration of six years from the date on which the cause of action accrued. In respect of competition litigation claims, this is the later of either the end of the infringement of competition law in question or the date on which the claimant has knowledge of the cause of action (s.32(1) LA). At a high level, this will require awareness of the anticompetitive behaviour, the manner in which this behaviour breaches antitrust law, the loss suffered as a result and the identity of those who have committed the breach.
The necessary level of knowledge requires that the claimants know, or with reasonable due diligence could know, that they have a worthwhile claim. In the context of a cartel, a claimant will have a worthwhile claim when a reasonable person could have a reasonable belief there had been a cartel. This does not require that they know all of the details of the cartel, such as its precise period, but rather that they have sufficient information to be able to know that a cartel may exist (or may have existed) and who the participants are likely to be. For example, where a competition authority has issued a statement of objections, the claimant will have a reasonable belief that there has been a breach of competition law and the limitation period may begin to run.
Pre-2015 Infringements:
New rules in 2015 aligned the CAT’s limitation periods with those of the Limitation Act and the wider litigation system. However, claims with a cause of action arising prior to October 1, 2015 must be brought within two years of an infringement decision becoming final. The date on which an infringement decision becomes final is the later of: (1) the deadline for appealing a decision; or (2) the date of the last appeal in relation to a decision concluding.
Collective Proceedings:
As explained at Question 15 (below), it is possible for a party to bring proceedings on behalf of a group of potential claimants, where judged eligible by the Court (“Collective Proceedings”). The position remains the same in collective actions. The key date is that on which the claim is issued which must be within the limitation period. This reflects that the claimant in a collective action Is the class representative, not the putative class members. Consequently, the point at which each class member opts into the collective action and the deadline for opting out of the action are irrelevant to limitation considerations.
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Which local courts and/or tribunals deal with competition damages claims?
Claimants have a choice between launching their claim in the High Court or the CAT. The former is a wider court of general jurisdiction comprising a number of divisions hearing different types of cases, whilst the latter is a dedicated tribunal with particular expertise in competition matters. Since 2017 the Chancery Division of the High Court has included a Competition List, featuring judges with expertise in competition law. A number of these judges also sit as chairs of CAT panels. The High Court has jurisdiction in England and Wales, and the CAT in the whole of the UK (including also Scotland and Northern Ireland).
The attractiveness of the High Court for claimants has been the parties’ familiarity with the Court’s rules and the High Court’s experience in case management, which is important at earlier stages of proceedings of litigation. However, if a claim is started in the High Court, it will typically be transferred to the CAT after the close of pleadings and a first case management conference.
Collective Proceedings under the Consumer Rights Act 2015 are a (relatively recent) exception and can only be issued in the CAT which has the exclusive jurisdiction to hear cases brought pursuant to this legislation.
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How does the court determine whether it has jurisdiction over a competition damages claim?
Common Law
Under common law, the English Courts have jurisdiction where a claimant is able to serve proceedings on the defendant(s). This will be the case where the defendant has a place of service in the England or Wales, i.e. a local office of the defendant itself or an agent and/or solicitor authorised to receive service on behalf of the defendant. The CAT has jurisdiction throughout the UK so the test for cases issued in the CAT is whether the defendant can be served anywhere in the UK.
Where this is not the case, a claimant may seek permission from the Court or the CAT (as the case may be) to serve the claim on a defendant outside the jurisdiction provided the claim has (a) one of a number of nexuses to the jurisdiction, known as jurisdictional gateways, and (b) a reasonable prospect of success. For torts, the most commonly applied jurisdiction gateways in competition damages claims are that the conduct complained of had an impact on competition in the jurisdiction, or that the claimant suffered loss within the jurisdiction.
To the extent that the Court or the CAT has jurisdiction, they may stay proceedings where a defendant can establish that there is a more appropriate venue for the adjudication of the dispute or in circumstances where the parties have agreed that a dispute of the sort in issue would be subject to the exclusive jurisdiction of Courts in another country or in international arbitration.
EU Law:
During the UK’s membership of the EU, jurisdictional questions between the UK and EU member states were governed by Regulation (EU) No. 1215/2012. This also applies to Switzerland, Iceland and Norway by virtue of the Lugano Convention. This continues to apply to cases initiated before the end of the Brexit transition period but not to cases initiated after this period, to which the common law rules apply unless there is some other applicable international treaty or convention. Typically, the Court has interpreted its jurisdiction in relation to other member states and Lugano Convention states expansively.
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How does the court determine what law will apply to the competition damages claim? What is the applicable standard of proof?
Overview:
In general, the applicable law for a competition litigation will be the country where the anticompetitive conduct had a substantial and direct effect. Where multiple markets are affected, the claimant may be able to choose the applicable law. However, the precise rules applicable will depend on the date of the infringements in question, with three separate sets of rules applying to infringements (1) after 2009; (2) between 1995 and 2009; and (3) before 1995.
Post-2009:
Since January 11, 2009, the choice of governing law has been governed by the Regulation on the law applicable to non-contractual obligations ((EC) 864/2007) (“Rome 2”). Rome 2 continued to apply in the UK during the transition period and continues to form a part of domestic UK law via the implementation of Regulation (EC) 864/2007 on the law applicable to non-contractual obligations (Rome II) (Retained EU Legislation).
Under Rome 2, the applicable law for competition infringements after January 11, 2009, is the law of the country where the market is likely to be affected. Where the markets of multiple countries may be affected, the claimant may choose to base their claim on the law of the Court seised of the claim, provided the market in that country is substantially and directly affected by the restriction on competition. Under Rome II the applicable law under statute may not be derogated by private agreement of the parties.
For example, in Westover Group Limited & Ors-v-Mastercard Inc & Ors [2021] CAT 12, Italian claimants brought claims against Mastercard in relation to its multilateral interchange fees in the UK under English law. The CAT concluded that they were entitled to do so because the alleged anticompetitive conduct had occurred equally in the national markets of both Italy and the UK. In doing so, the CAT concluded that the market likely to be affected for purposes of the analysis under Rome 2) is likely to be the market in which the damages resulting from the anticompetitive conduct occurred.
Pre-2009:
For infringements prior to 2009, the choice of governing law is governed by the Private International Law (Miscellaneous Provisions) Act 1995 (“PIL(MP)A”). Under s.11 PIL(MP)A, the applicable law is that of the country in which the events constituting the tort occurred. This will be the country where the most significant elements of the tort in question took place. In Deutsche Bahn AG & Ors v MasterCard Inc. & Ors [2018], the Court determined that, specifically for competition claims, the most important element is the competitive distortion/harm caused by the anticompetitive conduct alleged.
Pre-1995:
Prior to the PIL(MP)A, a competition litigation claim could only be brought if a cause of action would be recognised under both English law and the law of the jurisdiction in which the alleged anticompetitive conduct occurred. This common law rule is unlikely to be of any continuing effect.
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To what extent are local courts bound by the infringement decisions of (domestic or foreign) competition authorities?
The relevance of regulatory decisions arises in relation to both follow-on and standalone damages claims. Where a relevant UK regulator, i.e. the CMA or one of the sectoral regulators, such as Ofcom, Ofgem or the Financial Conduct Authority, or the EC in relevant cases prior to the end of the transition period, has issued a decision finding an infringement of competition law, the High Court or the CAT (and higher Courts) will be bound by it. Accordingly, a finding of infringement will not be open to a challenge by a defendant in a damages claim. Similarly, a claimant relying on a regulatory finding does not have to prove the infringement but only demonstrate that that infringement has caused it to suffer a loss.
Decisions of the EC in connection with investigations initiated after 31 December 2020 are not binding in the UK but British Courts may have regard to such decisions.
Decisions of foreign national competition authorities are not binding on, but may be admitted in evidence before, the High Court or the CAT. Such decisions have been particularly relevant in relation to standalone claims, or standalone elements in hybrid actions which combine follow-on and standalone claims, where claimants have sought to extend their claims to include, for example, additional territories and time periods which are not covered by the regulatory decision. More generally, foreign decisions are often deployed by claimants to fill gaps where, for example, foreign regulators may have made more detailed or more extensive findings of fact.
Decisions of the EC in connection with investigations initiated after 31 December 2020 are not binding in the UK but British Courts may have regard to such decisions.
Decisions of foreign national competition authorities are not binding on, but may be admitted in evidence before, the High Court or the CAT. Such decisions have been particularly relevant in relation to standalone claims, or standalone elements in hybrid actions which combine follow-on and standalone claims, where claimants have sought to extend their claims to include, for example, additional territories and time periods which are not covered by the regulatory decision. More generally, foreign decisions are often deployed by claimants to fill gaps where, for example, foreign regulators may have made more detailed or more extensive findings of fact.
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To what extent can a private damages action proceed while related public enforcement action is pending? Is there a procedure permitting enforcers to stay a private action while the public enforcement action is pending?
As a general principle, the CAT and the High Court are required to avoid decisions that would be inconsistent with both final and contemplated decisions of the CMA. This practice reflects that at the EU level, which is based on a long-standing line of CJEU case law dating back to Case C-344/98 Masterfoods [2000] ECR I-11412 and Case C-234/89 Delimitis [1991] ECR I-977. Accordingly, in the case of investigations commenced before the end of the transition period, the High Court and the CAT must also not take decisions which might conflict with decisions contemplated by the Commission.
In situations involving parallel pending regulatory and Court proceedings, the High Court and the CAT may stay proceedings until the parallel proceedings have concluded. However, they take an active approach to case management and often require the completion of various procedural steps before staying the claim. These steps may include the exchange of disclosure, witness statements and expert reports, and the determination of preliminary issues that will be unaffected by the outcome of the regulatory process. In one of the more exceptional examples, at the time of the EC’s then-pending investigation of Google Shopping (while the UK’s was a member state of the EU), in Streetmap.EU Ltd v Google Inc [2016] EWHC 253, the High Court proceeded to first determine the question of an alleged abuse of dominance by Google, finding none, without staying the proceedings.
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What, if any, mechanisms are available to aggregate competition damages claims (e.g. class actions, assignment/claims vehicles, or consolidation)? What, if any, threshold criteria have to be met?
Various mechanisms are available to claimants to combine multiple claims and to Courts to manage multiple proceedings jointly.
Collective Proceedings regime
Collective Proceedings may be brought on behalf of a class of persons alleging loss arising from an infringement of competition law. This is the most significant mechanism to aggregate multiple claims. Collective claims were made possible by the Consumer Rights Act 2015 which amended the CA, allowing a single class representative to bring claims on behalf of all persons, whether individuals or corporate entities, who were alleged to have suffered harm as a result of anti-competitive conduct. Such Collective Proceedings are within the exclusive jurisdiction of the CAT.
Collective Proceedings must be certified by the CAT in the form of a Collective Proceedings Order (CPO) before they can proceed. The CAT will consider two principle questions at a CPO hearing: namely the eligibility of the claims to be litigated by way of Collective Proceedings, and the suitability of the person seeking to act on behalf of the class to conduct the proceedings. The former involves the assessment of whether (i) the class is identifiable, (ii) the claims raise common (albeit not necessarily identical) issues of fact or law, and (iii) the claims are suitable to be tried in the form of Collective Proceedings. In relation to the person seeking to bring the proceedings, i.e. the ‘class representative’, the CAT will assess whether it is ‘just and reasonable’ for them to act. That exercise will involve, in particular, an evaluation of the proposed class representative’s experience, existence of conflicts of interest, and funding (to satisfy potential adverse costs orders).
The CPO, usually made after a hearing at which the parties make submissions, will specify whether the class members to be included in the claim will be determined on an opt-in or opt-out basis. If the former, individuals who meet the definition of potential class members must actively opt in to the proceedings. If the latter, they will be included in the proceedings automatically, without having to take any step, unless they choose to opt out by a specific date.
The first opt-out Collective Proceedings were certified in Case No. 1266/7/7/16 Walter Hugh Merricks CBE v Mastercard Incorporated and Others in December 2020, in an action brought by Mr Merricks against Mastercard, alleging an overcharge in connection with multilateral interchange fees. Importantly, in that case, the CAT refused certification but its judgment was overturned by the Court of Appeal, whose judgment ([2019] EWCA Civ 674) was in turn upheld by the Supreme Court ([2020] UKSC 51). The Supreme Court clarified that certification of Collective Proceedings was intended to address the eligibility and suitability requirements without delving into the merits of the underlying claim. In line with the Supreme Court’s judgment and the low threshold required by that test, the CAT has since issued eight CPOs (at the time of writing).
More recently, however, the CAT, with guidance from the Court of Appeal, has made clear that certification is not a mere formality and has a meaningful role to play in the formulation of collective claims: in Case No. 1339/7/7/20 Mark McLaren Class Representative Limited v MOL (Europe Africa) Ltd and Others, whilst letting the CPO stand, the Court of Appeal held that the CAT had erred in how it approached its gatekeeping role. When faced with directly competing pricing theories, the CAT should have considered whether the challenges to the class representative’s methodology required active case management to ensure the case was fit for trial. The Court of Appeal therefore remitted the case to the CAT to reconsider case management in light of the parties’ starkly opposed pricing methodologies ([2022] EWCA Civ 1701). That decision appears to have influenced the CAT’s subsequent approach in, for example, Case No. 1433/7/7/22 Dr Liza Lovdahl Gormsen v Meta Platforms, Inc. and Others, where the CAT found significant deficiencies in the proposed class representative’s methodology and refused certification, setting a time limit during which the proposed class representative may re-formulate its case. In late July 2023, the Court of Appeal remitted two further sets of proceedings to the CAT, in judgments from which the following observations emerge: first, in Trucks, the Court upheld ([2023] EWCA Civ 875) the CAT’s choice of Road Haulage Association Limited as the preferred class representative over UK Trucks Claim Limited (UKTC) in a “carriage dispute” (a dispute between two competing actions seeking to pursue similar claims). Second, in a judgment concerning the Forex cartel (and another carriage dispute), the Court of Appeal held ([2023] EWCA Civ 876) that the CAT was wrong to have found that the Collective Proceedings in question should have been brought on an opt-in rather than opt-out basis. Accordingly, the Evans action, which the CAT favoured over the O’Higgins action, can now proceed before the CAT on an opt-out basis.
Group litigation order
The CAT’s Collective Proceedings regime is not the only route to aggregation of competition damages claims (although it will likely continue to be the most relevant mechanism). Rule 19.22 CPR allows the High Court or County Court to combine multiple claims by way of a group litigation order (GLO) if they involve common or related issues of fact or law. In the case of a GLO, claimants hold individual claims and must actively opt in to be entered on a ‘group register’. Such claims will be managed in a single set of proceedings, with all members of the group benefitting from any favourable judgment. In circumstances where the CA now provides for a dedicated Collective Proceedings regime, the significance of GLOs for collective competition litigation will likely continue to be limited.
Representative action
Rule 19.8 CPR permits a person to commence or continue a claim as a representative of any other person who has the same interest in the claim. This route has rarely been used in practice, and in circumstances where the Collective Proceedings regime now enables opt-out Collective Proceedings, the relevance of representative actions in relation to antitrust damages will likely remain negligible.
Other procedural mechanisms
In relation to the consolidation of multiple individual proceedings or addition of third parties to existing proceedings, see Questions 19 and 22 respectively.CAT case management powers
In 2022, the President of the CAT issued a practice direction enabling the issue of an ‘umbrella proceedings order’ (“UPO”) where multiple separate proceedings before the CAT give rise to a common issue requiring the determination at a “central” level, with a view to avoiding conflicting or inconsistent decisions. At the time of writing, only one UPO has been made, namely to manage and try together in respect of the issue of pass-on the Merricks collective action and individual merchant claims against Visa and Mastercard concerning payment card fees. The CAT continues to actively monitor other proceedings where a UPO may be made, including the McLaren Collective Proceedings. -
Are there any defences (e.g. pass on) which are unique to competition damages cases? Which party bears the burden of proof?
In a competition damages action, one of a defendant’s principal concerns will be the extent of its liability. This will be influenced by the specific facts of each case and corresponding legal arguments available to the parties. Arguments relating to limitation, geographic or temporal scope, or the extent of any anti-competitive effects of an infringement each have a bearing on the bounds of a defendant’s liability.
In terms of defences in the strict sense, pass-on is peculiar to competition claims and is raised by defendants in the vast majority of competition damages claims. Pass-on is no more than a reflection of the compensatory principle which governs the assessment of damages. A claimant should not be entitled to recover damages beyond the loss which it has in fact suffered. To the extent that the claimant took steps to mitigate its loss by passing on any overcharge to others in the supply chain, it has suffered no loss and is not entitled to recover damages. Traditionally, a pass-on defence raised by a defendant would involve the argument that the claimant passed an overcharge, in full or in part, to its own customers or the end consumer (as applicable, depending on the structure of the supply chain in each case) (customer pass-on”).
The Supreme Court potentially extended the scope of pass-on as a defence in Sainsbury’s v Visa [2020] UKSC 24 where it outlined at paragraph 205 various ways in which a business may respond to an overcharge. In addition to customer pass-on, the Court suggested that an overcharge may be passed on to the injured party’s other suppliers in the form of reduced purchase prices (supplier pass-on).
While pass-on has become an integral part of competition litigation before Courts in the UK, it is still a relatively recent phenomenon in English law which continues to evolve. Subject to future developments, it appears, however, that Courts have accepted at least the following principles: first, pleading a general business theory to support a pass-on defence will not assist a defendant, who is required to advance a tangible case as to how a claimant has passed on any overcharge. Second, while the burden of proof on a pass-on defence lies with the defendant, the claimant will bear the burden of disclosure of materials recording price-setting to its customers or negotiations with its suppliers, given that virtually all of the relevant documents and data will be in the hands of claimants (in the same way as materials relating to liability or overcharge will be predominantly in the hands of defendants). Finally, the quantification of damages is not an exact science. Accordingly, just as estimation may be deployed to quantify a claimant’s loss, a “broad axe” may be used to estimate the volume and rate of pass-on on the part of a claimant.
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Is expert evidence permitted in competition litigation, and, if so, how is it used? Is the expert appointed by the court or the parties and what duties do they owe?
Parties to a competition damages claim may rely on expert evidence with the Court’s permission. Expert evidence from economists is in practice always allowed, to deal with such central issues as the theory of harm, counterfactual scenarios, the value of commerce between parties, overcharge and pass-on, each of which usually depends on the application of economic analysis and/or expertise in the industry concerned. The Court may in some circumstances limit the scope of expert evidence to those topics which the Court considers necessary for the just determination of the dispute.
Each party to proceedings will typically appoint its own expert. Experts owe certain duties to the parties who appoint them, including a duty to exercise due care and skill and to communicate any conflicts of interest which may affect experts’ independence.
Although experts are selected and appointed by the parties, the experts’ overarching duty is to assist the Court in the determination of relevant issues. This duty to the Court overrides the experts’ duties to the parties who have appointed them.
Experts will often influence the scope of disclosure among the parties by setting out the data that they will require to perform the analysis that it is anticipated will be included within their reports. Following the completion of disclosure, the experts prepare written expert reports which are then exchanged with other parties’ experts. Before trial, it has become common practice for the parties’ experts to meet to discuss the areas of their reports on which they agree and disagree in order to produce a joint expert statement setting out the areas of agreement and disagreement and the reasons for any disagreement between them.
At trial, experts are examined and cross-examined, and frequently questioned by the Court.
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Describe the trial process. Who is the decision-maker at trial? How is evidence dealt with? Is it written or oral, and what are the rules on cross-examination?
The precise court processes involved will depend on whether the claim is being heard in the CAT or the High Court. However, in each case, senior judges will hear competition cases with juries not being used in competition cases in the UK.
Competition Appeal Tribunal:
The CAT appoints a panel of three members for each case, usually consisting of either a Chair who is usually a High Court judge, and two “ordinary members,” one of which is usually a lawyer and the other a commercial expert with a background in economics or another relevant specialism.
Following the filing of the claim form and the corresponding defence and reply, a case management conference is typically scheduled to agree the structure of upcoming proceedings. Ahead of trial, this will involve: (1) a period for disclosure of documentary evidence; (2) the exchange of any further written pleadings, (3) the exchange of, witness statements, and (4) the exchange of expert reports.
Cases before the CAT are subject to the CAT Rules 2015 and related guidance published by the CAT on their website. It should be noted that the CAT has proven itself flexible in the exact procedure it follows, utilising case management conferences to settle disputes between parties and tailor the structure of proceedings. In some recent cases, the CAT has ordered a novel procedure where, instead of the above steps, the parties are instead ordered to exchange “positive position statements” and “negative position statements.”[2] These are designed to include all of the evidence, witness statements and expert reports that each party plans to rely upon in support of their positive and/or negative cases. This is a new procedure which is not reflected in the CAT Rules 2015, and it remains to be seen whether this procedure will improve the efficiency of trial preparations.
High Court:
In the High Court, the case will be heard by a single, senior judge assisted by clerks of the Court, regardless of the division in which the case is heard.
As in the CAT, a case management conference will typically be convened following the service of the claim form, the defence and any reply, and the assignment of the case to the appropriate division of the High Court, in order to agree the structure the litigation will take and a timetable to trial.
The disclosure of documents and the provision of witness evidence are governed by Parts 32-35 of the CPR. In general, these provide for a similar procedure as in the CAT, with the parties exchanging disclosure, witness statements and expert reports ahead of trial.
Witness Evidence and Cross-examination:
In both the CAT and High Court, witnesses of fact will provide written witness statements setting out their evidence and subject to a sworn statement of truth. Each of those witnesses may then be cross-examined by the lawyers for the opposing party at an oral hearing.
Witnesses are expected to limit their evidence to matters of fact that are within their own knowledge. Witnesses are required to refrain from taking an adversarial position by acting as advocates for the party in support of whose case they are giving evidence.
The most recent practice directions of the High Court and CAT on witness evidence can be found here and here, respectively.
Similarly, as set out above, expert witnesses may be subject to cross-examination by the lawyers for the opposing part and they are frequently also subject to direct questioning from the Court or Tribunal.
Footnotes
[2] See for example, the CAT’s Order (Directions to Trial) dated 6 April 2023 in the McLaren proceedings https://www.catribunal.org.uk/cases/13397720-mark-mclaren-class-representative-limited.
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How long does it typically take from commencing proceedings to get to trial? Is there an appeal process? How many levels of appeal are possible?
General:
The duration of any litigation is dependent on a range of factors, including: (a) the complexity of the facts in the case; (b) the number of parties involved; (c) the extent of disclosure required; and (d) the complexity of related legal principles. In particular, competition claims typically involve multiple defendants and extensive disclosure including documents covering a long historical period of time. Economists may require a considerable period of time after disclosure is complete to perform their analysis and prepare their reports. Embarking on any complex litigation of this sort is inevitably a long-term and burdensome undertaking, unless an early settlement can be accomplished.
High Court:
In the High Court, very few competition damages cases have proceeded to trial, with the average time from issuing proceedings to trial being approximately 4-5 years. Others claims have settled at some point before trial or otherwise been withdrawn or dismissed.
CAT:
A claim in the CAT is likely to take a similar period of approximately 4-5 years from the issue of proceedings to trial.
Collective Proceedings:
The first step in Collective Proceedings in the CAT is an application for a CPO (se response to Question 11 above). This process will likely add approximately 12-18 months to the time period set out above. However, no Collective Proceedings have yet proceeded to trial so it remains to be seen if other factors will add further delays to the process.
Appeals:
As senior courts in the UK, appeals from both the CAT and the High Court are to the Court of Appeal for cases heard in England and Wales; in relation to proceedings in Scotland, to the Court of Session; and in relation to appeals from proceedings in Northern Ireland to the Court of Appeal in Northern Ireland. ). Appeals can only be brought with the permission of either the trial court or the applicable appellate court. Permission to appeal may be sought on the grounds that there is a reasonable prospect that the appeal would be successful or there is some other compelling reason for the appeal to be heard.
Permission may also be sought to appeal from the judgment of the relevant appellate court to the UK Supreme Court on a point of law of general public interest. This is a very high bar and appeals to the Supreme Court are rare.
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Do leniency recipients receive any benefit in the damages litigation context?
Any benefits associated with the CMA’s or the EC’s leniency programmes are relevant in follow-on damages claims arising solely in connection with collusive practices and do not arise in relation to claims alleging abuse of dominance.
The Damages Directive, the substantive provisions of which the UK has retained following Brexit, introduced certain benefits for immunity recipients, in recognition of their cooperation with the regulatory proceedings. Most significantly, the principle of joint and several liability does not apply to immunity recipients where the conduct complained of post-dated the implementation of the Damages Directive by the UK on 9 March 2017, unless a claimant is unable to obtain full compensation from the other participants in the infringement. Accordingly, the default position is that the civil liability of an immunity recipient will be limited to damages caused by its own overcharges to its direct and indirect purchasers. As a corollary, an immunity recipient will also be insulated from contribution claims by the other participants in the infringement.
Depending on the facts of each case, including the role of an immunity recipient in the infringement, the extent of liability of the immunity recipient may still be very substantial in financial terms despite these protections. In addition, the final determination of all follow-on damages claims often spans a very long period of time.
In the recent years, there has been a lively discussion as to whether the current protections are sufficient or whether they should be enhanced.
Importantly, none of these protections extend to any other successful leniency applicants who may have received, for example, a reduction in a regulatory penalty.
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How does the court approach the assessment of loss in competition damages cases? Are “umbrella effects” recognised? Is any particular economic methodology favoured by the court? How is interest calculated?
Compensatory Damages:
As set out at Question 11 (above), damages are quantified by an assessment of the sum necessary to compensate the defendant for any loss it has suffered. In a competition claim, damages are sought to compensate the claimant for sums paid by way of overcharge, i.e. the amount by which prices were inflated as a result of the anticompetitive conduct. The Court has wide discretion to estimate this loss by way of the broad axe principle.
As set out in Question 18 (below), the value of loss over time to the claimant will take into account the cost of a party’s debt financing and the potential benefits of short-term investments it might have made during the infringement period.
Umbrella Effects:
The concept of “umbrella effects” refers to the effect of the anticompetitive conduct on prices charged by market participants who were not participants in the anticompetitive conduct. These are market participants who have enjoyed the ability to charge artificially inflated prices for their own goods or services as a result of their competitors engaging in anticompetitive conduct which increased prices generally in the market. The concept is recognised to varying degrees in the EU, US and Canada. In the UK, it is expected that the Court and the CAT will continue to consider umbrella effects as being caused by the anticompetitive conduct and so, subject to the claim presenting sufficient evidence to satisfy the finder of fact, that these will continue to form part of the landscape of damages available in competition damages cases in the UK.
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How is interest calculated in competition damages cases?
Simple or Compound Interest:
In the High Court and the CAT, compound interest is frequently awarded on damages, in competition cases, if it has been requested, to better reflect the true loss suffered by the claimant.
Debt Finance and loss of profit:
In considering the value of the loss to the claimant over time, and thus the rate of interest to be applied, the Court or the CAT may consider the costs of the claimant’s debt finance over the relevant period and the value of any profits made from contemporaneous short-term investments. This approach has been reaffirmed as recently as February 2023 (please see below). In considering these factors, the Court seeks to reflect the economic reality of what a business would have done with the funds had it had them and thereby to assess the amount of interest necessary to compensate the claimant for all of its losses.
New Update – WACC:
In Royal Mail v DAF Trucks [2023] CAT 6, the claimant, Royal Mail, argued that financing losses should be calculated by reference to its weighted average cost of capital (“WACC”). WACC is an economic measure that aims to quantify the value of capital in the context of a specific business. In particular, WACC seeks to acknowledge the costs of equity capital which does not necessarily incur specific direct costs in the manner of debt financing but still has a value and cost to the business. The CAT rejected the use of WACC as a measure of loss in that case, reaffirming the compensatory principle requires the claimant to be repaid its actual losses resulting from the anticompetitive conduct at issue, which the CAT did not consider would be accurately reflected by the proposed WACC analysis.
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Can a defendant seek contribution or indemnity from other defendants? On what basis is liability allocated between defendants?
Joint and Several Liability:
Defendants in competition claims have joint and several liability for the losses caused by their anticompetitive conduct. This permits a claimant to pursue any one defendant for the full amount of the losses incurred. A defendant may recoup money from other participants in the anticompetitive practices who are also liable for a portion of the damages in question.
As outlined at Question 16 (above), the usual rule on joint and several liability is displaced where a defendant has received immunity from the relevant regulatory authority. In such cases, the immunity recipient will only be reliable for damages
Contribution:
Where a contribution is sought from others, the defendant will be able to recoup a proportion of the damages paid out that is just and equitable with respect to the extent of the contribution defendant’s responsibility in causing the damage in question[3]. Contribution claims are not necessarily subject to the jurisdiction of the courts of England and Wales and law of England and Wales is not automatically applicable where the main case was decided in the courts of England and Wales under the law of England and Wales. Frequently, contribution claims are brought by defendants against other non-defendant members of a cartel to ensure that all of the contribution claims relating to the main claim can be dealt with together in a single set of proceedings.
No double-compensation:
The damages available to a claimant are limited to the loss incurred. Where defendants are jointly and severally liable, the claimant is not able to recoup the same compensation from each of the defendants.
Damages Directive:
The Damages Directive, further amends the position at common law outlined above to provide that: (1) the extent of each defendant’s contribution should calculated by reference to their respective responsibility for the whole of the loss or damage that the infringement causes; and (2) each defendant’s joint and several liability will be extinguished should they settle the claim against them for their portion of the damage caused.
Footnotes
[3] Section 1(1) of the Civil Liability (Contribution) Act 1978.
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In what circumstances, if any, can a competition damages claim be disposed of (in whole or in part) without a full trial?
In practice, three mechanisms are available to parties, which are relevant to competition litigation (and other commercial areas): settlement, strike-out, and summary judgment.
Competition damages disputes are associated with an extremely high rate of settlement. Indeed, the vast majority of disputes never reach trial, with settlement being the most common outcome. The Court and the CAT both actively encourage settlements, and professional advisers are experienced in arranging commercially acceptable settlement solutions.
Strike-out and summary judgment, which bear various similarities, are considerably more adversarial methods to achieve an early resolution of a dispute or part of a dispute. Under Rule 3.4 CPR, the High Court may strike out a claim or a defence wholly or in part if it i) sets out no reasonable grounds, ii) amounts to an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings, or iii) the party has failed to comply with a rule, practice direction or court order. The CAT has the power to strike out on similar grounds pursuant to the CAT Rules. An example where a (part of a) claim may be struck out is the inclusion in the claim of a period during which the rules invoked by the claimants were not in force or the Court did not have jurisdiction to hear the claim.
Summary judgment is governed by Part 24 CPR and Rule 43 CAT Rules, which are in similar terms. The High Court or the CAT may issue a summary judgment in circumstances where the claimant has no real (i.e. realistic as opposed to fanciful) prospect of succeeding on, or the defendant has no real prospect of successfully defending, the claim or a particular issue, and there is no other compelling reason why the case or issue should be disposed of at trial.
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What, if any, mechanism is available for the collective settlement of competition damages claims? Can such settlements include parties outside of the jurisdiction?
Settlement of collective claims brought before the CAT is permitted. Opt-in claims may be settled by agreement between the parties. Rule 94 CAT Rules provides a self-contained code for collective settlement in respect of opt-out claims, which by definition are limited to class members who are domiciled in the UK. This Rule requires the approval of the CAT for a collective settlement to become effective and legally binding, unlike settlement of opt-in Collective Proceedings or an individual action where parties can agree settlement terms without Court scrutiny.
Accordingly, in the case of an opt-out collective claim, the class representative and the defendant(s) must apply to the CAT for approval of the terms agreed between them, which approval will only be granted if the proposed settlement terms are “just and reasonable” from the perspective of the class members. The determination of a proposed settlement being just and reasonable is expected to include, in particular, an assessment by the CAT of the settlement amount, including costs, the likelihood of a higher amount being awarded at trial, the likely expense and duration of the proceedings if they were to continue, and any other matters to which the parties may refer in submissions, including those made by any class member who wishes to participate in the process.
Opt-in Collective Proceedings may include class members domiciled abroad who choose to opt in to the settlement within a time period specified by the CAT, and if they do not, the collective settlement will not include them. The mechanics of collective settlements in respect of foreign class members therefore resemble the mechanics of the certification of a collective claim (at which point foreign class members can opt in to a collective action within a time period specified in the Collective Proceedings order).
At the time of writing, there has been no settlement as yet in any of the collective claims brought before the CAT to date. It therefore remains to be seen how these procedures will operate in practice.
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What procedures, if any, are available to protect confidential or proprietary information disclosed during the court process? What are the rules for disclosure of documents (including documents from the competition authority file or from other third parties)? Are there any exceptions (e.g. on grounds of privilege or confidentiality, or in respect of leniency or settlement materials)?
Disclosure:
The precise manner of disclosure will be decided at the first Case Management Conference for the litigation at which the Court or CAT will determine the extent and nature of disclosure required to determine the issues at hand.
Confidentiality:
Documents cannot be withheld during disclosure on the grounds of confidentiality or commercial sensitivity. Confidential documents disclosed during civil proceedings must be kept confidential and may only be used for the purposes of the proceedings in which they were disclosed and for no other purpose, except with the permission of the Court or the CAT.
In order to protect the highly commercially sensitive documents typically disclosed during a competition litigation, parties can seek additional protection through applying for a confidentiality ring order. Confidentiality rings restrict the persons who may inspect the disclosed documents to a limited number of named individuals, who are required to sign an undertaking by which they promise to maintain the confidentiality of the documents. Typically, a confidentiality ring will consist of two rings: (1) an inner ring limited to each party’s legal team and relevant experts; and (2) an outer ring including the members of the inner ring and named select individuals from the companies which are parties to the proceedings.
Withholding Documentation:
All documents that are relevant to the claim or are within the categories of disclosure that is ordered must be disclosed unless they fall within a very limited number of categories of documents can be withheld from disclosure. The main categories of documents which may be withheld from disclosure are: (1) documents created for the purpose of giving or receiving confidential legal advice received from a party’s lawyer, i.e. documents which are subject to the legal advice privilege; (2) documents created for the dominant purpose of conducting litigation, i.e. documents that are subject to the litigation privilege; (3) cartel leniency statements to competition authorities; and (4) settlement submissions to competition authorities.
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Can litigation costs (e.g. legal, expert and court fees) be recovered from the other party? If so, how are costs calculated, and are there any circumstances in which costs recovery can be limited?
The starting point for costs recovery in English law is the principle that the loser pays the winner’s costs, including legal fees, as laid down in CPR 44.2(2)(a) (and reflected also in CAT Rule 104). This principle also applies in competition damages disputes. However, the (overall) more successful party rarely recovers the full amount of the costs that it has actually incurred in the litigation from the (overall) less successful party. As a general rule of thumb, a wholly successful party may expect to recover approximately two-thirds of the reasonable costs actually incurred, and the balance will have to be borne by the party concerned (or its litigation funder if applicable). Indeed, CPR 44 and CAT Rule 104 allow considerable discretion, which the High Court and the CAT readily use to scrutinise costs claimed by successful parties.
These rules also set out various factors to be considered in assessing a claim for costs. If a party succeeds overall but loses on a particular issue, the costs incurred by that party in relation to that issue may be considered to be irrecoverable. An important factor is the parties’ conduct in the litigation: for example, an excessive amount of work or inefficient division of labour will inevitably have a bearing on the amount of costs awarded.
Another relevant factor is the level of rates charged by the parties’ professional advisers. In pursuing or defending competition damages claims, parties are typically assisted by specialist lawyers whose hourly rates may exceed the official guideline rates published by the Judiciary. These guidelines may in some cases serve as a constraint on the level of parties’ costs recovery.
Costs may be ordered after a short interim hearing by way of summary assessment on the basis of the parties’ summary costs schedules. However, most costs of the ongoing proceedings will be held over to be determined upon the conclusion of the proceedings. The Court or the CAT will make an order as to which party is to bear which proportion of the other’s costs, with the amount of those costs to be subject to detailed assessment if not agreed. In practice, agreement is usually reached on the level of costs that would otherwise be subject to detailed assessment.
To limit their exposure to adverse costs orders and obtain a level of certainty as to their financial exposure, parties may obtain after-the-event (“ATE”) insurance. However, ATE insurance is expensive and not regularly used in practice in large-scale litigation.
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Are third parties permitted to fund competition litigation? If so, are there any restrictions on this, and can third party funders be made liable for the other party’s costs? Are lawyers permitted to act on a contingency or conditional fee basis?
English law takes a relatively permissive approach to third-party litigation funding, which reflects the latest global trends but not the existing position in, for example, some major European jurisdictions where the ability of third parties to fund litigation is heavily regulated. Accordingly, third-party funding has rapidly developed as a specialist segment among the services sought in connection with English litigation, particularly by claimants (and class representatives in the case of collective claims). These developments are particularly relevant to high-value complex litigation concentrated before London-based Courts, including competition litigation.
A funder’s involvement in a dispute will typically include exposure to adverse costs orders because of their role in funding the litigation. However, funders may obtain ATE insurance in the same way regular parties do, and in practice funders do so to limit their potential financial liability. Funders can also limit their potential exposure to adverse costs orders by ensuring they are not actively involved in the litigation or in the decisions that are made as the litigation progresses.
Traditionally, lawyers charge their fees at an hourly rate, which they bill to their clients every month. Alternative fee arrangements, including conditional fee arrangements (“CFA”) and damages-based agreements (“DBA”) are permitted, with certain caveats. In the case of a CFA, the client usually pays its lawyers at a significantly reduced hourly rate during the course of the litigation, plus a success fee in the event they are successful in the litigation. The payments on the basis of hourly rates are properly recoverable from the unsuccessful party, but the success fee is not recoverable. A DBA differs in that the client agrees to pay its lawyers a proportion of the damages awarded. Such fees are also recoverable from the unsuccessful party, but not beyond the amount agreed in the DBA.
Third-party funding has played a central role in the rapid growth over recent years of collective actions. However, in late July 2023, the Supreme Court called that role into question in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others [2023] UKSC 28: the Court found that litigation funding agreements (“LFAs”) allowing the funder to recover a percentage of any damages are DBAs which, pursuant to Section 47C(8) of the CA, are unenforceable if they relate to opt-out Collective Proceedings, and in other contexts may be unenforceable if they fail to comply with the relevant regulations. It is expected that a large proportion of the LFAs through which claimants are funding existing cases are DBAs under the Supreme Court’s analysis in PACCAR. Accordingly, the implications of this judgment for opt-out collective proceedings in particular, and for litigation funding more broadly will likely be very significant. With appropriate funding arrangements being one of the conditions of certification, it remains to be seen if the certification in any of the existing claims will be revisited.
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What, in your opinion, are the main obstacles to litigating competition damages claims?
The UK has acquired a reputation as an extremely attractive venue offering efficient and fair resolution of disputes, facilitated by a developed infrastructure, including highly-specialised judges and advisers. This perception applies not just to competition litigation but to high-value complex commercial litigation more generally. A disadvantage is that litigation in this jurisdiction is expensive. Key balancing features are the prospect for claimants to recover litigation costs from defendants (see Question 23), and the possibility to obtain funding from third parties (see Question 24) and/or ATE insurance. Whilst litigation in some other jurisdictions may be less costly, the availability of favourable costs awards, third-party funding or insurance may be less advantageous to claimants.
The attractiveness of the High Court and the CAT as venues for competition litigation has also resulted in an ever increasing volume of cases being heard. Accordingly, they have a developed and developing jurisprudence on the key issues in competition litigation. However, the High Court and the CAT are busy, and there may be some delays in hearings being listed. However, the Court and the CAT are taking active measures to address their ever-increasing workloads, including innovative case management techniques designed to increase efficiency.
One area of recent debate is the ability of claimants to pursue claims following on from decisions of the EC based on post-Brexit investigations. This concern is probably overstated, given the various jurisdictional mechanisms available in English law: one is the possibility to plead an infringement of EU competition law as a breach of foreign law. Another is the possibility to rely on a foreign regulatory decision by way of evidence, which is a long-standing feature of English litigation.
In relation to the most recent developments, the competition litigation community will undoubtedly be monitoring any impact of the Supreme Court’s judgment in PACCAR on third-party funding, particularly for opt-out Collective Proceedings (see question 24).
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What, in your opinion, are likely to be the most significant developments affecting competition litigation in the next five years?
Competition litigation in the UK has proven extremely resilient over recent years. The removal of the EC and European Courts from the competition litigation landscape in the UK as a result of Brexit initially gave rise to concerns over the country’s future as a leading forum for competition damages claims. Several years on, it is now apparent that competition litigation in the UK has continued to expand significantly in terms of the number and value of cases that claimants continue to bring in the jurisdiction. At present, a substantial proportion of competition litigation before the High Court and the CAT involved complaints about cartel conduct based on the Commission’s decisions which pre-date Brexit. However, the powerful Collective Proceedings regime is being used to pursue novel theories of harm based on alleged abuse of dominant position, frequently where there is no corresponding Commission decision. The growth of these claims has operated as a counter-balance to the uncertainties created by Brexit. Indeed, the full and accurate assessment of the impact of Brexit may not be possible for another several years, until the conduct subject to the Commission’s decisions from the relevant time period has been fully litigated.
A related factor is the development of similar legal regimes in other European jurisdictions. A number of European countries have adopted modern rules governing competition litigation, including the introduction of third-party funding, and provided specialist training to their judges, among other things, with a view to gaining a greater share of the European competition litigation market. In parallel with the potential consequences of Brexit, the UK will have to track these developments closely to ensure that it remains competitive with Courts in other European countries.
Further, as disputes over competition damages become more voluminous and complex, the CAT has taken a pragmatic approach to their management. As of 2022, the CAT has been able to case manage different sets of proceedings together where they give rise to overlapping issues by making a UPO. The underlying rationale for this case management tool is the fact that a single practice or a series of practices – a price-fixing cartel, for example – tends to give rise to multiple separate claims, which often advance very similar arguments in relation to theory of harm, overcharge and pass-on (see Question 11). The latter is a particularly prominent area where the CAT has made a UPO, effectively consolidating independent sets of proceedings (raising similar arguments concerning pass-on in relation to the same or similar industries and overlapping time periods). Such a centralisation of decision making, designed to lead to consistent decision and to avoid conflicting decisions can be expected to continue in litigation before the CAT over the next few years.
Another phenomenon that may be observed across various proceedings currently pending before the CAT is a high proportion of standalone claims. It appears that in these cases claimants (or class representatives, in Collective Proceedings), do not consider the absence of an underlying regulatory finding to be an obstacle to pursuing their claims (or those of members of class, in Collective Proceedings). It seems, in fact, that standalone claims may be preferred by some claimants in the sense that they are not constrained in the scope of their claims in the same way as they might be where there is a regulatory decision.
However, the single most important feature to watch in competition litigation will likely generally be Collective Proceedings before the CAT (see Question 11 in particular). Given that the first (and other) trials of collective claims will likely take place over the next few years, a substantial number of issues, including pass-on, may be expected to receive further judicial scrutiny, including at Court of Appeal and Supreme Court level.
United Kingdom: Competition Litigation
This country-specific Q&A provides an overview of Competition Litigation laws and regulations applicable in United Kingdom .
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What types of conduct and causes of action can be relied upon as the basis of a competition damages claim?
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What is required (e.g. in terms of procedural formalities and standard of pleading) in order to commence a competition damages claim?
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What remedies are available to claimants in competition damages claims?
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What is the measure of damages? To what extent is joint and several liability recognised in competition damages claims? Are there any exceptions (e.g. for leniency applicants)?
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What are the relevant limitation periods for competition damages claims? How can they be suspended or interrupted?
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Which local courts and/or tribunals deal with competition damages claims?
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How does the court determine whether it has jurisdiction over a competition damages claim?
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How does the court determine what law will apply to the competition damages claim? What is the applicable standard of proof?
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To what extent are local courts bound by the infringement decisions of (domestic or foreign) competition authorities?
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To what extent can a private damages action proceed while related public enforcement action is pending? Is there a procedure permitting enforcers to stay a private action while the public enforcement action is pending?
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What, if any, mechanisms are available to aggregate competition damages claims (e.g. class actions, assignment/claims vehicles, or consolidation)? What, if any, threshold criteria have to be met?
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Are there any defences (e.g. pass on) which are unique to competition damages cases? Which party bears the burden of proof?
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Is expert evidence permitted in competition litigation, and, if so, how is it used? Is the expert appointed by the court or the parties and what duties do they owe?
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Describe the trial process. Who is the decision-maker at trial? How is evidence dealt with? Is it written or oral, and what are the rules on cross-examination?
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How long does it typically take from commencing proceedings to get to trial? Is there an appeal process? How many levels of appeal are possible?
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Do leniency recipients receive any benefit in the damages litigation context?
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How does the court approach the assessment of loss in competition damages cases? Are “umbrella effects” recognised? Is any particular economic methodology favoured by the court? How is interest calculated?
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How is interest calculated in competition damages cases?
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Can a defendant seek contribution or indemnity from other defendants? On what basis is liability allocated between defendants?
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In what circumstances, if any, can a competition damages claim be disposed of (in whole or in part) without a full trial?
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What, if any, mechanism is available for the collective settlement of competition damages claims? Can such settlements include parties outside of the jurisdiction?
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What procedures, if any, are available to protect confidential or proprietary information disclosed during the court process? What are the rules for disclosure of documents (including documents from the competition authority file or from other third parties)? Are there any exceptions (e.g. on grounds of privilege or confidentiality, or in respect of leniency or settlement materials)?
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Can litigation costs (e.g. legal, expert and court fees) be recovered from the other party? If so, how are costs calculated, and are there any circumstances in which costs recovery can be limited?
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Are third parties permitted to fund competition litigation? If so, are there any restrictions on this, and can third party funders be made liable for the other party’s costs? Are lawyers permitted to act on a contingency or conditional fee basis?
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What, in your opinion, are the main obstacles to litigating competition damages claims?
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What, in your opinion, are likely to be the most significant developments affecting competition litigation in the next five years?