High Court rules on competition law damages and conspiracy claims

High Court rules on competition law damages and conspiracy claims

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Author: Sarah Livestro

The High Court has confirmed that so-called 'follow on' damages actions brought under section 47A of the Competition Act 1998 may be based on the tort of conspiracy to use unlawful means.

Under the Act, a person who has been caused loss or damage through an infringement of EU or UK competition law may bring an action for damages before the Competition Appeal Tribunal (CAT).

Such claims can only be brought before the CAT following a decision by the European Commission or the Office of Fair Trading that competition law has been breached, so they are commonly referred to as 'follow on' claims. They have generally been based on a breach of statutory duty.

In Newson v IMI, the claimants had sought damages under section 47A of the Competition Act, following a decision by the European Commission that the defendants had participated in a price-fixing and market sharing cartel for copper plumbing tubes.

As well their claim of a breach of statutory duty, the claimants argued that the breach of competition law amounted to the tort of conspiracy to use unlawful means.

In its judgment, the High Court found that the scope of section 47A of the Competition Act was not restricted to a particular cause of action. But whether a particular cause of action can be used to bring a claim under section 47A will depend upon whether it can be established on the basis of the infringement decision alone.

Here, the defendants had been found to have participated in a cartel, so all the elements of the tort of conspiracy to use unlawful means had been established by the Commission. But, as the Court made clear, a different type of infringement might not have given rise to this particular cause of action.

According to the claimants in this case, there could be benefits to basing a follow on damages action on conspiracy to use unlawful means. These could include more beneficial rules on remoteness of damage and on passing on the overcharge to customers and the ability of a claimant to recover its own costs of investigating the effects of the cartel. But since this case was an application for striking out, rather than a full hearing on the substantive merits, the strength of these arguments still remains untested.

As noted above, the section 47A CAT procedure applies only in cases in which the Commission or the OFT has already made a decision finding that the competition law rules have been breached. Absent such a decision, parties must bring their cases in the High Court (rather than the CAT) and they must prove the breach themselves (rather than being able to rely on the Commission or OFT decision as proof of the breach).

The principles of Newson v IMI should apply equally to High Court claims as they do to claims before the CAT.