It has been an established principle for some years that persons who have suffered loss as a result of competition law infringements may claim damages for the loss they have suffered as a result
However, until last week, no-one had yet succeeded in securing such damages from the UK courts.
Following a judgment by the Competition Appeal Tribunal (CAT) on 5 July 2012, that has now changed.
2 Travel Group plc v Cardiff City Transport Services Limited (Cardiff Bus)
In 2008, the Office of Fair Trading (OFT) issued a decision finding that Cardiff Bus, an operator of public transport in and around Cardiff, had infringed the competition law prohibition of the abuse of a dominant market position.
Cardiff Bus was the dominant operator in the relevant markets. The OFT found that, in response to 2 Travel's entry into the market, Cardiff Bus introduced its own bus service with buses that ran on the same routes and at similar times of day as 2 Travel's services. Cardiff Bus's services were run at a loss until shortly after 2 Travel's exit, when Cardiff Bus withdrew them.
The OFT concluded that Cardiff Bus had engaged in predatory conduct which amounted to an abuse of its dominant position.
Following the OFT's decision, 2 Travel claimed damages against Cardiff Bus before the CAT. Under the relevant rules, the OFT's decision was sufficient to prove the infringement. The case before the CAT therefore focused on issues of causation and quantifying loss.
2 Travel's claims appear to have totalled some £50 million. It claimed:
- loss of profits for the passengers it would have carried but for Cardiff Bus's conduct
- loss of the increase in the business's value had it been allowed to grow into a successful bus company
- loss of the ability to benefit from the increase in value of a depot that it owned
- wasted staff and management time
- costs associated with going into liquidation
- exemplary damages, intended to "punish and deter"
In the event, the CAT awarded damages of just under £100,000. This comprised an award for loss of profits (£33,818.79) and exemplary damages (£60,000).
On the question of exemplary damages, the CAT described this as a case in which "Cardiff Bus's conduct has been outrageous and where, absent an award of exemplary damages, a compensatory award would be insufficient". The CAT dismissed 2 Travel's other heads of loss, although the overall weakness of 2 Travel's business seems to have been an important factor in determining the validity of its claims.
A landmark case
Whilst this is the first judgment of its kind, the reality is that there have already been a large number of successful damages claims in competition law cases in the UK. These have taken the form of (often very substantial) settlements that have been negotiated confidentially by the parties, rather than having been played to a conclusion before the courts.
Nevertheless, this is an important judgment since it is the first time that damages have been awarded by a court in the UK in respect of a competition law infringement.
Damages claims are increasingly being brought in respect of competition law infringements. The UK has so far proved to be a popular jurisdiction for bring such claims. Claimant and defendant lawyers will be scrutinising the judgment to assess what it means for their cases. For potential claimants, the case proves that 'it can be done'. But the case also underlines the fact-specific nature of the analysis and that final damages awards may be very low.
It remains to be seen whether this case will push more parties to allow the courts to determine awards, rather than settling them in private. Either way, the important landmark of having 'the first' case in which damages have been awarded has now been achieved.