Euan Burrows, Max Strasberg and Alina Fazal provide an overview of the rules and regulations governing competition damages actions in England and Wales, and examine the advantages of lodging a claim in the jurisdiction
1 Are there any particular sectors in your jurisdiction which tend to be a focus for competition damages actions? Why do you think this is the case?
Due to the nature of follow-on damages actions, the industry sectors in which they occur will reflect the focus of competition authorities over the preceding few years. To date, the most significant damages actions in England and Wales have tended to follow on from infringement decisions of the European Commission. For example, cases have recently been brought following the Commission's Car Glass (Peugeot Citroen Automobiles UK Ltd and Ors v Pilkington Group Limited and Ors) and MasterCard (Deutsche Bahn AG and Others v MasterCard Incorporated and Others; Sainsbury's Supermarkets Ltd v Mastercard Incorporated and others; DSG Retail Limited and Dixons Retail Limited v MasterCard Incorporated and Others) decisions (which date back eight and nine years, respectively), and the Court of Appeal recently handed down its judgment in the follow-on damages claim based on the Commission's Air Cargo decision from 2010.
At the Commission level, infringement decisions announced in the last two years include the following markets (the first four of which have already given rise to follow-on damages actions):
While this industrial focus is likely to continue, further competition litigation can be expected in the digital sectors and to follow the enforcement activity taken by competition authorities in the financial services markets.
Standalone competition damages claims are somewhat less predictable, given the lack of a pre-existing underlying infringement decision. Damages claims were recently seen in the supermarket sector (Shahid Latif & Mohammed Abdul Waheed v Tesco Stores Limited) and the markets for qualification accreditation (NCRQ Ltd v Institution of Occupational Safety and Health) and internet search services (Infederation Ltd v Google Inc.  All E.R. 325).
2 Who do damages claims tend to be brought by in your jurisdiction? (e.g. direct purchasers, indirect purchasers, end consumers?) If claims are not currently being brought by indirect purchasers and/or end consumers, why do you think this is?
Competition damages claims in England and Wales usually involve business-to-business (“B2B”) rather than business-to-consumer (“B2C”) actions. Given the B2B type actions usually seen, the majority of claimants are direct rather than indirect purchasers.
An indirect purchaser must first show that the direct purchaser passed on some of its losses suffered as a result of the infringer's anticompetitive conduct and then establish the degree of pass-on to quantify its loss. This is a notoriously complex exercise if based on traditional common law recovery principles.
The problem is further compounded for end-consumers, who often rely on multiple instances of pass-on being established through the supply chain (e.g. evidence of loss passed on by suppliers to distributors and then by distributors to the end-consumer) to establish their own loss. In practice, disclosure is likely to be required of the indirect purchasers to establish the degree of pass-on, which may be difficult to obtain.
The Damages Directive (which must be transposed by 27 December 2016) has attempted to simplify the task for indirect purchasers. In particular, where a defendant is found to have committed an infringement resulting in an overcharge for a direct purchaser who still purchased the relevant product, there will be a presumption that the direct purchaser passed on losses down the supply chain (i.e. to an indirect purchaser).
Importantly, following UK reforms in October 2015, it is also now possible to bring both opt-out and opt-in collective actions before the Competition Appeal Tribunal (the "CAT") (Consumer Rights Act 2015, Schedule 8). This legislation is designed to facilitate representative actions on behalf of consumers (also permitting businesses to do the same). The opt-out regime is limited to UK-based consumers, but it is envisaged it will also be possible for class-action law firms/funders to set up websites designed to permit non-UK consumers to opt in to an action brought in the UK to recover EU-wide losses.
These changes may lead to an increase in competition damages actions from end-consumers. The first action of this type in England and Wales was commenced in March 2016, by the National Pensioners Convention on behalf of purchasers of mobility scooters who claim to have been overcharged by Pride Mobility Products. This follows the OFT's infringement decision against Pride dated 27 March 2014.
3 What approach are the courts taking to claims that originate from investigations or infringements arising out of the jurisdiction?
In the context of foreign infringement decisions, it may be possible to use a single cartel member as an 'anchor defendant' to establish jurisdiction in the UK. This relies upon the operation of the Recast Brussels Regulation (or precursors thereto) and uses the English common law principle that each of the addressees of an infringement decision will usually be jointly and severally liable for the entirety of the infringing conduct. As such, a claimant may have the option just to issue proceedings against one addressee in respect of its losses suffered as a result of the cartel as a whole.
English courts have to date been generous to themselves when considering their jurisdiction in this context. Where at least one addressee is a UK company, the position will be relatively straightforward: issue proceedings against that UK company in the usual way and, if required, issue proceedings against the other addressees simultaneously. Where only one defendant is sued, that defendant will be left to pursue other infringers, either by joining them to the on-going proceedings or seeking contribution in separate proceedings.
The position is more complex where there is no UK addressee. Potential claimants will often look for a UK subsidiary of a foreign addressee which, though not an addressee in its own right, may have been implicated in the infringement in some way or, at least, have sold cartelised products.
The question for the court will then be whether or not that UK subsidiary was sufficiently involved in the infringement to be a defendant in the proceedings, therefore anchoring them in England and Wales.
The High Court has permitted private damages claims against so-called 'innocent' subsidiaries, which merely implemented the infringing conduct of their parent company by, for instance, selling a cartelised product (Provimi Ltd v Aventis Animal Nutrition SA  2 All E.R. (Comm) 683). However, it has since cast doubt on this position through comments that the UK subsidiary should have some knowledge of its parent's infringing conduct in order to be an anchor defendant (Cooper Tire & Rubber v Shell Chemicals  EWCA Civ 864; see also Toshiba Carrier UK Ltd v KME Yorkshire Ltd  EWCA Civ 1190).
A practical difficulty arises in that jurisdiction needs to be established before evidence of fact is adduced as to whether or not the subsidiary was innocent. As such, when considering jurisdiction, the court is heavily dependent on the facts as pleaded by the parties. In turn, this emphasises the duty of parties to ensure that their pleadings are accurate in respect of such issues if they are to be relied upon by the court.
Obviously, an English court would adopt a different attitude in circumstances where the court of a foreign jurisdiction is already seised of the same claim. The position within the EU is, broadly, that the court first seised of the claim will have jurisdiction, and the courts of other Member States subsequently seised will decline jurisdiction (by staying or dismissing the proceedings).
4 Do claimants favour your jurisdiction when they have a choice as to where to lodge a claim? Why?
Many claimants favour English courts when they have a choice of jurisdictions, for three main reasons:
(i) all documents on which they rely; and
(ii) the documents which affect their own case, another party's case, or support another party's case.
5 In practice, are the courts generous to claimants when awarding disclosure, including pre-action disclosure?
The 'standard disclosure' test described above is relatively generous compared to most other EU jurisdictions, although in practice the courts are increasingly keen to control the scope of disclosure.
The courts will get involved in finalising parameters where the extent of disclosure cannot be agreed. For example, in Air Cargo, Rose J required the parties to agree on an economic framework to govern the approach to establishing whether the cartel behaviour actually resulted in an overcharge, prior to ordering disclosure.
English courts are able to make an order for pre-action disclosure, but this is not available as of right (Alstom Transport v Eurostar International Ltd  EWHC B32 (Ch)). For example, in Marme Inversiones 2007 S.L. v The Royal Bank of Scotland plc and others  EWHC 173 (Comm), the High Court refused an application for early specific disclosure by the claimant in proceedings arising out of the alleged rigging of the Euribor reference rate because (i) the claimant was able to plead its claim without early disclosure, and (ii) it was not demonstrated that it would save costs. In practice, in some cases parties will give early disclosure voluntarily or by way of settlement, although this is heavily dependent upon the facts of the case.
Whilst the EU Damages Directive seeks to impose minimum disclosure requirements which will apply in national courts of all Member States, the English disclosure standard will remain relatively more comprehensive and burdensome by comparison even following these reforms.
6 How do the dynamics of a settlement really work in your jurisdiction? Is there a mechanism by which a "global settlement" can be approved/enforced?
Settlement is usually explored through correspondence (usually on a "without prejudice" basis) to establish the parties' respective appetites for settlement. This may take place at any time before the trial commences, whilst a settlement may still be reached after trial has commenced with the court's permission.
A formal process is available under the 'Part 36 Offer' route which permits an offer to be made and held open for a given period. Costs penalties will then apply where a party declined a Part 36 Offer that it should have accepted (i.e. where the eventual judgment is less favourable than the Part 36 Offer).
Alternatively, there is the flexibility of the traditional 'Calderbank Offer'. The court will be able to refer to the existence of the offer when considering costs, but will retain its discretion when making an award of costs.
It is possible and generally advisable from a defendant's perspective to reach a joint settlement in multi-party cases. However, as a private settlement between a defendant and a claimant is not per se binding against non-settling parties, whether a defendant is prepared to settle more than its fair share will be an important tactical issue. Indeed, a settling defendant must show that the original settlement was reasonable in order to enforce it against other infringers.
With the introduction of representative collective actions in the UK, including a collective settlements regime, courts are likely to play an increasingly important role in settlements, including in multijurisdictional cases. With this comes the practical difficulty of achieving a final and binding 'global' settlement between parties in a number of jurisdictions. It is now possible to obtain an approved settlement before the CAT, certainly in respect of EU-based damages, whereby the class representative and those of the defendants that have agreed to the settlement may apply to the CAT for a collective settlement approval order (Consumer Rights Act 2015, Schedule 8).
7 How long do damages actions take? What is the likely range of costs required to defend a claim?
Generally, damages actions in the High Court can be expected to take around two years in the first instance to complete (from issuing the claim form until trial). However, this may be subject to significant variation given the propensity for follow-on actions to be contingent upon (and thus stayed pending) the outcome of appeals against infringement decisions and the fact that most damages actions in English courts result in settlement.
Moreover, a variety of factors will affect the length of a damages action and therefore also the costs of proceedings (e.g. extent of disclosure, number of witnesses, legal and economic issues). It is possible to obtain an order for expedited proceedings, but only if there are substantive grounds for requiring an early trial. Ultimately, this is a matter of discretion for the judge in question.
The new fast-track procedure in the CAT is designed to enable simple antitrust claims to be heard quickly, although this is unlikely to be relevant for complex follow-on damages actions.
8 What funding options are available for (i) claimants and (ii) defendants, in your jurisdiction?
A variety of funding options are available to claimants and defendants in England and Wales. These include:
These funding options will generally be applied in a context where, as noted, in England and Wales, costs follow the event. As a result, the starting point will be that a wholly successful party (claimant or defendant) should expect to recover in the region of 60–65 per cent of their costs from their opponent.
9 Do you anticipate any significant increase in damages actions in your jurisdiction over the next year or two? If so, where and why do you anticipate these increases coming?
We envisage that England and Wales will continue to be the primary forum for UK and EU follow-on damages claims and the volume of cases will continue to grow, reflecting the level of antitrust infringement findings. Moreover, the introduction of the new domestic opt-in and opt-out collective damages regime may eventually facilitate an increase in competition damages claims from individual or SME end-consumers, albeit the lack of retroactive effect of the new regime (including in respect of limitation) means the impact may be delayed by a few years yet.
Some claimants may also be encouraged by the new fast-track procedure for simple claims before the CAT, which offers two distinct advantages to claimants seeking a simple, quick and (relatively) low-cost solution:
The first fast-track claim was brought before the CAT on 22 December 2015 and settled on 12 January 2016 (NCRQ Limited v IOSH). This was also the first standalone damages claim brought before the CAT. The second such claim was brought on 18 February 2016 and settled on 18 March 2016 (Shahid Latif & Mohammed Abdul Waheed v Tesco Stores Limited). A further fast-track claim was brought on 12 April 2016 and remains on-going at the time of writing (Socrates Training Limited v The Law Society of England and Wales).
10 In your opinion, what are the key changes (if any) required in your jurisdiction to improve the effectiveness of private enforcement of competition law?
One of the key areas of uncertainty in competition damages proceedings is limitation, and specifically when time starts to run. The relevant limitation period under English law for competition damages claims will be six years from the date on which the cause of action accrued.
This can be problematic when the conduct complained of was concealed for a significant period of time (i.e. the majority of cartel damages claims). A claimant may be unaware of their cause of action having accrued for several years.
Although in a case involving deliberate concealment a claimant may argue that time did not begin to run until the date on which they knew or ought to have known that their cause of action had accrued, English courts take a strict approach when assessing the argument. Even if the concealment argument were accepted, the court has discretion to determine the point at which the claimant ought to have known of the existence of their cause of action.
The Damages Directive proposes to resolve this uncertainty by introducing a minimum five-year limitation period and codifying a set of minimum requirements on similar lines to the doctrine of concealment under English law. Those minimum requirements provide that time does not begin to run until:
(a) the infringement has ceased; and
(b) the victim knows or can reasonably be expected to have knowledge of:
(i) the behaviour constituting the infringement;
(ii) the qualification of such behaviour as an infringement;
(iii) the fact that the infringer caused harm to them; and
(iv) the identity of the infringer who caused such harm.
In addition, the limitation period must be suspended during the competition authority's investigation, and will only restart one year after any infringement decision has become final or proceedings are otherwise terminated.
However, while the new limitation regime can be said to give claimants a 'fairer' chance to make their claims, it has shifted significant risk to the defendants, who will be 'on the hook' for much longer. Using the example of cartel infringements: the process from investigation to final infringement finding (after all appeals) may last at least eight years at EU level. Assuming a cartel ceases in 2016 and an investigation is commenced the same year, the limitation period may not expire until 2030. This is likely to be a significant cause for concern for businesses, who may face uncertainty as to their exposure to competition damages actions for well over a decade and possibly longer.
The authors would like to acknowledge Alina Fazal for her assistance in the preparation of this chapter. Alina Fazal is an associate in the Dispute Resolution department in Ashurst's Singapore office. She has advised clients on a wide range of contentious matters across various different sectors, including investigations, anti-trust litigation as well as general commercial disputes. Email: Alina.Fazal@ashurst.com.