In October 2012, the UK Supreme Court issued its first antitrust judgment, ruling that the UK statutory limitation period for bringing “follow-on” damages actions—i.e., claims based on antitrust infringement decisions—was sufficiently clear that, under the facts of the case, it did not deprive the claimants of effective redress. This ruling is significant as it is the first time the UK’s highest appeal court has examined antitrust damages claims and shows, alongside several high-profile UK Court of Appeal judgments handed down earlier this year, that the UK courts are gaining experience and confidence in dealing with complex antitrust matters. This increased competence will continue to benefit both claimants and defendants in the form of increased legal certainty in what remains a growing and developing area of EU and UK law.
BCL v. BASF centered on the compatibility of the UK limitation rules for follow-on damages actions with the European Union legal principles of effectiveness and legal certainty. The claimants, BCL Old Co. Limited and others (BCL), brought an action, in 2004, for damages against members of the vitamins cartel other than BASF, following a decision issued by the European Commission in November 2001. BCL did not sue BASF until more than six years after the decision, in March 2008, bringing its action in the UK specialist Competition Appeal Tribunal (CAT). Pursuant to the CAT’s rules, a claimant wishing to bring such an action must do so within two years from the date on which the decision of the relevant competition authority becomes final, suspended by any appeal brought against the decision. BASF had appealed the Commission’s decision, but only on the level of the fine. BCL argued that it was not clear from the limitation rules that an appeal of the fine alone did not invoke the suspension of the limitation period and that, in any event, it had not been clear at the time the appeal was brought what BASF was appealing against.
In May 2009, the UK Court of Appeal found that BCL’s claim was time-barred and could proceed, if at all, only with an extension to the limitation period granted by the CAT itself. Later that year, the CAT assumed that it did have the power to extend but declined to do so. On appeal of this decision, the Court of Appeal, however, held that the CAT had no such power to extend the statutory deadline for bringing an action before the CAT and that European Union law did not require the CAT to hold such a power.
The UK Supreme Court was asked to consider whether the statutory limitation period and its application violated the claimant’s rights under European Union law principles by rendering it “excessively difficult” for BCL to bring a claim against BASF. The Supreme Court considered that the statutory language was “plain and ordinary” and the legal position was “clear.” It found that the risks to BCL of not bringing a claim against BASF in January 2004 were or should have been evident and the Supreme Court found no evidence that the reason BCL had not brought its claim earlier was actually due to any legal uncertainty. In any event, the Supreme Court held, even if the legal position had not been clear, the only remedy for BCL would have been to bring an action against the UK government. Any uncertainty would not have permitted an action for damages to be brought against BASF at this stage.
The ruling clarifies the CAT limitation period: An appeal of a Commission decision limited to the level of fine does not suspend the two-year period. By contrast, an appeal on the substance of the infringement, by any addressee of the decision—even if not a defendant in the damages claim—does suspend the limitation period.
The UK Supreme Court and recent Court of Appeal judgments have a number of practical implications for both claimants and defendants in UK private damages actions. First, a claimant will need to review the details of all appeals of any relevant infringement decision to determine whether it is the infringement itself that is the subject of the appeal or merely the level of fine. An appeal of the level of fine will not suspend the CAT limitation period. For potential defendants who did not appeal the Commission’s decision, for example because they were one of the immunity or leniency applicants, this may mean a number of years of uncertainty where they have no influence over the outcome of any appeal. Conversely, a claimant will not be able to proceed with an action before the CAT until the outcome of any appeal brought on the substance of the infringement by one of the decision addressees, even if the claimant did not intend to sue that particular defendant. This may significantly delay any recovery by the claimant through an action brought before the CAT. Instead, a claimant may decide to bring a damages action before the UK High Court, which also has jurisdiction to hear follow-on damages actions, and where a claim is more likely to proceed pending appeals of the underlying infringement decision.
As outlined in previous editions of this Newsletter, the UK regime is currently undergoing significant reform with the planned merger of the Office of Fair Trading and the Competition Commission due to take place as early as spring 2014. The procedure for bringing antitrust damages actions is also currently under review by the UK government with a proposal to expand the CAT’s jurisdiction to hear damages claims that do not arise from a decision by a competition authority (also known as “standalone” claims). The full text of the Supreme Court’s judgment is available here.