NEWS

Security for Costs in CAT damages action dismissed

17 October 2011

For only the second time in its history, the Competition Appeal Tribunal has given judgment on a security for costs application in the case of 2 Travel Group Plc (in liquidation) v Cardiff City Transport Services Ltd.

The Claimant in this action seeks damages from the Defendant pursuant to section 47A of the Competition Act 1998. The claims follow on from a decision taken by the Office of Fair Trading on 18 November 2008. In the Decision, the OFT found that, between 19 April 2004 and 18 February 2005, the Defendant infringed the prohibition imposed by section 18(1) of the Act ("the Chapter II prohibition") by engaging in predatory conduct against the Claimant which amounted to an abuse of its dominant position in the relevant markets.

The CAT ruled that the award of security would very likely have the effect of stifling a genuine claim and commented that the Claimant had taken all reasonable steps to exhaust those avenues of funding that are realistically available to it, and any requirement to provide security would carry a very real risk of extinguishing the proceedings.

The Tribunal went on to say that it was very concerned that making an order for security for costs would risk extinguishing a genuine claim by a company in liquidation, in circumstances where it cannot be excluded that the Tribunal might ultimately conclude that the Claimant's impecuniosity has been caused by the Defendant and that it's conclusion was fortified having regard to the findings of the OFT contained in the Decision, which are (subject to direction by the Tribunal) binding on the Tribunal.

Michael Bowsher QC of Monckton Chambers and Adam Aldred of Addleshaw Goddard appeared and continue to appear for the claimant.

For a copy of the judgment please click here.

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Michael Bowsher QC