The Court of Appeal has today handed down a judgment that considers the relationship between Articles 33 and 37 of Directive 2008/118/EC – the Excise Directive. The Appellant had contended that excisable goods would cease to be so having been destroyed following seizure and forfeiture by UK Customs authorities. Specifically, it argued that the destruction of goods at the hands of authorities following seizure engaged Article 37 which materially provides that: “in the event of the total destruction or irretrievable loss of the excise goods during their transport in a Member State other than the Member State in which they were released for consumption, as a result of the actual nature of the goods, or unforeseeable circumstances, or force majeure, or as a consequence of authorisation by the competent authorities of that Member State, the excise duty shall not be chargeable in that Member State.” The destruction of those goods by customs authorities would, it was contended, retrospectively preclude any duty point arising under Article 33 of the Directive, a precondition for the levying of duty. The Court of Appeal has comprehensively rejected that contention finding that the purpose of the proviso in Article 37 was to authorise the destruction of goods which are no longer saleable and on which it would not be appropriate to levy excise duty. The Appellant’s argument would, in effect, have incentivised smuggling since there would be relatively little downside to seizure where the party in question would not be liable for duty or any penalty absent a duty point having been reached. The Court of Appeal’s ruling confirms that that is not the law.

Brendan McGurk acted for HMRC and the judgment is here.

Daniel Beard QC and Jack Williams were in the General Court of the European Union on 10 to 12 March representing Intel in an appeal against a decision of the European Commission. The case (T-286/09 RENV) is a remittal back to General Court following Intel’s successful appeal to the Grand Chamber of the Court of Justice of the European (C-413/14 P), which set aside an earlier General Court judgment and clarified the legal framework to be applied in Article 102 TFEU cases. The case is a highly important one with significant ramifications for the proper approach to the assessment of alleged abuses of dominance under both European and domestic competition law rules.

The Court of Appeal handed down a Judgment today on the appeals against the Competition Appeal Tribunal’s judgment which set aside parts of the CMA’s decision finding that the pharmaceutical companies, Pfizer and Flynn, had breached Article 102 TFEU / the Chapter II prohibition by charging unfairly high prices for the anti-epileptic drug, phenytoin sodium capsules.

The Court of Appeal re-affirmed the Tribunal’s decision that the question of abuse and penalties be remitted to the CMA. The Court dismissed the CMA’s argument that it was unnecessary to examine evidence of comparator products put forward by the undertakings under investigation. The CMA must evaluate that evidence fairly and impartially. However, the Court considered that the CAT was wrong to hold that the CMA had to carry out a ‘full investigation’ of the comparators in all cases.

The Court upheld the CMA’s ground of appeal that the Tribunal had erred by requiring the CMA to identify a hypothetical benchmark price in assessing whether prices were excessive. The Court also departed in a number of respects from the Tribunal’s reasoning regarding the principles to be applied in unfair pricing cases.

The Court of Appeal’s judgment provides a detailed consideration of the test to be applied in unfair pricing cases and of the nature of the duty upon a competition authority to evaluate evidence adduced by an undertaking in its defence.

Mark Brealey QC acted for Pfizer.

James Bourke acted for the European Commission.

Click here for the full judgment.

In case C-405/18 Aures Holdings, the CJEU refused to extend the (limited) entitlement to cross-border group loss relief provided for in case C-446/03 Marks & Spencer to a further category of taxpayer. The applicant had sought to deduct historic losses against tax liabilities for the current year in one Member State, even though those losses had occurred in another Member State and in a different accounting period when the parent company had not even been tax resident in its current Member State.

Brendan McGurk successfully intervened on behalf of the United Kingdom Government.

The judgment is here and a detailed case note by Alfred Artley is here.

In a judgment issued today in the case of Renesola v HMRC, the Upper Tribunal (Mr Justice Marcus Smith and Judge Richards) has asked the Court of Justice of the EU for a preliminary ruling on the validity of a Commission Regulation fixing the country of origin of solar modules (commonly known as solar panels). The Commission Regulation lays down that, for EU customs purposes, solar modules are to be taken to have their origin in the country where the solar cells are manufactured.

The case was brought by an importer into the UK of solar modules made in India. The cells used in the modules came from China. HMRC applied the Regulation and treated the modules as having Chinese origin – which meant that they were liable to pay high anti-dumping and countervailing duties imposed by EU trade defence measures on solar modules with Chinese origin. The importer argued that it wasn’t liable to those duties because the Commission had exceeded its powers in making the Regulation, because the manufacturing of the modules in India from the cells and other items was the last substantial manufacturing process (the relevant test of origin in EU and WTO law).

Although the First-tier Tribunal has refused to make a reference, the Upper Tribunal accepted that the FTT had gone wrong in failing to take any proper account of the evidence that cells were useless as generators of electricity outside modules because they were not durable in outside conditions. The UT accepted that the substantial change in durability as between cells and modules, among other factors, could well mean that the manufacture of modules had to be regarded as a substantial step in manufacture, and thus as the last substantial step. If that was right, then the Commission could have exceeded its powers by making a Regulation fixing origin at the cell stage. Since only the CJEU could find a Commission Regulation to be invalid, a reference should be made.

The outcome of the reference will be relevant to the UK even after the end of transition, since the relevant EU rules are based on WTO principles, which the UK will have to apply even after Brexit.

It should be noted that during the transitional period (until at least 31 December 2020) the UK courts remain, under the Withdrawal Agreement and the EU Withdrawal Agreement Act 2020, able to – and in some cases bound to – make preliminary references to the CJEU. The CJEU can decide those references even after the end of the transition period, and the CJEU’s answer will bind the UK courts.

George Peretz QC represented the importer, Renesola.

R (Heathrow Hub Ltd) v Secretary of State for Transport [2020] EWCA Civ 213

The Court of Appeal has today handed down judgment in the two appeals challenging the Government’s decision to adopt a National Planning Statement in favour of a third runway at Heathrow. Besides the well publicised success of the climate change challenge brought by Plan B Earth and Friends of the Earth, the Court also gave judgment in the separate competition law based judicial review brought by Heathrow Hub Ltd (“Hub”).

This judgment is significant not only for its analysis of the principles to be applied under articles 106(1) and 102 of the Treaty on the Functioning of the European Union (“TFEU”) regarding abuse of a dominant position, but also for its discussion of the principles governing the application of Article IX of the Bill of Rights, concerning the circumstances in which statements made in Parliament can be used in court challenges.

Hub had promoted an alternative scheme to that promoted by Heathrow Airport Ltd (“HAL”) and adopted by the Government. Their scheme was for an Extended Northern Runway (“ENR”), extending the current northern runway so that it could effectively operate as two separate runways, with aeroplanes landing on one and taking off from the other. Hub owned the intellectual property rights to this scheme.

Hub alleged that the Secretary of State had breached EU law by insisting (prior to the decision on which scheme to prefer) that HAL must provide a guarantee or assurance that it would implement the Claimants’ scheme if that scheme were selected by the Government as its preferred scheme for airport expansion, and making the provision of that guarantee or assurance an effective pre-condition to the selection of the ENR Scheme. The alleged pre-condition was said to be unlawful as a matter of EU law insofar as it breached articles 106(1) and 102 TFEU, as it facilitated an abuse or potential abuse of dominance by HAL. Hub also argued that the decision had been made in breach of their legitimate expectation that no such assurance would be taken into account, and that it should be quashed on the grounds that the reasons provided for the decision were inadequate.

The Court of Appeal (Lindblom LJ, Singh LJ and Haddon-Cave LJ) dismissed Hub’s appeal from the Divisional Court in its entirety. The Court found that Hub had enjoyed no legitimate expectation of the kind asserted. In respect of both the legitimate expectation claim and the competition law complaint, the Court found that the matters complained of had played no material part in the decision to prefer the north-west runway scheme over the Claimants’ scheme. In so doing, it rejected Hub’s case that statements made in Parliament by the then Secretary of State for Transport, Chris Grayling MP, showed that the most important reason for the rejection of the ENR scheme was the lack of a guarantee or assurance, dismissing Hub’s argument that to do so was in breach of Article IX of the Bill of Rights.

The Court of Appeal criticised the Divisional Court’s willingness to entertain the competition law complaint notwithstanding its immateriality. Nonetheless, it went on exceptionally to consider the complaint, and to overturn the Divisional Court’s conclusions insofar as they had been adverse to the Secretary of State and to HAL.

• First, the Court held that Hub had not established that it was competing in a market for the provision of airport operation services, commenting that “Competition law is not concerned with regulating a contest between rival schemes to be chosen under a national planning policy.”
• Secondly, the Court rejected the Divisional Court’s conclusion that HAL had “special or exclusive rights” within the meaning of Article 106 TFEU by virtue of its predecessor BAA’s former status as a state monopoly and/or the operation of the CAA licensing regime.
• Thirdly, the Court held that Hub had failed to demonstrate that HAL was dominant in a relevant economic market in which it was competing, in the absence of any expert economic evidence to that effect.
• Fourthly, the Court rejected Hub’s argument that the mere existence of a conflict of interest (such as a request to HAL that it guarantee Hub’s scheme before it could be selected) was sufficient to found a breach of Article 106 and 102 TFEU, absent any liability to distort competition.

The Court refused Hub permission to appeal.

The judgment is here.

Robert Palmer QC and Alan Bates acted for the Secretary of State for Transport. Gerry Facenna QC acted for Heathrow Airport Limited.

On 25 February 2020, Mr Justice Foxton handed down his judgment following the trial of a preliminary issue concerning limitation in a follow-on action arising out of the DRAM cartel, which had operated from 1998 to 2002. He found that the claims brought by Granville Technology Group (and the connected company VMT) were time-barred but that the claim brought by a third company – OTC – was not. All claimants were companies in liquidation.

The Defendants, Infineon Technologies AG and Micron Europe Ltd, were found to have participated in the cartel by a European Commission decision of May 2010. Granville, VMT and OTC were computer manufacturers who purchased DRAM at that time. In May 2016, just under six years from the date of the Commission’s decision, the liquidators filed claims for follow-on damages on behalf of the companies. The Defendants pleaded that the claims were time-barred and a preliminary issue on limitation was ordered.

The Claimants argued that s.32(1)(b) of the Limitation Act 1980 had the effect that in this case time did not start running until the announcement of the Commission’s decision. The Defendants argued that time started running far earlier because there was information in the public domain from 2002 about the US Department of Justice’s (“DOJ”) investigation into the DRAM cartel. The Claimants accepted that Granville and VMT (but not OTC) had actual knowledge of the DOJ investigation but denied that this sufficed to plead a standalone claim for breach of EU competition law in respect of purchases made in the UK.

Mr Justice Foxton found that a standalone claim against the Defendants in the EU could have been brought earlier, based on what was known and/or knowable about the Defendants’ conduct. As a result, he found that the claims brought by Granville and VMT were time-barred. However, Mr Justice Foxton found that OTC was in a different position because it had gone into liquidation prior to any reports into the DOJ investigation. He held that the fact of OTC’s liquidation affected the test for constructive knowledge. In particular, he rejected the suggestion that OTC should be assumed for the purposes of s.32(1)(b) to have the same knowledge as a trading computer manufacturer that was still involved in the acquisition of DRAM. Rather, he found that a reasonably diligent liquidator would not have been on notice of any facts triggering a need to investigate further. He therefore concluded that OTC’s claim was not time-barred.

The judgment is here.

Stefan Kuppen acted for the Claimants (instructed by Osborne Clarke).

Bioplus Life Sciences and Ors v Secretary of State for Health [2020] EWHC 329 (QB)

Bioplus Life Sciences claimed Francovich damages against the MHRA for losses suffered over a 9-year period, during which time the MHRA had regulated Bioplus’s drug Dolenio as a medicinal product requiring a marketing authorisation, but not competitors’ equivalent products (which were being sold as food supplements).

Bioplus had already established in a prior judicial review claim that this disparate treatment was unlawful, and now sought damages.

The matter was listed for a preliminary issue hearing on the sole question of whether the Medicinal Products Directive imposing regulatory and supervisory obligations on Member States entailed the grant of rights to individuals such as the Claimant, so as to provide the necessary foundation for a Francovich claim. Mrs Justice Eady held that they did not, and therefore dismissed the damages claim in its entirety. She found that the claim went no further than establishing the Claimants’ interest in the Defendant’s compliance with its obligations under the Directive (an interest which had given them standing to bring their successful judicial review proceedings), but otherwise the Claimants did not benefit from any individual right to be protected against the consequences of the MHRA’s failure to classify products materially identical to Dolenio as medicinal products.

Robert Palmer QC and Khatija Hafesji acted for the MHRA.

The judgment is here.

Meredith Pickford QC and David Gregory were in the General Court of the European Union on 12 to 14 February, as part of a team representing Google in an appeal against a decision of the European Commission. The Commission had found that Google abused a dominant position in the way that it presented results for shopping searches, for which Google was fined 2.4 billion euros. Meredith Pickford QC led on the legal issues for Google. He explained to the Court that the European Commission’s decision strayed from clear and established tests for what constitutes an abuse of dominance in European Law; and that, moreover, Google competed on the merits with innovations that benefited consumers. The case is a highly important one with significant ramifications for Article 102 TFEU and similar domestic competition rules on the test for abuse of dominance.

Motor Insurers’ Bureau v Lewis [2019] EWCA Civ 909

On the 13 February 2020, the application made by the Motor Insurers’ Bureau (“MIB”) to appeal against a tetraplegic’s personal injury claim, was refused in the Supreme Court and the Appellant also ordered to pay the Respondent’s costs.

In keeping with the recent trend, but possibly for the first time in the Transition Period, the Supreme Court also refused the MIB’s application for a reference to the CJEU.

This follows on from the Court of Appeal’s judgment in June 2019 which upheld the Judge’s ruling that the MIB was liable for the accident on private land in which the respondent claimant was injured when he was hit by the uninsured driver of a 4×4 motor vehicle.

In September 2018 the High Court held that whilst an accident on private land was not a liability which was required to be insured against pursuant to Part VI of the Road Traffic Act 1988, it was a liability which the MIB is obliged to satisfy pursuant to Directive 2009/103/EC (at least to the extent of the minimum in respect of personal injury of €1million per victim) and that the provisions of the relevant EU Motor Insurance Directives have direct effect against the MIB as an emanation of the state.

Philip Moser QC led David Knifton QC, instructed by David Gauler of Thompsons Solicitors, for the successful respondent, Mr. Lewis.