Court of Appeal overturns the CAT on procedural fairness issues in Allergan PLC & Ors v The Competition and Markets Authority

The Court of Appeal has overturned the CAT’s judgment on issues of due process in Allergan PLC & Ors v The Competition and Markets Authority. In a judgment published openly in March 2024, the CAT set aside the CMA decision that there was an unlawful market sharing agreement in relation to 10mg hydrocortisone tablets on the basis that the CMA had failed fully to put its case to certain witnesses at trial. The Court of Appeal, however, endorsed the cross-examination by CMA counsel as demonstrating “precisely how a case of anti-competitive conduct can and should be put to a recalcitrant witness”. It also found that the procedure adopted by the CAT after the trial was inappropriate and unjust in all of the circumstances of the case.

Jon Turner KC and Daisy Mackersie acted for the Appellants (the CMA), instructed by the Legal Department of the Competition and Markets Authority.

Mark Brealey KC acted for the Advanz Defendant/Respondent Group (Advanz – A2 to A5), instructed by Morgan Lewis & Bockius LLP.

The judgment is available here.

Frank Mitchell successful in duty classification appeal for Nexans Norway A.S

Frank Mitchell successfully represented Nexans Norway A.S. in its recent duty classification appeal. Nexans manufacture in the USA, and imported into the UK, a composite submarine cable comprised of fibre optic elements and electrical cores. The cable, referred to as an ‘export cable’ connects offshore wind farms to onshore electrical substations and facilitates both the export of electricity from the wind farm and the remote control and operation of the wind farm through the fibre optic element. Whilst a physical inspection of the cable reveals that the fibre optic element comprised just 0.3% of the cross sectional area of the cable and just a ’small-fraction’ of the cable’s overall weight, the FTT were satisfied that the cable performed two functions which were independent of each other and performed both both to a high level. It held that neither the electrical nor the fibre optic element performed the principal function nor did either element provide the cable with its essential character as the essence of this cable was one which was designed to perform two functions which were, in essence, ‘better together’.

Whilst the case centres on a niche product, the First Tier Tribunal’s careful analysis of the relevant rules of classification and the jurisprudence of the courts is of general interest to those involved in customs duty classification.

General Court overturned in landmark merger decision of Illumina/Grail

The Grand Chamber of the EU Court of Justice has handed down a landmark judgment in the Illumina/Grail merger case. It overturned the General Court and found that the Commission did not have jurisdiction to review the deal.

In 2021 the Commission had changed policy and considered it could review mergers which did not cross national or EU merger notification thresholds. It considered that this new approach was particularly relevant in dynamic industries, such as the digital and life sciences sectors, where historic revenue thresholds may not capture so-called “killer acquisitions”. The Court of Justice held that the Commission had no power to review such mergers under the Merger Regulation. As well as changing the way in which EU merger control operates, the judgment will be a leading authority on EU statutory interpretation.

Daniel Beard KC and Josh Holmes KC acted for Illumina.

Ben Rayment wins for Swatch

The Swatch Group AG and two of its subsidiaries have successfully obtained the dismissal of proceedings brought against them in the High Court by  the Claimant, a UK-based wholesaler of watch spare parts, which claimed that the refusal to supply it with spare parts for Swatch Group products breached EU and UK competition law.  The English proceedings were brought following some years of litigation involving the same issues in Switzerland before the Bern Commercial Court and the Swiss Federal Supreme Court, which inter alia clarified the conditions under Swiss law for obtaining a negative declaration.  After having established Swatch’s interest in a negative declaration and jurisdiction, the Swiss Courts rejected the claimant’s claims applying EU and UK law and granted Swatch a negative declaration in respect of the claimed infringements.  Dismissing the English proceedings the Judge, Mr Justice Michael Green, held that the Swiss Courts’ judgments were entitled to recognition under the Lugano Convention and that Swatch was entitled to the declaration it sought that the issues raised by the claimant in the English proceedings were res judicata.  The Lugano Convention continues to apply to cases started before the UK left the EU. The Judge considered he did not need to rule on the issue, but considered that the common law rules on recognition were broadly similar to those under the Lugano Convention. The Judge dismissed the claimant’s arguments that recognising the Swiss Courts’ judgments would be contrary to English public policy because it had not had a fair hearing in breach of Article 6(1) ECHR.  He also dismissed an argument that s.60A of the Competition Act 1998, which enables a court applying UK competition law post-Brexit to depart from EU competition law in certain circumstances, provided any basis on which the Swiss Courts’ judgments should not be recognised.  The Judge considered he did not need to rule on a further argument concerning whether a failure by Cousins to petition the European Court of Human Rights in respect of alleged failings by the courts of a signatory state to the ECHR meant that Cousins had failed to exhaust its remedies in Switzerland.   On 30 July 2024 the Court of Appeal (Green LJ) refused an application for permission to appeal by the Claimant due to lack of merit and absence of any public interest.  The High Court’s Judgment is accordingly now final.

A copy of the High Court’s Judgment can be found here

Ben Rayment was instructed by Addleshaw Goddard for Swatch.

Alan Bates successfully defends Academy conversion decision saving primary school

The Court of Appeal today handed down judgment rejecting a London council’s attempt to close one of its primary schools that is in the process of becoming an academy.

Pooles Park Primary School (“the School”) was rated ‘Inadequate’ by Ofsted following an inspection in November 2022. This triggered a statutory duty for the Secretary of State for Education to make an Academy Order in respect of the School, which is situated in the London borough of Islington and maintained by the local authority (“the Council”). The legal effect of the Academy Order was to start a process directed at converting the School into an academy school sponsored by a multi‑academy trust outside of the local authority’s control.

At around the same time, the Council was consulting on options for managing, within its area, the London-wide problem of falling primary school rolls and the consequent need to reduce over-supply of school places. The Council ultimately decided that it wished to close the School, doing so as part of an overall strategy for reducing surplus school places. The Council therefore requested the Secretary of State to revoke the Academy Order so that the Council would be able to carry out its wish.

The then Secretary of State refused to do so, instead selecting a local multi‑academy trust (“MAT”) to become the School’s sponsor. The selected MAT specialises in providing education for children with complex special educational needs (“SEN”), in both mainstream schools and special schools. The MAT had put forward a proposal to operate the School in tandem with one of its existing local mainstream schools, sharing resources between the two schools and attracting additional pupils and funding by offering places to children with complex SEN who might otherwise be without a suitable school place. The Secretary of State’s Regional Director for London believed that this innovative proposal was an attractive one, given the growing demand for specialist provision for children with SEN and the shortage of places in special schools.

The Council brought a judicial review claim challenging the Secretary of State’s refusal to revoke the Academy Order. The Council argued that the MAT’s financial modelling underpinning its proposal was flawed and unrealistic, and that the Secretary of State was unlawfully undermining the Council’s ability to carry out its statutory remit to manage the efficient provision of school places in its area.

On 12 July 2024, the High Court (Choudhury J) dismissed the Council’s challenge: [2024] EWHC 1798 (Admin). The Judge held that it had not been necessary for the Minister who took the decision on behalf of the Secretary of State to be provided with, or to have sought to test the robustness of, the MAT’s financial modelling. Under the policy being applied by the Secretary of State at the time, a school that had been rated Inadequate should, save in exceptional circumstances, be converted to an academy and given the opportunity to improve with the support of its sponsor.

The Council applied to the Court of Appeal on an expedited basis for permission to appeal, arguing that the Judge had been wrong to find that the Minister had been provided with all the information that it was legally necessary for her to consider.

In today’s judgment ([2024] EWCA Civ 951), the Court of Appeal (Macur and Andrews LJJ) rejected the Council’s appeal. The judgment upheld the High Court’s conclusion that the Minister was provided with the “salient facts” and that the law did not require that she be shown, or that she seek to test, the MAT’s financial modelling or the assumptions underlying that modelling.

The interim relief that had been preventing the School from converting to an academy has therefore come to an end. Pupils who started the school summer holiday period not knowing whether their School would be closing this Autumn will now be returning there in September knowing that the School’s future is more secure.

Monckton barrister Alan Bates represented the Secretary of State in both the High Court and Court of Appeal.

Robert Palmer KC and Nikolaus Grubeck succeed in Gibraltar’s first competition trial

The Supreme Court of Gibraltar has handed down judgment in Gibraltar’s first competition trial.

The Claimant (“Gibfibre”) alleged that a rival telecommunications operator (“Gibtelecom”) was acting in breach of an allegedly dominant position by refusing to grant Gibfibre access to a data centre from which it is providing colocation services.

Following a contested three-week trial, Restano J dismissed the claim. He found for Gibtelecom on all points, including (i) on the correct definition of the relevant market, (ii) the Defendants were not dominant in that market, (iii) in any event there was no abuse of a dominant position, and (iv) even a successful claim (contrary to his earlier findings) would have resulted in much lower damages than sought by Gibfibre.

The judgment is available here.

Robert Palmer KC and Nikolaus Grubeck acted for the successful Defendants and appeared with Moshe Levy and Samuel Marrache, instructed by Hassans

Jen Coyne succeeds for Appellant in Court of Appeal ruling against Uber

An attempt by Uber Britannia Limited to force private hire vehicle operators outside of London to contract directly with their customers, which threatened to upend industry structure by effectively abolishing the agency business model, has today been overturned by the Court of Appeal.

The Court discharged a declaration made by Mrs Justice Foster in July 2023 that, in order to operate lawfully under the Local Government (Miscellaneous Provisions) Act 1976 (the “Act”), operators are required to directly contract with passengers to provide the journey the subject of the booking.

Two operators, D.E.L.T.A. Merseyside Limited and Veezu Holdings Limited, appealed on the basis that the Act could not be interpreted as imposing an obligation on operators to so contract. They successfully argued that the Act addresses all contracts within a single provision, section 56, which deems there is a contract with the operator, regardless of which person has directly contracted with the customer. It made no difference that a requirement on operators to contract had been found to apply in London (in R (United Trade Action Group Ltd) v Transport for London [2021] EWHC 3290 (Admin)). The Private Hire Vehicles (London) Act 1998 was drafted in materially different terms.

One difference between an obligation to contract versus a deemed contract is in the potential fiscal consequences. If operators are bound to contract then they would be required to charge their passengers VAT. HMRC had previously launched a public consultation on the tax impact of the High Court’s declaration. It remains to be seen whether this will now be withdrawn.

Jen Coyne acted for the successful Appellant D.E.L.T.A. Merseyside Limited, led by Philip Kolvin KC and instructed by Layla Barke-Jones of Aaron and Partners LLP.

The Court of Appeal’s judgment is available here.

Jack Williams cited by UK Supreme Court

Blog posts written by Jack Williams on the topic of the content of retained EU law have been extensively cited and discussed by the UK Supreme Court in its recent judgment in Lipton v BA Cityflyer Ltd [2024] UKSC 24.

Although ultimately taking a different analytical route, Lord Burrows (as part of the majority) kindly described those posts as “carefully and tightly reasoned”. Lord Sales and Lady Rose (with whom Lady Simler agreed) likewise discussed the blog posts, albeit again reaching a different view after engagement with them. Lord Lloyd-Jones, dissenting, also cited the blog posts, but this time tracked and agreed with the reasoning in them.

Despite the differences in approach, it is most gratifying and encouraging that the Justices of the Supreme Court read and engaged so extensively with blog posts published on Monckton Chambers’ UK-EU Relations law blog, available here.

The judgment can be found here and the relevant blog posts are here and here.

Court of Justice of the EU upholds EU Commission Decisions in Servier “Pay for Delay” appeals

On 27 June, the Court of Justice of the EU published its judgments on the various appeals to the Court of Justice relating to the European Commission’s 2014 decision finding that Servier and a number of producers of generic medicines had infringed Article 101(1) of the Treaty on the Functioning of the EU by entering into agreements concerning perindopril, an important treatment for hypertension and heart problems.  The Commission imposed significant fines.

Under the agreements, the generic producers abandoned their challenges to the validity of various patents held by Servier in relation to the manufacture of perindopril and agreed not to supply generic versions of perindopril for a period.  In return, Servier made substantial payments to those producers and entered into various distribution agreements with those producers under which they would distribute Servier-produced perindopril.

In 2019, the General Court of the EU largely dismissed the companies’ appeals, though it overturned the Commission’s finding that Servier had also breached Article 102 TFEU (abuse of dominant position), and found that two of the agreements involving Krka were not infringements.

The Court of Justice judgments confirm that the agreements were unlawful market exclusion agreements that restricted competition.  It also overturned the General Court’s decision to annul the Commission’s finding that Servier had infringed Article 102, and its decision in relation to the two Krka agreements, remitting that matter to the General Court.

George Peretz KC and Ben Rayment acted for the European Commission on, respectively, the Teva and Lupin appeals, and Josh Holmes KC and Philip Woolfe KC acted for the UK government, which intervened in the appeals in support of the Commission (the UK still being a Member State at the time that the appeal was brought).

CAT rules that the NHS is not time-barred from pursuing damages claims against drug manufacturers involved in the citalopram “pay for delay” cartel

The Competition Appeal Tribunal today ruled that the NHS is not time-barred from pursuing claims for damages against Lundbeck, the Danish pharmaceutical company, and various manufacturers of generic pharmaceuticals, arising out of the “pay for delay” cartel found by the European Commission.

In 2013, the Commission found that Lundbeck, which held various patents in relation to the manufacture of citalopram, a regularly-prescribed treatment for anxiety and depression, had agreed with generic manufacturers that they would abandon their legal challenges to Lundbeck’s patents and stay out of the market in return for payments equivalent to the amount of profit that those generic companies would have made on successful entry.  The Commission found that those agreements breached EU competition law.  In March 2021 the European Court of Justice gave judgment upholding a ruling of the EU General Court that dismissed the companies’ appeals against the Commission’s decision.

The NHS brought an action for damages arising out of the companies’ breach of competition law in the High Court in 2019, just before the sixth anniversary of the Commission’s decision, and that action was transferred to the CAT in 2021.  It was agreed in the transfer order that the NHS would file a claim form in the CAT setting out the details of its claim, which it did in March 2023 (less than 2 years after the Court of Justice’s ruling).

The companies then claimed that the NHS was out of time, under the six year period set out in the Limitation Act 1980, on the basis that it knew or should have known before the date of the decision that it had a cause of action.  The NHS conceded that point, but relied on a separate limitation period under the CAT’s rules that ran for two years from the date of the Court of Justice’s judgment.  The companies accepted that that separate period could have applied, but argued that the filed claim form could not be regarded as a claim form making a new claim, as it was no more than a step in the transferred proceedings.  They also argued that the NHS was estopped from relying on the separate limitation period.

The CAT held that the claim form did have the legal effect of starting proceedings within the separate limitation period, and that proceedings were therefore brought in time.  It also held that there was no estoppel as alleged by the companies.

The NHS’s claim for damages will now proceed.

George Peretz KC represented the NHS before the CAT: he previously represented the European Commission in its successful defence to the appeals in the EU General Court and Court of Justice.