Court of Appeal upholds Galvanised Steel Tanks Information Exchange

Balmoral Tanks Ltd & Anor v Competition And Markets Authority [2019] EWCA Civ 162

In a judgment handed down today, the Court of Appeal has dismissed Balmoral Tanks’ appeal against the judgment of the Competition Appeal Tribunal upholding the CMA’s Information Exchange Infringement decision. The infringement occurred at a single meeting in July 2012. At that meeting, Balmoral rejected an invitation to join a cartel involving customer allocation, price fixing and bid rigging arrangements for cylindrical galvanised steel tanks, but the CMA found that Balmoral nevertheless exchanged confidential pricing information with the other suppliers in attendance at the meeting.

Balmoral argued on the appeal that the CMA’s infringement decision was inconsistent with Balmoral’s acquittal in respect of the main cartel, and also objected to the fact that it alone had been fined for the Information Exchange. The judgment, which rejected Balmoral’s appeal on all grounds, contains an interesting discussion of the extent to which the single and continuous infringement principle is one which the competition authority is entitled rather than obliged to apply.

Rob Williams, Standing Counsel to the CMA, acted for the CMA on the Appeal. He led James Bourke in defending Balmoral’s appeal before the Tribunal.

The judgment can be found here.

Aggregates Levy State Aid Appeals Withdrawn after hearing but before judgment

A Complex dispute concerning the Aggregates Levy has now been concluded after over 14 years of litigation in the European and domestic courts. Three separate but linked appeals to the General Court have been withdrawn after hearings in Luxemburg  but before Judgments were handed down.

The Aggregates Levy was introduced by the UK Government in the Finance Act 2001 as an environmental tax on the commercial exploitation of aggregate in the UK.  Its overall aim was to encourage the commercial exploitation of aggregate to be conducted in a more environmentally friendly manner.

The Levy included a series of complex exemptions and reliefs for certain types and uses of aggregate in the UK.  Due to particular circumstances affecting Northern Ireland, a specific relief was adopted in order to give the industry in Northern Ireland sufficient time to adapt to the Levy.  The European Commission decided that, with certain exceptions, these exemptions and reliefs from the Levy did not constitute state aid. Its decisions to that effect were challenged by the British Aggregates Association and, in relation to Northern Ireland, certain quarries located in the Republic of Ireland on the basis that the exemptions and reliefs did comprise state aid, which was said to have distorted competition in a way that was not compatible with the single market.

It is the appeals against those decisions in cases T-101/14, T-610/15 and T-741/15 that have now been withdrawn.  These appeals were the second round of challenges conducted in the European Courts against the Commission’s approval of certain other aspects of the Levy. In general terms it was said that the exemptions from the levy amounted to incompatible state aid.

The Government has now made a written statement in Parliament indicating that it will be reviewing the operation and effectiveness of the levy over the next year.  The Written Statement can be found here.

Melanie Hall QC and Ben Rayment represented the United Kingdom on each of the appeals.

Court of Appeal rules on temporal scope of EU competition law

La Gaitana Farms SA & Ors v British Airways Plc [2019] EWCA Civ 37

In a judgment handed down today in the air cargo cartel damages litigation, the Court of Appeal (Master of the Rolls; Flaux and Bean LJJ) has held that the national court did not have jurisdiction to award damages for a contravention of what is now Article 101 TFEU in relation to collusion on surcharges on air freight services provided between the EU and third countries, during the period prior to 1 May 2004. Under the transitional regime that applied during that period, the national court could only consider such conduct if the European Commission or the designated national regulatory authorities had first made a relevant decision. Moreover, the Court of Appeal held that the advent of Regulation 1/2003 did not change the position such as to enable the national court now to apply Article 101 TFEU to pre-1 May 2004 conduct on flights between the EU and third countries, despite the fact that the transitional regime no longer applies to such conduct. The judgment contains a detailed exposition of the general principle of the non-retrospectivity of substantive legal rules and is therefore of significant wider interest.

Philip Moser QC acted for the “La Gaitana” Appellants at the hearing of the appeal.

Jon Turner QC and Michael Armitage acted for the Respondent, British Airways.

Daniel Beard QC and Tom Sebastian acted for the “Part 20” Respondents to the appeal.

This is the latest judgment in the air cargo litigation, which encompasses a large number of claims that have now settled. Monckton Chambers has been at the heart of the litigation, and (in addition to the individuals above) the following Members of Chambers have all previously been instructed in the proceedings:

NHS wins £1billion Hepatitis drug challenge


[2019] EWHC 61 (TCC)

Pharma giant AbbVie challenged the largest NHS drug procurement ever undertaken, for contracts to treat and eliminate Hepatitis C (“HCV”) worth about £1 billion over five years commencing April 2019.

The procurement is a “whole market” procurement, to award market shares to all three existing HCV drug suppliers. The Claimant challenged two aspects of the Procurement, claiming breach of the duty of equal treatment in Regulation 18 (1) of the Public Contracts Regulations:

i) A “dummy price mechanism” (“DPM”) used in the assessment which the Claimant said gave an unfair advantage to bidders unable to supply part of the market as compared to those that could.

ii) An Unmetered Access Model (“UAM”) involving a fixed fee for all the patients a supplier commits to treat, the Claimant claiming as unfair that failure by one bidder to treat all its patients might require others to do so without additional pay.

In an important judgment on the equal treatment principle and the margin of discretion available to the contracting authority Choudhury J dismissed the claim on all points, holding:

i) The DPM did not amount to a breach of equal treatment. That a bidder might fare better than a rival under a particular model did not necessarily mean that model was in breach of equal treatment. The choice of model falls within the wide discretion available to contracting authorities to choose award criteria for their purposes. The evidence clearly demonstrated that the Claimant could still win the largest share, depending on the prices it chose to bid. Alternatively, the DPM would be objectively justified for reasons including the increase of competition, reducing cost and maximising health benefits.

ii) In relation to the UAM, the fixed fee did not breach equal treatment. The advantage the Claimant believed it had by reason of a more popular product was not a difference in competitive position which needed to be catered for in the tender rules. An application of the same rules to all suppliers, irrespective of competitive position, does not amount to unequal treatment. Also, the Claimant’s claimed understanding of how value was to be assessed was not that of the reasonably well-informed and normally diligent tenderer. Alternatively, on the evidence any discriminatory effect would be modest and thus relatively easy to justify and was objectively justified for the reasons relied upon by the Defendant.

Philip Moser QC of Monckton Chambers acted for the successful Defendant, instructed by Blake Morgan.

Ligia Osepciu of Monckton Chambers was also instructed by the Defendant on the case.

The full (non-confidential part of the) judgment is here.

Concordia warrant challenge is dismissed

Thee Competition And Markets Authority v Concordia International Rx (UK) Ltd [2019] EWHC 47 (Ch)

The High Court (Marcus Smith J) has today dismissed Concordia’s long running challenge to the warrant granted to the CMA in respect of Concordia’s premises in October 2017. The ruling concerns the first challenge to a warrant granted under the Competition Act 1998.

The decision is the subject of an open judgment in which the Judge rejected Concordia’s argument that the CMA had no reasonable basis for seeking a warrant at an advanced stage of investigations concerning Concordia. The judge reached the conclusion that the warrants were justified on the basis of the evidence which he had found was subject to public interest immunity (PII) and which Concordia had not seen.

The judgment is here. It is the latest in a series of judgments arising from the challenge which also include:

  • The judgment of the Court of Appeal in August 2018 that evidence which is subject to PII (and which cannot be disclosed to the challenging party) may be taken into account as part of a closed material procedure to determine the challenge;
  • The ruling of HHJ Matthews that a special advocate should not be appointed in connection with the challenge;
  • The ruling of Marcus Smith J in December 2018 that evidence relevant to the challenge was subject to PII. This evidence was considered in a closed material proceeding as part of the final hearing.

Mark Brealey QC acted for Concordia. Rob Williams acted for the CMA.

Google v CNIL: Advocate General agrees global “right to be forgotten” orders pose risk to freedom of expression

The Court of Justice of the European Union has published the Advocate General’s Opinion in Case C-507/17 Google Inc v Commission nationale de l’informatique et des libertes (CNIL).

In his opinion, Advocate General Maciej Szpunar advised that de-referencing requests under the CJEU’s decision in Google Spain v Gonzales et al (the so-called ‘right to be forgotten’) do not oblige Google and other search providers to de-list search results on a global basis. Among other things, the Advocate General agreed with the submissions of the third party interveners that global de-referencing posed a grave risk to freedom of expression:

[T]here is a danger that the Union will prevent people in third countries from accessing information. If an authority within the Union could order a global deference, a fatal signal would be sent to third countries, which could also order a dereferencing under their own laws. …. There is a real risk of reducing freedom of expression to the lowest common denominator across Europe and the world.

The Advocate General’s opinion substantially adopts the submissions of the interveners ARTICLE 19, Human Rights Watch, the Electronic Frontier Foundation and 5 other digital rights organisations, who were represented before the CJEU by Gerry Facenna QC, Eric Metcalfe and M. Guillaume Tapie of the Paris Bar.

The Opinion has received international news coverage, including The Guardian, The Wall Street Journal, ABC News, and The Washington Post. The Court’s press release on the Opinion is available here. The Judgment of the Court of Justice is expected later in 2019.

Judgments in Servier ‘Pay for Delay’ Appeals

The General Court (‘GC’) of the European Union has confirmed the Commission’s Decision that certain patent settlement agreements may be restrictive of competition by object but has upheld in part certain aspects of the appeals against the Decision, including Servier’s appeal in relation to a finding of an abuse of a dominant position in relation to the ACE inhibitor drug perindopril.

The Servier group developed perindopril, an angiotensin converting enzyme (‘ACE’) inhibitor drug, intended primarily for the treatment of hypertension and heart failure. The perindopril compound patent, filed with the European Patent Office (EPO) in 1981, expired in various EU Member States over the course of the 2000s.

The active pharmaceutical ingredient of perindopril takes the form of a salt, erbumine. A new patent relating to erbumine and its manufacturing processes was filed with the EPO by Servier in 2001 and granted in 2004. This was the ‘947 patent.

Following disputes in which the validity of that patent was challenged, Servier entered into various settlement agreements with a number of generic companies, namely Niche, Unichem (Niche’s parent company), Matrix (now Mylan Laboratories), Teva, Krka and Lupin, by which each of those companies was to refrain, in particular, from entering the market or challenging that patent. A subsidiary of Servier, Biogaran, a wholly-owned subsidiary of Servier SAS, also entered into a licence and supply agreement with Niche.

On 9 July 2014, the Commission adopted the Decision in which it found that the contested agreements constituted restrictions of competition by object and by effect. It also found that Servier had implemented, in particular by those agreements, an exclusionary strategy which constituted an abuse of a dominant position.

The GC has upheld the Commission’s reasoning according to which, when an originator company, the proprietor of a patent, grants a generic company advantages inducing it to refrain from entering the market or challenging the originator company’s patent, the agreement at issue, even if presented as a settlement agreement, must then be considered a market exclusion agreement. In such circumstances it is the inducement, and not the recognition by the parties to the settlement of the validity of the patent, which is the real reason for the restrictions on competition introduced by the agreement.

The GC confirms that the agreements that Servier concluded with Niche, Unichem, Matrix, Teva and Lupin, in which the diverse and complex nature of the arrangements for granting the inducive benefit may be observed, constituted market exclusion agreements restrictive of competition by object. It also confirms that the agreement concluded between Niche and Biogaran sought to grant an additional advantage to Niche so that it would conclude the settlement agreement with Servier.

Having regard to the links between that agreement and the agreement concluded by Servier with Niche and Unichem, the GC considered however that the Commission ought to have applied a further reduction of the penalty to Servier in addition to the reduction it had already applied in relation to the agreements as a whole on account of overlaps between the infringements.

As regards the agreements between Servier and Krka, the GC has held, first, that the existence of an inducement by Servier in exchange for Krka’s withdrawal from the market was not established on the facts. In particular, the GC rejects the Commission’s finding that the royalty which Krka had to pay to Servier in the context of a licence agreement relating to the 947 patent was not concluded at arm’s length. Consequently, the General Court concludes that there was no restriction of competition by object in that regard. Secondly, the General Court finds that it was not established that, in the absence of agreements, Krka would probably have entered the markets in question at risk and that Krka’s continuation of the proceedings against the 947 patent would probably, or even plausibly, have allowed a faster or more complete invalidation of the patent. Accordingly, the General Court also concludes that there was no restriction of competition by effect in that regard and the fines imposed on Servier and Krka in respect of that agreement should be annulled.

As regards the abuse of a dominant position, the Commission found in the Decision that the relevant finished product market was limited to a single molecule within the ACE inhibitor class, namely perindopril, in its originator and generic versions.

The GC however considered that the Commission failed to show that the finished products market was limited to the perindropil molecule alone, when the latter could be exposed to non-price competitive pressures from other medicines of the same therapeutic class. Accordingly the Commission had not established that Servier enjoyed a dominant position on the relevant market.

George Peretz QC was instructed in case T-679/14 as the Commission’s advocate on the appeal by Teva.

Ben Rayment was instructed in case T-680/14 as the Commission’s advocate on the appeal by Lupin.

Early dismissal of a £39m Commercial Court fraud and conspiracy claim

Cunningham v Ellis & Ors [2018] EWHC 3188 (Comm)

A £39 million Commercial Court fraud and conspiracy claim has been struck out and summary judgment entered in the Defendants’ favour.The Claimant had been majority shareholder of Allerton Group Limited (“AGL”), the parent of a group involving steel fabrication and bridge building. The group entered administration in 2009 as a result of cashflow pressures. The Claimant alleged that there had been a conspiracy between three of the group’s directors (“the Directors”), AGL’s bank and the administrators, Ernst and Young, to render AGL insolvent so the directors could purchase the business themselves at an artificially deflated value.

Following a four-day hearing in the Commercial Court, Teare J struck out the claim in its entirety and gave summary judgment in favour of the defendants. He held:

  1. The Particulars of Claim were inadequate for the purpose of alleging conspiracy to injure by unlawful means or fraudulent misrepresentation, having failed to plead primary facts from which it can be inferred that the Defendants were party to a deliberate and unlawful conspiracy;
  2. The allegations had no realistic prospect of success
  3. The claims were time-barred (save where the claims fell within section 21(1)(a) Limitation Act 1980).

William Buck and David Gregory acted for the Directors.

The judgment can be found here.

Court of Justice confirms United Kingdom’s right to change its mind about Brexit.

In a landmark judgment delivered today the Court of Justice of the European Union has made it clear that, as a matter of EU law, the UK is free to change its mind about Brexit and unilaterally revoke the notice given under Article 50 TEU, thereby remaining in the EU on its present terms of membership.

The judgment of the Full Court, delivered in an unprecedented accelerated timescale, declares that a Member State which has notified its intention to leave the EU may, prior to actually leaving: “revoke that notification unilaterally, in an unequivocal and unconditional manner”, provided that it “has taken the revocation decision in accordance with its constitutional requirements” and “the purpose of that revocation is to confirm the EU membership of the Member State concerned under terms that are unchanged as regards its status as a Member State, and that revocation brings the withdrawal procedure to an end.

Reaffirming its case law that the EU Treaties, unlike ordinary international treaties, have established a new legal order, the subjects of which comprise not only those States but also their nationals, the Court interpreted Article 50 by reference to its wording, the objectives it pursues, and the context and provisions of EU law as a whole.

  • As to the wording, the Court noted that Article 50 refers to an intention, which “is, by its nature, neither definitive nor irrevocable”, and also noted that the Article leaves the decision about whether to withdraw to the Member State alone, dependent solely on its own sovereign choice [49]-[50];
  • As to the objective, the Court found that Article 50 TEU pursues two objectives: (i) enshrining the sovereign right of a Member State to withdraw from the European Union and, (ii), establishing a procedure to enable such a withdrawal to take place in an orderly fashion, both of which support a right of unilateral revocation [56]-[60].

The Court also found, at [60]-[65], that a right of unilateral revocation was consistent with the fundamental aims and objectives of the Treaties, in particular:

  • the creation of an ever closer union among the peoples of Europe” and the aim of the European Union “to eliminate the barriers which divide Europe”;
  • values of liberty and democracy, which “form part of the very foundations of the European Union legal order”;
  • the fact that “the European Union is composed of States which have freely and voluntarily committed themselves to those values, and EU law is thus based on the fundamental premiss that each Member State shares with all the other Member States, and recognises that those Member States share with it, those same values”; and
  • citizenship of the Union, which “is intended to be the fundamental status of nationals of the Member States”, whereas any withdrawal of a Member State from the European Union is liable to have a considerable negative impact on the rights of all Union citizens.

The Court held that it would be inconsistent with those aims and values, and in particular with the Treaties’ purpose of creating an ever closer union among the peoples of Europe, to force the withdrawal of a Member State which, having notified its intention to withdraw in accordance with its constitutional requirements and following a democratic process, decides to revoke the notification of that intention through a further democratic process.

The claim was pursued by a group of Scottish politicians supported by the Good Law Project and by two Westminster MPs (Tom Brake MP (Lib Dem) and Chris Leslie MP (Lab)), who were represented by Gerry Facenna QC and Anneli Howard, acting together with Scottish counsel Morag Ross QC and Stephen Donnelly, instructed by Jennifer Jack of Harper Macleod and John Halford of Bindmans LLP.

The Court’s judgment may be found here. The Court’s reasoning and answer reflects the submissions of the MPs, which may be found here.

CJEU Advocate General concludes that notice under Article 50 TEU is unilaterally revocable

The Court of Justice of the European Union has published the Advocate General’s Opinion in Case C-621/18 Wightman and Others v Secretary of State for Exiting the European Union.

In his opinion, Advocate General Campos Sánchez-Bordona concludes:

“When a Member State has notified the European Council of its intention to withdraw from the European Union, Article 50 of the Treaty on European Union allows the unilateral revocation of that notification, until such time as the withdrawal agreement is formally concluded, provided that the revocation has been decided upon in accordance with the Member State’s constitutional requirements, is formally notified to the European Council and does not involve an abusive practice.”

Dismissing the UK Government’s argument that the issue is hypothetical and merely theoretical, the Advocate General’s view is that a unilateral decision by the UK to remain in the European Union in the face of an unsatisfactory Brexit, is a valid option under EU law:

“If the Court accepts that the notification of the intention to withdraw may be revoked unilaterally, the United Kingdom could communicate such revocation to the European Council, and thereby remain a member of the European Union. As the United Kingdom Parliament has to give its final approval, both if a withdrawal agreement is reached and in the absence of that agreement, several members of that parliament consider that if the notice of the intention to withdraw were revocable, this would open a third way, namely remaining in the European Union in the face of an unsatisfactory Brexit. The referring court appears to adopt that position, reasoning that the Court’s answer will have the effect of clarifying the precise options open to members of the United Kingdom Parliament when casting their votes.”

The Advocate General’s proposed answer adopts the answer suggested by Chris Leslie MP and Tom Brake MP, who were represented by Gerry Facenna QC and Anneli Howard, together with Scottish counsel Morag Ross QC and Stephen Donnelly, instructed by Harper Macleod and Bindmans. Their written submissions to the Court are published here.

The Advocate General’s Opinion is not binding on the Court of Justice; it provides an independent, legal view which the Court may or may not follow. Judgment of the Court of Justice is expected before Christmas.

See The Court of Justice of the European Union press release here.