The Competition Appeal Tribunal (“CAT”) has dismissed a judicial review challenge against the CMA’s decision to reject a novel merger remedy proposed by a provider of cloud-based services for property transactions.  In a judgment issued on 10 July 2023, the CAT dismissed all three grounds of challenge advanced by Dye & Durham (“D&D”), holding that the CMA was entitled to be concerned about the impact that the proposal could have on competition between the merging parties.

In August 2022, the CMA blocked the merger between D&D and TMG, both of whom provide property search report bundles in England and Wales, ordering D&D to sell TMG to an independent approved purchaser.  D&D agreed and provided final undertakings to the CMA in October 2022.  Half-way through the sale process, however, D&D sought the CMA’s approval for a novel process whereby TMG would be divested to D&D’s shareholders and then listed for sale on the AIM stock exchange.  The rationale for the proposal was to maximise the price that could be obtained for TMG in light of a perceived downturn in the UK property market since the final undertakings were given.

The CMA rejected the proposal, finding that:

1. It would require a variation to the final undertakings, which envisaged a private sale to a single approved purchaser.
2. No such variation was justified.
3. In any event, the proposal would result in D&D and TMG having identical shareholders, which would compromise their incentive and ability to compete.

D&D challenged each of those findings before the CAT, but the CMA’s decision was upheld in its entirety.  The CAT’s observations on the impact of common shareholdings on competition will be of particular interest for practitioners and economists.  This is a hot topic in competition circles and has generated a considerable amount of literature both in Europe and the USA.  Whilst the CAT acknowledged that this was a matter of ongoing debate, it held that it was reasonable for the CMA to conclude that there were competition risks in light of market conditions and in circumstances where the 100% overlap between the shareholders could well reduce incentives to compete.  The CAT confirmed that it was not incumbent on the CMA to obtain its own empirical evidence in relation to the impact of common shareholdings.

The CMA was represented by Ben Lask KC and Thomas Sebastian.  A copy of the judgment is here.

The Secretary of State for Health & Or v Servier Laboratories Limited & Ors

The Court of Appeal has dismissed an appeal by Servier against a landmark judgment given by the High Court in 2022.

The High Court’s judgment represented a major victory for the NHS in claims which it has brought against Servier for serious infringements of competition law, in relation to the sale and supply of the blood pressure drug perindopril (brand name Coversyl).

Those claims concern actions between 2005 and 2007, in which Servier entered into “pay for delay” agreements with generic drug manufacturers, under which the generics companies agreed not to enter the market for supplying perindopril. The NHS claimants allege that, as a result of Servier’s conduct, they paid hundreds of millions of pounds more for perindopril than they would otherwise have paid, and claim damages for the difference. The question of whether Servier’s conduct infringed competition law is awaiting final determination by the CJEU.

Pending the conclusion of the CJEU proceedings, the High Court judgment dealt with the preliminary issue of whether, as Servier argued, any damages recoverable by the NHS should be reduced as a result of the NHS’s failure to take steps to avoid buying Coversyl, and instead purchase cheaper generic alternatives. Mr Justice Roth rejected Servier’s arguments in their entirety, commenting that “a disinterested observer might find it surprising that such arguments would, or could, be advanced by a defendant found to have committed a very serious infringement of competition law”.

Servier appealed to the Court of Appeal, arguing that Roth J had erred in dismissing all of its case on the preliminary issue without fuller disclosure being given by the NHS claimants.

In a judgment handed down this week, the Court of Appeal unanimously dismissed Servier’s appeal, finding that “Servier’s contentions on this appeal…run entirely counter to the basis on which the [preliminary issue] trial was directed and maintained”.

The Court of Appeal’s judgment represents a further victory for the NHS claimants in this long-running litigation. It is anticipated that a full trial to determine the level of damages due to the NHS claimants will be listed following the conclusion of the European proceedings, in which a final judgment is expected later this year.

The Court of Appeal’s judgment can be found here.

Jon Turner KC and Josh Holmes KC acted for all of the NHS bodies.

Philip Woolfe (instructed by Peters & Peters Solicitors LLP) acted for the English health authorities.

Julian Gregory  (instructed by RPC LLP) acted for the Scottish / NI health authorities.

Laura Elizabeth John and Ciar McAndrew (instructed by Geldards LLP) acted for the Welsh health authorities.

R (oao Glint Pay Services Ltd) v HMRC [2023] EWHC 1621 (Admin), judgment of 30 June 2023

The Administrative Court (Sir Ross Cranston, sitting as a Judge of the High Court) has dismissed Glint Pay Services’ claim for judicial review of a decision of HM Revenue & Customs that its supplies of gold were not to be treated as zero-rated, rather than exempt, for the purposes of VAT.

Glint makes available to individual members of the public the ability to buy, hold and sell London Bullion Market-accredited gold (see Home | Buy, Save & Spend Physical Gold (glintpay.com)). Glint does this by way of a bespoke app, which operates and interacts with the Mastercard system and which enables clients to buy and sell gold from and to Glint, in the form of fractional/proportional shares of gold bars. The client’s purchases, sales and ownership of gold are recorded in the app. Glint in turn buys and sells gold from and to a member of the London Bullion Market Association (LBMA). At all times, the gold itself remains held securely in the vault of another LBMA member in Zurich.

In the course of Glint’s application for approval of a Partial Exemption Special Method, HMRC indicated that Glint’s sales to clients were exempt supplies of investment gold pursuant to Group 15 of Schedule 9 to the Value Added Tax Act 1994 (“the Investment Gold Exemption”) and that, consequently, Glint could not deduct input tax attributable to those supplies. Glint appealed HMRC’s decision to the First-tier Tribunal, but later withdrew. Consequently, Glint’s supplies were – definitively- exempt as a matter of VAT law. Glint also challenged HMRC’s decision by way of judicial review, claiming it had a legitimate expectation that its supplies would be zero-rated under the VAT Terminal Markets Order 1973 (TMO), based on statements in a 2013 Memorandum of Understanding between HMRC, the LBMA and the London Platinum and Palladium Market (MOU).

The High Court dismissed the claim, holding that the MOU did not state, in terms that were “clear, unambiguous, and devoid of any relevant qualification”, that Glint’s supplies of gold could benefit from any additional carve-out from the Investment Gold Exemption in addition to that provided by the TMO. Glint’s innovative transactions did not fall within the MOU’s terms. Glint accordingly had no legitimate expectation to be taxed otherwise than in accordance with the law.

The High Court further held that it would not have been “conspicuously unfair” or an abuse of power to frustrate any legitimate expectation Glint might have had, and there was no justification to override the public interest in HMRC’s collecting VAT in accordance with what the law clearly provided, especially given that neither Glint nor its advisers had sought HMRC’s clarification as to the possible application of the MOU.

Andrew Macnab acted for HMRC.

Read the Court’s judgment here.

Robert Hammond, a former solicitor and consumer rights advocate for over 20 years, has filed an application for an opt out Collective Proceedings Order before the Competition Appeal Tribunal.

By his application Mr Hammond seeks to act as the Class Representative for the claims of a large class of UK consumers. He alleges the class members have in aggregate suffered a substantial loss as the result of an alleged abuse of a dominant position by entities in the Amazon group of companies through the manner in which product offers were selected for display in the so-called “Buy Box” on Amazon’s online marketplace in the UK.

The proposed claim by Mr Hammond is the second application for a Collective Proceedings Order to have been issued in the Tribunal against Amazon in relation to similar allegations. An earlier application was issued by Julie Hunter. At a case management conference on 28 June 2023 the Tribunal’s President, Sir Marcus Smith, directed that the issue of which Class Representative should have carriage of the claims should be determined in the Autumn as a preliminary issue prior to the determination of the issue of certification (i.e. whether the proposed claim meets the necessary legal conditions to proceed). In the recent FX claims brought by the O’Higgins and Evans Class Representatives the Tribunal determined that carriage and certification should be heard together. That case is currently on appeal to the Court of Appeal. In the present case the President decided that the approach in the recent case of Claudio Pollack v Alphabet Inc. and Others [2023] CAT 34, Case No 1572/7/7/22 should be followed and that the issue of carriage, namely which class representative will better represent the interests of the class, should be determined before the issue of certification. He emphasised that the Tribunal is conscious that, at the stage of a carriage dispute, it should neither pre-determine nor appear to pre-determine issues that would arise at the later stage of certification, since this might give rise to a sense of grievance on the part of the proposed defendant, Amazon.

Philip Moser KC and Ben Rayment are instructed on behalf of Robert Hammond.

Jon Turner KC and Ciar McAndrew are instructed on behalf of Amazon.

The Court of Appeal today handed down judgement in R (AAA and ors.) v SSHD [2023] EWCA Civ 745. It found that the policy of the Secretary of State for the Home Department to relocate certain asylum seekers to Rwanda was unlawful.

The judgment is available here.

It has received extensive media coverage, including by the BBC, CNN, the Financial Times, the Guardian, and the Telegraph.

Nikolaus Grubeck and Julianne Kerr Morrison, instructed by Freshfields Bruckhaus Deringer LLP, acted for Freedom from Torture, who intervened in support of the successful appellants.

The Divisional Court (Popplewell LJ and Henshaw J) has issued judgment in a challenge by Campaign Against Arms Trade (“CAAT”) to the Secretary of State’s decision to continue granting licences for the export of arms to the Kingdom of Saudi Arabia.

The claim brought by CAAT challenged the Secretary of State’s decision, of July 2020, to continue to grant licences for the export of arms and military equipment to the Kingdom of Saudi Arabia for use in Yemen.  The Secretary of State is obliged to cease granting new licences and suspend existing licences where there is “a clear risk that the arms might be used in the commission of a serious violation of International Humanitarian Law (“IHL”)”.

The Secretary of State’s most recent decision was made following an earlier judgment by the Court of Appeal in which it found that the Secretary of State had erred by failing to assess whether, in individual instances, the Saudi Coalition may have been responsible for violations of the laws of war in past incidents.

The Secretary of State had found that the clear risk test was not met because there was no pattern of previous violations.  CAAT challenged the decision on 4 grounds. First, that there was no proper evidential basis for the Secretary of State’s conclusion that there had only been a limited number of IHL violations. Second, that there was no proper evidential basis for the Secretary of State’s conclusion that there was no pattern of IHL violations. Third, that irrespective of the existence of a pattern, there was no proper basis for concluding that Criterion 2c was not engaged, given the alleged record of past violations. Fourth, that the Secretary of State misdirected herself as to the meaning of “serious” violations and failed to consider whether officials in KSA enjoyed impunity for serious violations.

The Court found that the Secretary of State has a wide margin of discretion in reaching judgments on matters going to each of the four grounds of challenge and that the decision-making process could not be characterised as meeting the high threshold of irrationality in this context.

Conor McCarthy was junior counsel for CAAT, instructed by Leigh Day.

Michael Armitage was counsel for Oxfam, which intervened in the proceedings.

The Competition Appeal Tribunal today handed down a judgment in the Pollack v Google collective proceedings claim – which alleges that Google abused its dominant position in online advertising markets to the detriment of online publishers.

Since the Pollack claim was filed in November 2022, a rival opt-out collective proceedings claim (Arthur v Google) brought on behalf of a similar class and containing similar allegations of abuse was filed on 29 March 2023, giving rise to a potential carriage dispute.

The issue facing the Tribunal was whether it should determine the carriage dispute in an earlier, separate hearing, or in a combined carriage and certification hearing – the approach previously adopted in the FX and Trucks collective proceedings claims.

The Tribunal determined that carriage should be determined first (this autumn), with a certification hearing for the successful claim to follow early next year.

The judgment contains the following comments of wider relevance to the case management of collective proceedings claims where a carriage dispute arises.

1. The decision to hold a combined hearing in FX was influenced by the fact it was the first time the Tribunal had considered carriage issues. Determining carriage first can produce significant cost savings and that approach is likely to be appropriate for most carriage disputes.
2. Rival PCRs should co-operate to ensure that a carriage hearing is listed as soon as possible. There is no need for listing to wait until all foreign proposed defendants have been served.
3. Proposed defendants should not – save to assist the Tribunal – be entitled to have much of a say in carriage hearings, i.e. in picking the party that will be litigating against them. Indeed, proposed defendants do not have to participate in the carriage hearing at all unless they want to.
4. In determining carriage, the question of which PCR was ‘first to file’ is not determinative. On the other hand, where a PCR has spent time and money in framing a carefully considered, standalone, claim, some credit ought to be given for filing first – and the longer the delay before the second claim is filed, the harder it will be to displace the first applicant.

Julian Gregory, instructed by Humphries Kerstetter LLP, represented Mr Pollack at the hearing.  Ronit Kreisberger KC is also instructed.

Meredith Pickford KC, instructed by Herbert Smith Freehills LLP, represented Google.

Gerry Facenna KC, Nikolaus Grubeck and Alison Berridge, instructed by Hausfeld & Co LLP, represented Mr Arthur.

Robert Palmer KC has successfully defended a judicial review claim brought by the Duke of Sussex concerning his security arrangements in Great Britain.

Following a one-day hearing On 16 May, Mr Justice Chamberlain has handed down judgment refusing permission to apply for judicial review.

The Duke of Sussex wished to challenge a decision on behalf of the Home Secretary to reject the principle of permitting the private funding of police protection where the provision of such protection was no longer judged to be in the public interest. The decision concluded that it would be inappropriate to support or authorise the wealthy to ‘buy’ protective security services provided by specialist officers of the Metropolitan Police.

This was the Duke’s second claim for judicial review of decisions made concerning his security since his stepping back as a working member of the Royal Family. The Duke’s first claim, in which Robert is also acting, challenges the decision to alter his protective security arrangements. That claim had been granted permission in July 2022 on a limited basis and will be heard in due course.

Robert was instructed by the Government Legal Department and the full judgment can be found here.

The case has been widely reported, including on the BBC which you can view here.

On Friday 19 May, the High Court handed down judgment in James Waste Management LLP v Essex County Council [2023] EWHC 1157 (TCC). The case concerned whether an in-term modification to the defendant Council’s Integrated Waste Handling Contract was permissible under the Public Contracts Regulations 2015 (“PCR”).

Waksman J’s detailed judgment, dismissing James Waste’s claim, will be of wider interest to public procurement lawyers.

It clarifies important principles regarding when an in-term modification to a contract will be “substantial”, i.e. impermissible, within the meaning of Reg 72(8) PCR, first set out in the CJEU case Pressetext, and previously considered only in part by domestic Courts, in the Edenred litigation and Gottlieb v Winchester County Council [2015] EWHC 231.

Waksman J held that:

• The “gateways” to modification under Reg 72(1) should be interpreted narrowly, because they are derogations from the general rule that in-term modifications are impermissible (Reg72(9)).
• The fact that those gateways are derogations does not, however, entail that the authority invoking them bears any reverse burden of proof.
• A “considerable” extension of scope (Reg72(8)(d)) should be interpreted in a common-sense way, notwithstanding that the gateways to modification are to be interpreted narrowly. Waksman J rejected James Waste’s submission that any extension with a value more than (or not much more than) the operative threshold for the engagement of the PCR was “considerable”.
• For Reg 72(8)(b)(ii) to be satisfied, it is sufficient for a claimant to show that there is a real (as opposed to fanciful) prospect that another tenderer would have won the modified contract, because of the conditions newly introduced. It is not necessary, however, to show that the new conditions would have entailed the acceptance of a different tender.
• For Reg 73(8)(c), requiring a change of economic balance of the contract in favour of the contractor, to be satisfied, the appropriate yardstick by which to judge a price increase is whether it constitutes “reasonable compensation”, irrespective of any change in the contract payment mechanism.

Waksman J also provided guidance on the “clear, precise and unequivocal” review clause gateway in Reg. 72(1)(a) and held that, in respect of Reg. 102, a civil penalty could not be made against a contracting authority where a declaration of ineffectiveness could not be made.

The full judgment is available here.

Monckton’s Azeem Suterwalla and Antonia Fitzpatrick acted for the successful Council.

Heathrow has launched an appeal against the recent decision of the Civil Aviation Authority (the “CAA”) to modify the price control terms of Heathrow’s economic licence.

As an airport regulated by the CAA, Heathrow is subject to a price control on the amount which it can charge users for the facilities. This charge is decided by the CAA and normally reviewed every 5 years. The latest price control, for the period known as H7, contains the decision which is subject to appeal.

Permission to appeal has been granted by the Competition and Markets Authority (the “CMA”). The CMA is required by statute to determine the appeal by 17 October 2023.

British Airways, Delta Air Lines and Virgin Airways have also been granted permission by the CMA to appeal the CAA’s price control decision.

Daniel Beard KC, Josh Holmes KC, Philip Woolfe, Stefan Kuppen and Jenn Lawrence are advising Heathrow.

George Peretz KC is advising the CAA.

Rob Williams KC and Jonathan Lewis are advising the CMA.

Alfred Artley is advising British Airways.