CMA prevails against Facebook in the Court of Appeal – Ben Lask acts for CMA

Facebook v Competition and Markets Authority [2021] EWCA Civ 701

The Court of Appeal has dismissed an appeal by Facebook concerning the CMA’s use of interim measures in merger investigations.

The CMA is investigating Facebook’s acquisition of GIPHY, a provider of short soundless videos (GIFs) and stickers, which are used on apps such as WhatsApp, Instagram, TikTok and Snapchat. As is standard practice in merger investigations, the CMA imposed an Interim Enforcement Order (IEO) on the parties at the outset of its investigation, prohibiting any further integration of their businesses and imposing various obligations for the purpose of preventing pre-emptive action (i.e. action which might prejudice the investigation or impede the imposition of any remedies at the end of the investigation). Given the need to act quickly to “hold the ring” with completed mergers, the CMA uses a broad template IEO from which it then grants appropriate derogations in response to reasoned requests.

Facebook applied to the Competition Appeal Tribunal for judicial review of the CMA’s refusal to grant a number of derogations that it had sought from the IEO. It complained that the effect of the IEO was to “freeze” hundreds of Facebook’s businesses and more than 50,000 employees worldwide. The Tribunal dismissed the claim, holding that, since Facebook had refused to provide the information requested by the CMA in order to consider its derogation requests, the CMA had been entitled not to grant the derogations sought. Facebook appealed to the Court of Appeal but, in a judgment handed down on 13 May 2021, its appeal was dismissed. The Court held, in summary, that:

  1. Facebook’s case was based on the misapprehension that the CMA’s final remedial were limited to requiring the divestiture of GIPHY, whereas in fact they were wider than that.
  2. The problem of which Facebook complained had been entirely of Facebook’s own making. Rather than engaging properly with the CMA, it had made its derogation requests and then “sat on its hands”, refusing to answer the CMA’s questions.
  3. A consequence of the UK’s prospective merger regime was that the CMA had to act quickly in appropriate cases. Accordingly, it had developed a broad template for IEOs, which were intended to hold the ring whilst it obtained further information, and which Facebook had not specifically challenged. However, the process broke down if addressees of the IEOs refused to cooperate as Facebook had.

The CMA’s investigation of the Facebook / GIPHY merger is ongoing, with a final decision due in September 2021.

Ben Lask represented the CMA in the Court of Appeal. A copy of the judgment is here.

Ronit Kreisberger QC in opt-out collective action for 19.6 million eligible UK iPhone and iPad users as Apple faces damages of up to £1.5 billion.

Ronit Kreisberger is joint lead counsel for the legal team representing Dr Rachael Kent, an expert in the digital economy and lecturer at King’s College, University of London, in this representative opt-out collective action against Apple.

A claim in the Competition Appeal Tribunal on behalf of around 19.6 million eligible UK iPhone and iPad users, alleges that Apple’s conduct violates section 18 of the UK Competition Act 1998 and Article 102 of the Treaty on the Functioning of the European Union.

Ronit, who has been instructed by Hausfeld, says she is “delighted to be involved in this significant case, at a time when opt out collective actions – especially those seeking compensation for consumers – are dominating the competition litigation landscape in the UK, in the wake of the Supreme Court’s judgment in Merricks.”

For further information see Hausfeld press release here.

The case is being reported widely in the media:
BBC News
City A.M.
The Times

In court this week – latest development in the interchange litigation and Care UK dispute re the CMA review of the care sector

Two separate teams from Monckton Chambers are in court this week on significant cases:

Monckton’s Kassie Smith QC and Fiona Banks, instructed by Humphries Kerstetter partner Mark Humphries, are representing hundreds of claimants against Visa and Mastercard, in what will be the latest development in the interchange litigation saga. Wednesday’s proceedings follow last month’s preliminary hearing to determine whether 40 Italy-based claimants are to be governed by English or Italian law. The Claimants are seeking summary judgment under Article 101(1) on all of their claims following the Supreme Court judgment of last summer. This application has huge implications for all “second wave” MIFs claims as, if it succeeds, only issues arising under Article 101(3) and as regards quantum will remain to be litigated in these cases. The application is being hotly contested by Visa and Mastercard.

Monckton’s Gerry Facenna QC and Daisy Mackersie, instructed by CMS Cameron McKenna Nabarro Olswang disputes partner Tom Dane, are representing Care UK, one of the UK’s largest care home providers, defending a claim by the CMA in the Business and Property Courts that the administration fees charged by Care UK between 2013 and 2018 were contrary to EU consumer protection legislation and should be refunded. This dispute forms part of the CMA’s wider review into the care home sector and its efforts to bolster its consumer protection powers.

For subscribers to The Lawyer Litigation Tracker, further detail can be found here.

Court of Appeal judgment in Royal Mail v Ofcom

The Court of Appeal has handed down its judgment dismissing Royal Mail’s appeal against a decision of the Competition Appeal Tribunal which confirmed Ofcom’s earlier finding that Royal Mail abused its dominant position to exclude its competitor Whistl from the wholesale market for bulk mail delivery services. Ofcom imposed a fine of £50 million for that conduct (the highest fine ever imposed by Ofcom), which was upheld on appeal.

The Court of Appeal concluded that “Ofcom was not required as a matter of law to treat the AEC test [the as-efficient-competitor test relied upon by Royal Mail] as either determinative or highly relevant. In those circumstances Ofcom gave adequate consideration to the AEC test, and the Tribunal did not err in law in so concluding.”

All parties to the proceedings – Royal Mail, Ofcom and Whistl – were represented by leading and junior counsel from Monckton Chambers.

The Court of Appeal’s judgment is available here.

Daniel Beard QC and Ciar McAndrew appeared for Royal Mail.

Josh Holmes QC, Julianne Kerr Morrison and Nikolaus Grubeck appeared for Ofcom.

Jon Turner QC, Alan Bates and Daisy Mackersie appeared for Whistl.

Michael Bowsher QC acts for Northstone as the Northern Ireland Court of Appeal rules against award of contracts by Department for Infrastructure road contracts

Civil engineering company Northstone was one of a number of operators in competition for a total of eight road resurfacing contracts in Northern Ireland. The eight separate contracts, with a total estimated annual value of up to £52 million, were dealt with under a single procurement competition tendering process, carried out in 2015 by the Department for Infrastructure, (formerly known as the Department for Regional Development – DRD). The challenge by Northstone focused on the Department’s handling and determination of the competitive tender process and in particular the process which was conducted with one bidder, John McQuillan (Contracts) Limited (McQuillans).

The tender criteria meant that price was weighted at 70% and quality 30% and all bidders were ranked accordingly. Northstone was ranked first in one of the eight contracts it tendered for, coming second or third in all the rest. The Department ranked six of McQuillan’s tenders first before entering into private negotiations with the company which culminated in the firm withdrawing two of its bids and then being awarded four of the eight contracts. Northstone challenged the handling of the tendering competition and in July 2020 a High Court judge held that the Department had wrongly given high marks for contracts for which McQuillans did not have the necessary resources. He also identified a lack of transparency, unequal treatment and breach of the principle of non-discrimination in the circumstances whereby that company was able to select which contracts it would deploy its resources to.

In the Court of Appeal, Lord Justice McCloskey upheld the conclusion that the post-tender evaluation and scoring interaction with the operator ranked first for six contract bids, along with resulting award decisions, breached the relevant procurement legislation and that the Department had “engaged in a secret, bilateral and unrecorded process with one of multiple bidders”, and “in consequence, the level playing field was distorted for other bidders.” He further assessed that “to design and operate this competition in such a way as to rank first six contract bids from an operator who had the resources to perform only four contracts at most defies common sense and commercial reality”.

The appeal by the Department for Infrastructure was dismissed.

The judgment can be found here.

Michael Bowsher QC and Richard Coghlin QC, instructed by Declan Magee of Carson McDowell LLP, acted for Northstone.

Melanie Hall QC, Brendan McGurk and David Gregory secure Court of Appeal victory against the landfill sector in a landmark test case

In the last of a series of challenges brought by the UK’s landfill sector which has generated a decade of litigation in the Administrative Court, Tax Tribunals and the Court of Appeal, Monckton Chambers has secured a further victory on behalf of HMRC.

In a combined judgment handed down by Rose LJ, Nugee LJ and Newey LJ, the Court of Appeal unanimously overturned the decisions of the UT which had decided that substantial refunds of landfill tax were payable across the landfill sector. The Court of Appeal found that material known as “fluff”, even when shredded (as Biffa had done) did not give rise to any legally relevant use, as contended by the sector on the basis of the Court of Appeal’s judgment in Waste Recycling Group v HMRC [2008] EWCA Civ 849, [2009] STC. The FTT had been right to conclude that fluff was merely carefully emplaced waste on which landfill tax was therefore payable. Biffa’s decision to shred that waste made no difference.

Link to judgment here.

Melanie Hall QC, Brendan McGurk and David Gregory represented HMRC.

Permission Granted in Challenge to Export Licensing of Military Equipment for Yemen Conflict

The Administrative Court has granted the Campaign Against Arms Trade (CAAT) permission to judicially review the government’s decision to resume issuing licences for the transfer of arms and military equipment to Saudi Arabia for use in the conflict in Yemen. 

The decision to resume exports follows a review by the government of the legality of exports, undertaken following previous litigation brought by CAAT which resulted in the Court of Appeal finding in 2019 that earlier licences had been issued unlawfully. This was because the government’s assessment had failed properly to assess whether KSA and its coalition partners had violated the laws of war in a series of incidents investigated by the UN and NGOs and found likely to constitute war crimes. A number of issues in the first challenge remain pending before the Supreme Court. 

The Administrative Court has now listed CAAT’s second challenge to be heard by the Divisional Court, at a date still to be determined.  

Conor McCarthy is junior counsel for CAAT.

In the first claim brought by CAAT, Nik Grubeck acted as junior counsel for interveners including Human Rights Watch and Amnesty International, while Gerry Facenna QC and Julianne Kerr Morrison acted as counsel for Oxfam, which also intervened in the case. 

Judicial Review: Imogen Proud and Michael Armitage succeed in the Administrative Court

R (Cheung) v Office of Intercollegiate Services
Downing College were an Interested Party

The Administrative Court has refused permission to apply for judicial review to a disappointed applicant to Downing College, Cambridge concerning the decision not to offer him a place.

The Claimant applied to study Land Economy at Downing College in the academic year 2020-2021. Following the College’s refusal decision, he sought entry to the University by way of a challenge to the decision of the Undergraduate Admissions Complaints Panel (which operates under the auspices of the Defendant) which he had asked to consider a complaint he made against the College’s rejection decision. The Panel’s remit was to consider whether Downing College had made a ‘serious procedural error’.

The Claimant’s claim centred on an email which the College was said to have received but not taken into account in rejecting the Claimant. It was not in dispute that the putative email contained the fact that the Claimant was to re-sit to A-level exams. It was disputed that the email was ever received, and there was an issue as to whether it contained ‘updated A-level predictions’.

The Claimant advanced four grounds: (1) the Panel had failed to take into account the ‘updated A-level predictions’ in the email; (2) the Panel had erred in finding or was irrational in determining that the Claimant’s complaint was a challenge to academic judgment; (3) the Panel erred in fact in finding that the Claimant had not provided any evidence of predicted results; and (4) the Panel erred in fact or was irrational in finding that the email would have made no difference.

At an oral renewal hearing, the Administrative Court refused the Claimant permission on all grounds on the basis that the Panel had been entitled to find that Downing had made no ‘serious procedural error’. The Court found, as it did so, that there was “no doubt” that the Panel’s decisions had been “conscientious, expert and reasonable”. The judge did not need to determine the issue of whether decisions of the Panel, or university admissions decisions generally, are susceptible to judicial review, which is left for future challenges.

Imogen Proud acted for the Office of Intercollegiate Services

Michael Armitage acted for Downing College

Stefan Kuppen acts for successful respondent as Court of Appeal considers postponement of limitation period for insolvent claimant

The Court of Appeal has today handed down its judgment in OT Computers (in liquidation) v Infineon and Micron [2021] EWCA Civ 501. The judgment is the first time an appellate court has considered the operation of s.32(1) of the Limitation Act 1980 (postponement of limitation period in case of fraud, concealment or mistake) in the context of an insolvent claimant. It confirms that a claimant’s insolvency is a relevant factor in the application of the test in s.32(1) and, in particular, may affect the question of what a claimant could with reasonable diligence have discovered.

OT Computers (‘OTC’) was a computer manufacturer before entering into administration in early 2002. Its claim for damages follows on from a decision of the European Commission finding a price-fixing cartel in computer memory (DRAM) which operated from 1998–2002. OTC ceased trading before the cartel’s activity had come to an end, and before any information about its existence had entered the public domain. The Commercial Court ([2020] EWHC 415 (Comm); Foxton J) had found that similar claims by other claimants, all filed six years after the European Commission’s decision, were time barred because those claimants could with reasonable diligence have discovered the facts necessary to bring their claims some time before the publication of the decision. This was largely due to information about a parallel investigation into cartel activity in the United States which the judge had found to be known to and of general interest to purchasers of DRAM such as the claimants. The judge however held that OTC was in a different position, as it had already ceased trading at the time this information became available. What mattered therefore in OTC’s case was (in essence) what a reasonably diligent insolvency practitioner could have discovered. On the facts of the case, the sporadic reports in national newspapers were not sufficient to set time running.

The Court of Appeal (Jackson, Coulson and Males LJJ) agreed with the judge’s approach. The Appellants had contended that the judge had erred because the guidance previously given by the Court of Appeal in Paragon Finance Plc v DB Thakerar & Co [1999] 1 All ER 400 that the test for reasonable diligence was ‘how a person carrying on a business of the relevant kind would act’ was binding on the judge and meant that OTC had to be treated, for the purposes of limitation, as if it had continued to carry on its business as a computer manufacturer. The Court rejected this contention as artificial and found that the guidance in Paragon simply did not apply in the context of a claimant that had ceased to carry on a business. It found that while the test in s.32(1) of the Limitation Act was an objective one, it was nonetheless focused on the actual claimant and directed at ensuring that the actual claimant was not disadvantaged by the concealment. The purposes of the objective test was to ensure that ‘claimants in a similar position should be treated consistently. However, a claimant in administration or liquidation which is no longer carrying on business is not in a similar position to claimants which do continue actively in business and it is unrealistic to suggest otherwise’ (at [59]).

In comments more generally applicable to statutory interpretation, the Court stressed that ‘it is a mistake to read a judgment as if it were a statutory text, especially on a point that was not in issue’ (there was no insolvent claimant in Paragon Finance) (at [55]). The focus had to be on the language and purpose of the statute itself: ‘To treat the terms of a judgment as laying down a rule of law applicable to circumstances which were never in contemplation runs counter to the whole approach of the common law, which develops flexibly as new factual situations arise. What was said in Paragon Finance has rightly been described as “authoritative guidance”, and no doubt will provide the answer in many cases, but it can be no more than guidance. To treat it as providing an answer to the present case would be to force a square peg into a round hole. What matters are the language and purpose of section 32’ (at [56]).

The judgment can be found here.

Stefan Kuppen acted for the claimant respondent OTC.

Andrew Macnab, representing HMRC, successfully defends the Rank Group’s appeal to the Court of Appeal against HMRC’s refusal to repay a £67m VAT refund – *UPDATE*

The Rank Group plc v HM Revenue and Customs [2020] EWCA Civ 550, [2020] STC 1155

On 24 April 2020, the Court of Appeal dismissed Rank’s appeal against HMRC’s refusal to repay a £67m refund of VAT overpaid between 1996 and 2002.  The Court upheld, on different grounds, the decision of the Upper Tribunal [2019] UKUT 100 (TCC).  The Court rejected Rank’s attempt to circumvent the 4-year limitation period that had time-barred its earlier claims for those sums, made in 2011 under s.80(1) VATA.  In 2013, Rank made a new claim for a refund of those sums under s.80(1B), in combination with the set-off provisions of s.81(3) and (3A) and dicta in Birmingham Hippodrome Theatre Trust Ltd v RCC [2014] 1 WLR 3867.  Rank argued that HMRC should have brought Rank’s out-of-time claim into account when calculating other, earlier, in-time s.80(1) claims; that, by failing to do so, HMRC had underpaid Rank £67m in respect of those in-time claims; and that HMRC’s underpayment of the £67m was to be construed as an overpayment by Rank of the same sum.

On 23 February 2021, the UK Supreme Court refused Rank’s application for permission to appeal.

Andrew Macnab represented HMRC throughout.  Read the full decision of the Court of Appeal here