On 23 March 2007 Mr Justice Rimer gave judgment in Pirelli Cable Holding NV and others v. Commissioners for HM Revenue and Customs [2007] EWHC 583 (Ch.), the latest chapter in the long-running Advance Corporation Tax (‘ACT’) group litigation.

The five test cases in the ACT group litigation (of which Pirelli is one) result from the 2001 decision of the ECJ in Metallgesellschaft v. IRC and Hoechst v. IRC [2001] Ch. 620. They are aimed at resolving the issues arising out of a large number of claims for compensation by foreign companies and their UK subsidiaries in respect of payments of ACT made between 1973 and 1999, which the ECJ held in Metallgesellschaft/Hoechst to be contrary to the right of establishment under Article 43 EC.

Two of the five test cases have progressed through the domestic courts and were decided by the House of Lords in 2006 (Pirelli and Deutsche Morgan Grenfell); two are currently being heard by the House of Lords (Sempra Metals and Boake Allen / NEC Semiconductors); while the last case, “Test Claimants in Class IV” was referred back to the ECJ, which delivered judgment on 12 December 2006.

The central issue in Pirelli was whether the payment of a tax credit to a parent company resident in another EU Member State should have any bearing on the compensation now payable to its UK subsidiary in respect of unlawful ACT payments. Having lost the argument in the House of Lords, Pirelli sought to argue before Rimer J. (to whom the matter was remitted) that the Claimants were nevertheless entitled under EC law to a separate tax credit that they had not yet received and which now had to be brought into account in assessing the compensation due in line with the ECJ’s judgment in Metallgesellschaft.

Rimer J. rejected the argument, finding that neither domestic law nor Community law provided Pirelli with a right to any such tax credit. The Judge held that the Claimants should have raised the point before the House of Lords but that, on balance, it was not an abuse of process for them to do so now.

It is now expected that there will be a further hearing to deal with factual issues and the method of assessing the relevant amount of compensation in line with the decision of the House of Lords.

Meanwhile, the House of Lords has set down a further day in May 2007 for argument in Sempra Metals, another of the ACT test cases, to deal with issues relating to the restitutionary claims by the ACT Claimants and the issue of whether compensation should be calculated using compound interest.

The original High Court actions in Metallgesellschaft and Hoechst were commenced in 1995 before Neuberger J., sufficiently long ago that the same Judge is now sitting in the House of Lords in one of the test cases (Boake Allen / NEC Semiconductors). Increasingly, it looks like what Lord Hoffman has referred to as ‘the forensic fall-out’ from Metallgesellschaft will see out another decade.

Gerry Facenna is instructed as junior counsel to HM Revenue & Customs in two of the five ACT group litigation test cases, Sempra Metals and Pirelli.

 

 

 

The Administrative Court gave judgment in a further test case involving ‘penalty charge notices’, more commonly known as ‘parking tickets’, which affects millions of people every year: R(Transport for London) v The Parking Adjudicator.

The general rule is that a parking attendant must serve a parking ticket on the spot by fixing it to the vehicle or by giving it to the person appearing to be in charge of the vehicle.  In London, there are two statutory exceptions permitting service by post.  One is concerned with contraventions observed by camera.  The other is where “a parking attendant attempts to issue a penalty charge notice in accordance with section 66(1) of the [Road Traffic Act 1991] but is prevented from doing so by any person” (s5 London Local Authorities Act 2000).

TfL brought judicial review proceedings against the Parking Adjudicator claiming that the adjudicator had adopted an unlawfully narrow interpretation of their power to serve by post under the second exception.  The issues were the meaning of “attempts to issue” and “prevented”.  Tfl argued that where an attendant had merely begun to note the vehicle details in a handheld device or notebook, that constituted an ‘attempt to issue’ a ticket.  Further, that merely by driving away, the driver ‘prevented’ the ticket being issued and Tfl were entitled to serve a ticket by post in such circumstances.

The Administrative Court upheld the decision and reasoning of the Parking Adjudicator on all points and dismissed Tfl’s application.  Merely preparatory acts, such as jotting down notes, do not amount to an attempt, applying the common law and common usage.  Given that the meaning of ‘issue’, in its statutory context, must refer to the act of ‘fixing’ or ‘giving’, it cannot be an ‘attempt to issue’ if the attendant is inputting details into a computer device or making notes. To make an ‘attempt to issue’, the attendant must be in the course of physically affixing the ticket or giving it to the person appearing to be in charge.  It follows that a ticket cannot be served by post if the ticket has not been completed by the time the vehicle is driven away.

The Judge also upheld the Parking Adjudicators’ interpretation of ‘prevention’ as involving violence or the threat of violence, in this context.  The judgment confirms the narrow scope of the power to serve parking tickets by
post, and minimises the risk of local authorities using the provision to issue tickets when an attendant has not had sufficient time to ascertain that a contravention has in fact occurred.

Ian Rogers appeared for the Parking Adjudicator.

 

 

 

The Court of First Instance (CFI) heard an important state aid case, T-475/04, which raises the question of in what circumstances the grant of 3G mobile licences can involve state aid. Bouygues, the number 3 operator in France has challenged a decision of the European Commission that the grant of 3G licences to SFR and France Telecom involved no aid.

Christopher Vajda QC who was instructed by the Paris office of Denton Wilde Sapte, acted on behalf of SFR, the number two mobile operator in France and addressed the CFI in French. Judgment is expected in the summer.

 

The Competition Appeal Tribunal has dismissed an appeal against a cartel penalty imposed under Chapter I of the Competition Act 1998 against Sepia Logistics Ltd, formerly Double Quick Supplyline Limited.

The appellant manufactured components for use in double glazed windows.  It admitted its liability for what the Tribunal described as a “very serious infringement” of the Chapter I prohibition which concerned both price fixing and market sharing.  It challenged the quantum of the penalty imposed on grounds, inter alia, of financial hardship.  The OFT had considered, but rejected those contentions.  During the course of the penalty appeal, the Appellant produced a quantity of additional information on its financial position, but the Tribunal noted there remained “certain grey areas”.

The Tribunal upheld the OFT’s decision on all points.  It rejected a submission by the Appellant it was incumbent on the OFT to carry out additional investigations of its financial position, noting:

“where an undertaking is making a plea for a mitigated penalty to a regulatory (whether under the auspices of a formal leniency policy or otherwise, as was the case here), the onus must be on the applicant to provide the regulator with all information and/or documentation needed to assess its application and not on the regulator to actively seek out or require production of those documents and/or that information.”

The Tribunal’s decision also contains a valuable analysis of the circumstances in which two or more companies in the same group may be considered to be a single undertaking for the purposes of competition law.

Tim Ward represented the OFT.

 

 

 

The High Court (Chancery Division) dismissed (on Friday 2 March 2007) an application for an interim injunction by AAH Pharmaceuticals Limited and 7 other pharmaceutical wholesalers to restrain the implementation of Pfizer Limited’s new distribution arrangements for its prescription drugs in the UK, which include the drugs Lipitor and Viagra. The claimants claim that the arrangements, which were due to come into force today (Monday 5 March 2007), infringe both UK and EC competition law. Unichem Limited, a pharmaceutical wholesaler, which has an agreement to deliver Pfizer’s products to pharmacies and dispensing doctors, was joined as a party to the proceedings. Mr Justice David Richards gave his reasons for his decision to reject the application this morning (5 March 2007).

Peter Roth QC and Ronit Kreisberger were instructed by the claimants while Ben Rayment was instructed as junior counsel for Pfizer.

 

We are pleased to announce that Ronit Kreisberger has been appointed to the Attorney General’s ‘C’ Panel of Junior Counsel to the Crown.

Ronit specialises in European, competition and public law, with a particular focus on EC/UK competition and regulatory work, procurement and general European law.

This appointment consolidates the recent appointments to the A and B Panel. Monckton Chambers now numbers four ‘A’ Panellists, seven ‘B’ Panellists and six ‘C’ Panellists. This is a great honour and a significant acknowledgement of our expertise in all aspects of public administrative and European law.

 

 

 

Commissioners for Her Majesty’s Revenue and Customs v Isle of Wight Council and others [2007] EWHC 219 (Ch)

Under Article 4.5.2 of the Sixth VAT Directive public authorities are required to charge VAT on their supplies, when not to require them to do so “would lead to significant distortions of competition” with private sector operators.  This ‘test’ case concerned the provision of off-street car parking by local authorities.

Following an appeal by HMRC the High Court (Rimer J.) has decided to refer a number of questions to the European Court of Justice in order to clarify the way in which the required competition assessment should be carried out.  The VAT and Duties Tribunal had originally held that there were no issues of Community law that needed to be clarified and had concluded that was no significant distortion of competition in any of the areas of the four local authorities concerned.

The reference to the ECJ will focus broadly on three issues.  First, whether the assessment of competition is to be carried out on a national or local authority-by-local authority basis.  Second, what is the required degree of probability of distortions of competition arising?  Previous ECJ caselaw suggested that “would lead to significant distortions” might be read as “could lead to”. The difference can be important.  As his Lordship noted many people might think England could win the Ashes in 2009, far fewer that they would win them.  Thirdly was the issue of whether in this context “significant” means “exceptional?  References to the ECJ can take up to 18 months.

Christopher Vajda QC, Paul Harris and Ben Rayment were instructed by HMRC.

 

The High Court delivered judgment in Greenpeace v Secretary of State for Trade and Industry on 15th February 2007.  Greenpeace sought to challenge the Government’s decision in the Energy Review Report 2006, The Energy Challenge, published on 11 July 2006, to support nuclear new build as part of the United Kingdom’s future energy-generating mix.

The submissions of Greenpeace centred on the promise by the Government in the 2003 Energy White Paper, “Our energy future – creating a low carbon economy”, to carry out full public consultation on the issue before it decided whether or not to change its declared policy position not to support nuclear new build.

The High Court gave Greenpeace declaratory relief that their legitimate expectation had been frustrated and that the procedure followed was unfair, such that the decision to support nuclear new build was unlawful.

Sullivan J held that the consultation exercise had been very seriously flawed.  The consultation document: “Our Energy Challenge. Securing clean, affordable energy for the long-term”, gave every impression of being an issues paper, rather than a consultation paper on the substantive issue, as to whether the Government should support nuclear new build in the future.  As a consultation paper, it was inadequate since it offered no proposals and there was insufficient information given to consultees to enable them to make an intelligent response.

With regard to the issue of nuclear waste arising from new build, Sullivan J found that the consultation had not merely been inadequate but had been misleading in relation to the position of the Committee on Radioactive Waste Management (CORWM). CORWM’s draft report was only published two weeks after the consultation period had closed.  Sullivan J held that fairness, in this situation, required consultees to be able to respond to this new material.

Kassie Smith was acting for Greenpeace as a junior barrister in this high profile case.

 

 

 

We extend our warmest congratulations to Paul Harris and Tim Ward who have been elevated to the A Panel of Junior Counsel to the Crown and to Ian Hutton and Meredith Pickford for their elevation to the B Panel. Similarly, we are also very pleased to announce that Ian Rogers’ application to the B Panel was successful.

 

The Court of Appeal has handed down its keenly anticipated judgment in Attheraces Limited v. The British Horseracing Board Limited [2007] EWCA Civ 38 (judgment of 2 February 2007) which raised an important question which has long been a source of considerable difficulty for competition lawyers: at what point do prices charged by a dominant undertaking cross the threshold of being so excessive as to constitute an abuse?

The question arose in a dispute between the British Horseracing Board Ltd (“the BHB”) (the administrator and governing body of British horseracing) and Attheraces Ltd (“ATR”) (a broadcaster whose output largely consisted of information concerning British races). The BHB had engaged a third party to compile and distribute certain pre-race data on the BHB’s behalf. ATR sought to negotiate with the BHB to be supplied with that data for the purposes of two relatively new broadcasted services which ATR was supplying to bookmakers outside of the UK and Republic of Ireland. The BHB refused to supply the data except in return for a 50 percent share of ATR’s profits from the two services.

ATR then commenced proceedings in the Chancery Division, alleging that the BHB had abused its dominant position in the market for supply of pre-race data in respect of British races by, inter alia, charging excessive prices. The High Court agreed, holding that the prices demanded by BHB for supplying the data to broadcasters were abusive, essentially because they yielded profits for BHB which significantly exceeded the “cost+ formula” (i.e. the BHB’s costs of compiling and distributing the pre-race data, together with a reasonable return on those costs). The BHB appealed.

The Court of Appeal has allowed BHB’s appeal, holding that the High Court had been wrong to regard the “economic value” of the pre-race data as limited to the product of the cost + formula. In a judgment which was firmly rooted in the purposes of competition law (namely, to protect competition and consumers), the CA stated that the High Court should not have found BHB’s prices to have been “excessive” despite there being no evidence that those prices were undermining competition in downstream markets. Further, even if the BHB’s prices had been “excessive”, they were arguably not “unfair”, and therefore arguably not abusive, having regard to the activities undertaken by BHB in administering and funding aspects of British racing, which activities produced benefits to ATR which were not reflected in the costs of compiling and distributing the pre-race data.

Peter Roth QC acted for the successful appellant.