The Competition Commission (CC) today issued its final report into the acquisition by Kerry Foods Limited of Headland Foods Limited. Before the merger, the companies were the two largest suppliers in the UK of frozen ready meals (FRMs), mainly to supermarkets.  After a detailed investigation, the CC accepted Kerry’s case that retailers were able to find alternative sources of FRMs from other suppliers in the UK and on the Continent, so that there was no substantial lessening of competition.

Kerry was represented before the OFT by George Peretz and Ronit Kreisberger, and before the CC by John Swift QC and George Peretz.

For the Competition Commission’s inquiry page, with links to its report and the submissions of each of the parties, please click here.

Elisa Holmes and Fiona Banks successfully represented Photo-Me International Plc in defending a strike out application brought by Network Rail Infrastructure Limited.

In what is set to be a landmark case, the judgment considers the relationship between the Utilities Directive (Directive 2004/17/EC) and the General Directive (Directive 2004/18/EC). In particular, in finding that although Network Rail was a Utility for some purposes, the activities in question (the provision of concessions) were outside of the scope of the Utilities Directive, His Honour Judge Havelock-Allan QC found that the General Directive nevertheless applied to Network Rail in respect of all of its activities in light of the concession made by Network Rail that, for the purposes of the application only, the Court could treat it is as being a contracting authority within the meaning of the General Directive.  There was no concept of “public activities” incorporated into the General Directive, even insofar as utilities are concerned.

The issue of the application of general principles of EU was decided by the Court as if it was a preliminary issue, given it raised a pure point of law.

The judgment also makes an important contribution to the debate about the implication of contractual terms in the context of public procurements. In particular, Judge Havelock-Allan QC found that “I have no difficulty concluding that there is a real prospect of [Photo-Me] being able to establish an implied tender contract”.

Monckton Chambers is pleased to announce that Valentina Sloane has been listed in the Tax Journal’s feature – “40 Under 40“.  The feature focuses on individuals in the tax profession who have illustrated technical excellence, commercial nous and good client skills.

“Valentina is an experienced advisor and litigator in VAT and Customs & Excise duties law. In less than ten years of practice at the Bar, Valentina has cultivated an enviable practice. Now working predominantly for the taxpayer, she has featured in some of the most high-profile cases concerning indirect tax of recent years. She has an ever increasing reputation as being one of the junior tax Bar’s best litigators. She already appears alone in the Court of Appeal and the ECJ and often appears against QCs.”

Clients comment that Valentina

“also comes across as warm and interested in our clients, and seeks to advise in a way that fits with their business needs” and that “the straightforward, clear and obviously thoroughly-thought-through advice she provides is much appreciated by her long list of fiercely loyal clients.”

On 10^th November 2011, the Court of Justice of the European Union (“CJEU”) delivered its keenly anticipated judgment in HMRC v Rank, in which it gave preliminary rulings on questions referred by both the Upper Tribunal and the Court of Appeal.  The judgment is significant both in terms of the clarification it provides on the EU principle of fiscal neutrality and in terms of the practical consequences of the ruling, since Rank’s multi-million pound claim is a test case for the gaming industry.

The context of the rulings is a series of claims by the Rank Group plc (“Rank”) for VAT allegedly overpaid on supplies of bingo and slot machine gaming.  In essence, Rank alleges that the UK has breached EU law by treating similar supplies differently for VAT purposes, in that certain forms of bingo and slot machine games have been subject to VAT, while other forms of the same games have been exempt from VAT, despite the fact that the exempt and taxable forms of each game are similar from the point of view of the average consumer.  HMRC have raised a number of defences to the claims, including a due diligence defence, and an argument that any difference in VAT treatment between similar games did not distort competition, an argument that certain comparators relied on by Rank were in fact not similar to its machines, and that it was only differences of legal treatment that could found a case for breach of the principle of fiscal neutrality: a practice by HMRC of treating supplies differently  would not suffice.

In its ruling, the CJEU has clarified the scope for claims by taxpayers based on a breach of fiscal neutrality and on the availability of defences by Member States to such claims:

1. First, the CJEU ruled that a difference in VAT treatment of two supplies of services which are identical or similar from the point of view of the consumer and meet the same needs of the consumer is sufficient to establish an infringement of the principle of fiscal neutrality. Such an infringement does not require that there also be established an actual existence of competition between the services in question or a distortion of competition because of the difference in VAT treatment.

2. Secondly, the CJEU stated that where there is a difference in VAT treatment of two games of chance, for the purpose of fiscal neutrality no account should be taken of the fact that those two games fall into different licensing categories and are subject to different legal regimes relating to control and regulation.

3. Thirdly, on the issue of how to assess alleged similarity of supplies, the CJEU stated that an assessment of whether games are similar must be made from the point of view of “the average consumer” and must take account of the “relevant or significant evidence liable to have a considerable influence” on his decision to play one game or the other.

4. The CJEU’s fourth ruling clarified that a taxable person cannot demand that a certain supply be given the same tax treatment as another supply, where such treatment does not comply with the relevant national legislation. The principle of equal treatment must be reconciled with the principle of legality, according to which a person may not rely, in support of his claim, on an unlawful act committed in favour of a third party.

5. Finally, the CJEU ruled that a Member State may not rely on a due diligence defence to contest a claim for reimbursement of VAT based on a breach of the principle of fiscal neutrality, in circumstances where it has exercised its discretion to exclude from exemption a category of machines meeting certain criteria.

The Rank Group plc was represented by Paul Lasok QC and Valentina Sloane

HMRC were represented by Christopher Vajda QC and George Peretz

Briggs J ordered that Chemistree must pay £750,000 to Teva by way of security in a series of staggered payments.  The Judge held that, in defending itself against Chemistree’s claims, Teva was entitled to incur legal costs that reflected “the best legal representation that it could secure.”  The Judge was critical of the limited disclosure made by Chemistree and, in particular, its failure to provide audited accounts.  He found that Teva had shown, relying on evidence from an expert accountant, that there was reason to believe that Chemistree would be unable to pay Teva’s costs if Teva was successful at the end of the trial.  The Court was also unpersuaded by Chemistree’s argument, on the evidence put before it,  that the claim would be “stifled” if it were ordered to pay any more than £350,000.  It was therefore just to make the order for security for costs.  The Judge also rejected Chemistree’s argument that the Court should apply a different test in exercising its discretion to award security because their claim concerned EU law rights or was, in Chemistree’s submission, a test case.

Ronit Kreisberger acted for Teva Pharmaceuticals Limited.

Monckton Chambers was honoured to be awarded “Set of the Year” for our work in EU and competition law for the third year in a row at the annual Chambers Bar Awards held at the Hilton Hotel, Park Lane.

Josh Holmes was recognised in the same field last night as he picked up the “Junior of the Year” award.

Congratulations to everyone.

The Competition Commission today issued its Provisional Findings in the Kerry/Headland merger inquiry.  Kerry Foods Limited (part of the Kerry Group) and Headland Foods Limited were both leading suppliers of frozen ready meals (FRMs) to UK supermarkets. Kerry purchased Headland’s FRM business in January 2011.  The Commission stated that, in its view, events since the merger demonstrated that customers were able to source FRMs from alternative suppliers, so that the merger would not be expected to result in a substantial lessening of competition.

The Competition Commission is now seeking comments on its Provisional Findings, and a final report is due in December 2011.

John Swift QC and George Peretz have been acting for Kerry in the inquiry.

Lord Justice Elias has granted permission to appeal and ordered that attempts should be made for it to be heard before the Court of Appeal early next month after campaigners, who sought a judicial review against Brent Council’s decision to close six libraries in north-west London, lost their bid in the High Court last week.

An Order has been made preventing Brent Council from taking steps to decommission the libraries in the meantime.

 

The High Court today handed down judgment In an important decision for those considering the English High Court as a forum for damages claims in international competition law cases.

A group of Toshiba companies claimed damages against companies alleged to have taken part in an international cartel in the supply of industrial copper tubing.

The European Commission had made an infringement decision against parent companies in three corporate groups.  The UK claim included allegations of liability against UK subsidiaries of those companies, as well as the parents.

The Defendants argued that there was no valid claim against the UK subsidiaries, which did not form part of the same undertakings as their parents.  They also argued that the Court was in a position to give summary judgment against the Claimants based on witness evidence from officials in the UK companies who said that their companies had not been involved in any cartel behaviour.

These allegations were decisively rejected by the Chancellor of the High Court.  He found that the claims against the UK subsidiaries were properly constituted, and that the attempts by the Defendants to obtain summary judgment were misguided.  This meant that there was also jurisdiction to sue the foreign domiciled parent companies in the English Court, under Article 6 of the Brussels Regulation.

The judgment built on the two leading precedents of Provimi and Cooper Tire, and emphasised that in a secret cartel case the strength of the claimants’ case cannot be assessed, let alone particularised, until after disclosure of documents.

Jon Turner QC acted for the Claimants.

Daniel Beard QC acted for the 1st to 4th Defendants and Kassie Smith acted for the 9th Defendant”

For only the second time in its history, the Competition Appeal Tribunal has given judgment on a security for costs application in the case of 2 Travel Group Plc (in liquidation) v Cardiff City Transport Services Ltd.

The Claimant in this action seeks damages from the Defendant pursuant to section 47A of the Competition Act 1998. The claims follow on from a decision taken by the Office of Fair Trading on 18 November 2008. In the Decision, the OFT found that, between 19 April 2004 and 18 February 2005, the Defendant infringed the prohibition imposed by section 18(1) of the Act (“the Chapter II prohibition”) by engaging in predatory conduct against the Claimant which amounted to an abuse of its dominant position in the relevant markets.

The CAT ruled that the award of security would very likely have the effect of stifling a genuine claim and commented that the Claimant had taken all reasonable steps to exhaust those avenues of funding that are realistically available to it, and any requirement to provide security would carry a very real risk of extinguishing the proceedings.

The Tribunal went on to say that it was very concerned that making an order for security for costs would risk extinguishing a genuine claim by a company in liquidation, in circumstances where it cannot be excluded that the Tribunal might ultimately conclude that the Claimant’s impecuniosity has been caused by the Defendant and that it’s conclusion was fortified having regard to the findings of the OFT contained in the Decision, which are (subject to direction by the Tribunal) binding on the Tribunal.

Michael Bowsher QC of Monckton Chambers and Adam Aldred of Addleshaw Goddard appeared and continue to appear for the claimant.