Competition Damages – Chasing down a cause of action…

15 Jul 2016

Once the UK withdraws from the EU, claimants will no longer have a direct cause of action based on Articles 101 and 102 TFEU nor will they be able to assert a breach of statutory duty under s.2(1) ECA 1972.  Similarly, it does not seem likely that ss. 47A(6)(c), 58A and 60 CA98, which refer to the binding nature of Commission infringement decisions, will survive.  Those provisions will, most likely, be repealed as a direct consequence of withdrawal.

The statutory cause of action based on the Chapter I and II prohibitions in the CA98 will continue to apply, under s.47A CA98, but only in respect of trade within the UK.  The scope of damages claims are likely to become more parochial, limited to national, regional or local commercial practices.

So how can competition damages claims for EU cartels continue to be brought in the UK?  Claimants would not be able to invoke Articles 101 and 102 TFEU directly in damages claims and would not have an automatic right to “follow-on” damages. It may be argued that infringement findings in a Commission decision should be regarded as ‘foreign’ law relating to public policy which the English courts should not readily apply or enforce. Even if an English Court were willing to have regard to such findings, they would only count as “foreign law” with the status of one piece of factual evidence that the court would have to weigh alongside other evidence.

That risk could be mitigated by statutory provisions to the contrary or if the UK entered into a trade agreement with the EU, which specifically provided for the application of EU competition rules in cases where common trade between the UK and the EU is affected.[1]

Alternatively, if the UK were to join the EEA, then a substitute enactment to s.2(1) ECA 1972 could incorporate the provisions of the EEA Agreement, including Articles 53 and 54 EEA, although they would not have direct effect in the same way as provisions of the EU Treaties.  The EFTA Court has recognised the public policy in encouraging private enforcement as a means of ensuring the effectiveness of competition law and has followed Courage,[2] Manfredi[3] and Donau Chemie[4] in its case law.[5]

The implications of these complexities on the jurisdiction of the English Courts is discussed in a recent article by Anneli Howard published by Jordans in the Brexit edition of the Competition Law Journal available here.

[1]  See, for example, Article 35 of the EU/South Africa Trade, Development and Cooperation Agreement (1999) OJ L 311/03.

[2] Case C-453/99 Courage Ltd v Crehan [2001] E.C.R. I – 6297

[3] Case C-295/04 Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA [2006] E.C.R. I – 6619

[4] Case C-536-11 Bundeswettbewerbsbehörde v Donau Chemie AG and others, EU:C:2013:366.

[5] Case E-14/11 DB Schenker v EFTA Surveillance Authority (‘DB Schenker I’) [2012] EFTA Ct. Rep. 1178, paras 132 and 189.