High Court rules that Gemalto’s smart card chips competition damages claim is out of time

 

High Court rules that Gemalto’s smart card chips competition damages claim is out of time

The High has handed down a judgment in an action by Gemalto seeking competition law damages from Infineon and Renesas for harm allegedly suffered as a result of the smart card chips cartel.  The Court ruled that the claim, brought in July 2019, was time-barred.

The case concerns a follow-on action based on the European Commission's September 2014 decision on the smart card chips cartel.

The defendants alleged that the claim was time-barred as it had been brought more than six years after the date on which the cause of action accrued under section 32(1)(b) of the Limitation Act 1980.

Section 31(1)(b) provides that where any fact relevant to the right of action has been deliberately concealed by the defendant, the period of limitation shall not begin to run until the claimant has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.

The High Court accepted the defendant’s argument that although the case involved concealment, the limitation period time started running at the latest by April 2013 when the Commission announced that it had sent a statement of objections to suspected participants in the cartel.  At that point Gemalto had sufficient information to formulate a reasonable belief as to the essential elements of a claim for damages and without waiting for the Commission to issue and infringement decision.

To rely on section 32(1)(b) it is important to distinguish between essential facts that give rise to a cause of action and the supporting evidence.

So far as section 32(1)(b) is concerned, competition claims are not to be treated differently to any other type of claim.  In Arcadia Group Brands Ltd & 11 ors v Visa Inc & ors [2015] EWCA Civ 883, the Court emphasised that section 32 must be read narrowly in terms of what facts are needed to trigger the limitation period.  A “fact relevant to a plaintiff's right of action” for these purposes is a fact without which a cause of action would be incomplete.  

In terms of the prospects of success of relying on section 32(1)(b) in future cases, I express some caution given that this provision is to be construed narrowly but it remains complex, difficult to interpret and arguably lacking in consistency.  Competing interests are at stake (on the one hand the need for finality and, on the other hand, the public interest in ensuring that claims can be vindicated).  These interests tend to be irreconcilable except on a pragmatic basis.  This represents a significant ‘unknown’ in terms of how this point would be answered in future cases.

Gemalto Holding BV and another v Infineon Technologies AG and others [2022] EWHC 156 (Ch)

nternational Competition Network suspends Russia’s Federal Antimonopoly Service

 

International Competition Network suspends Russia’s Federal Antimonopoly Service

 

In a stop press development since my post yesterday, the International Competition Network (ICN) has now suspended the Russian Federal Antimonopoly Service (FAS) from participating in all its upcoming events.

This follows submissions from the competition authorities in Latvia, Lithuania, Estonia and the Netherlands in the aftermath of Russian’s invasion of Ukraine.

ICN’s chair has described how the invasion threatens the values the network is founded on, namely to “facilitate cooperation and convergence” between the world’s competition authorities.  At the same time it was made clear that the position would be reviewed if the situation changes.

The chair of the Competition Council of Latvia has commended the ICN’s statement as important in sending a strong signal of the international community’s zero tolerance for what is considered as a flagrant breach of human rights.

The chair of the Lithuanian authority said that the suspension was the “bare minimum” that the ICN can do.  There was regret that the justification put forward by the ICN based on the threat to ICN collaboration at events did not hit the mark and that instead there should be a more direct condemnation of what Russia had done.

Meanwhile, Poland’s Office of Competition and Consumer Protection has joined the other authorities and in urging UNCTAD and the Organization for Economic Co-operation and Development’s Competition Committee to suspend the FAS participation in their events.

I can speak anecdotally of reflections by Russian competition lawyers who condemn the action being taken in the name of the Russian Federation.  For reasons of anonymity and security they do not wish to be named.

Andrea Coscelli, the chief executive of the UK’s Competition and Markets Authority has gone on the record today supporting the ICN announcement.

European Antitrust Agencies unite to urge suspension of Russia from International Competition Network

 

European Antitrust Agencies unite to urge suspension of Russia from International Competition Network

 

A week after Russia invaded Ukraine, competition authorities in Latvia, Lithuania, Estonia and the Netherlands have urged the International Competition Network (ICN) to suspend Russia’s Federal Antimonopoly Service (FAS) from taking part in its future events “in any form”.

The Dutch competition authority has stated today that the Russian actions infringe fundamental values protected by competition policy, i.e., the well-being of citizens, businesses and society as a whole.  They say that the invasion is a blatant transgression of the fundamental values on which market functioning depends and as such is something that the antitrust community cannot ignore.

The Lithuania Competition Council has applauded other agencies for supporting its own plea for suspension and says that it will boycott future events if the ICN does not take swift action. 

The Estonian Competition Authority said there is “no place” for Russian participation in events which are designed to foster good relations between countries with similar values.  A significant showcase event is the upcoming May ICN conference but there are other ongoing events such as webinars and video-conferences..

The ICN’s steering group chaired by Andreas Mundt, who leads Germany’s Federal Cartel Office, is charged with making a final decision on suspension of members.

The Latvia’s Competition Council cannot understand the ICN’s “wait and see” position where a number of sports bodies have spoken out and taken a stand against what it describes as the “unimaginable aggression” that has unfolded over the past week.

General Curt dismisses damages action by UPS following annulment of prohibition of UPS-TNT merger

 

General Curt dismisses damages action by UPS following annulment of prohibition of UPS-TNT merger

The EU General Court rejected a claim by United Parcel Service (UPS) and ASL Aviation Holdings (ASL) in respect of damages that they allegedly suffered as a result of the European Commission's 2013 decision prohibiting the proposed acquisition of TNT Express NV (TNT) by UPS.

The General Court annulled the Commission’s decision in March 2017; upheld by the Court of Justice in January 2019.

UPS claimed compensation of EUR1.742 billion in respect of costs and loss of profits.

The General Court held that the Commission’s failure to communicate changes in the economic model used to support the Commission’s analysis was a sufficiently serious breach intended to confer rights on individuals.  However the General Court did not consider that the Commission’s procedural defect was the direct cause of UPS’s losses.

ASL claimed that the Commission’s decision had deprived it of the agreement with UPS giving rise to loss.  The General Court held that ASL could not found its claim on UPS’s rights of defence.

As a result the General Court dismissed the claims in entirety.

Damages actions have been brought in the past in respect of Commission merger prohibition cases.

In 2008 the General Court rejected a claim for damages by My Travel Group as a result of the Commission's prohibition of the Airtours/First Choice merger.  The General Court referred to the complexity of the case and the margin of discretion afforded to the Commission and found that the breach was not sufficiently serious to give rise to non-contractual liability. 

In 2009 the Court of Justice awarded Schneider damages for its costs incurred in dealing with the Commission’s second investigation of the merger between it and Legrand following the General Court’s annulment of the Commission’s prohibition decision.  However it overruled the General Court’s finding that the Commission was responsible for two thirds of losses allegedly suffered by Schneider because it had to accept a lower sales price.  The Court concluded that this category of loss did not arise directly and exclusively out of the Commission’s breaches.

The cases show that a breach of law by the Commission will not automatically sound in damages.  The claimant will need to show that there is a direct causal link between the breach and the harm suffered and this will be interpreted strictly.

 

T-834/17 United Parcels Service, Inc v European Commission ECLI:EU:T:2022:84

T-540/18 ASL Aviation Holdings DAC and others v European Commission ECLI:EU:T:2022:85

CMA seeks remedies in veterinary merger to avoid Phase 2 investigation

 

CMA seeks remedies in veterinary merger to avoid Phase 2 investigation

The CMA will refer the completed acquisition by CVS Group plc of Quality Pet Care Ltd (trading as The Vet).) to a Phase 2 merger investigation unless acceptable remedies (‘undertakings in lieu of reference’) are offered.

CVS operates over 450 veterinary practices across the UK.  The Vet is a chain of eight small animal veterinary practices in the UK.  The CMA has identified competition law concerns in the local areas of Bristol, Nottingham, Portsmouth, Southampton and Warrington where the merged businesses would account for a significant proportion of veterinary services in each of these five areas.

The parties now have five working days (until 25 February 2022) to offer acceptable undertakings in lieu to the CMA.

The CMA’s approach indicates that it remains concerned to address competition issues whether they arise in national, regional or local markets.  Even though the UK operates a voluntary merger control system where there is no obligation to seek merger clearance in advance, it is a reminder of the competition law risks for merging parties completing a transaction where there are overlaps in local markets.

https://www.gov.uk/government/news/cvs-takeover-of-the-vet-raises-competition-concerns

CMA designates Amazon under Groceries Order

 

CMA designates Amazon under Groceries Order

The Competition and Markets Authority (CMA) has designated Amazon.com, Incorporated (Amazon) under the Groceries (Supply Chain Practices) Market Investigation Order 2009 (the Order).

As a result, Amazon must comply with the Groceries Supply Code of Practice (the Code).

The Code was introduced following the Competition Commission’s groceries market investigation.  It provides terms on which the large grocery retailers deal with their suppliers.  It applies only to "designated retailers” (i.e., those with turnover exceeding £1 billion with respect to the retail supply of groceries in the UK and that have been designated by the CMA).

The CMA considers it appropriate to exercise its discretion to designate Amazon given the size and nature of its grocery retail activities in the UK.

Amazon operates its grocery business through two separate and wholly owned subsidiaries Amazon EU Sarl (which operates Amazon Fresh (comprising an online grocery delivery service and physical stores) and Fresh & Wild Limited (which has seven physical grocery stores in London and offering delivery through Deliveroo).

The £1 billion groceries threshold for designation has been exceeded by the Amazon corporate group of companies.

Once the CMA has designated a grocery retailer, compliance with the Code is managed by the Groceries Code Adjudicator.

Other retailers subject to the Code are Ocado Retail Limited, Asda Stores Limited, Co-operative Group Limited, Marks & Spencer PLC, Wm Morrison Supermarkets PLC, J Sainsbury PLC, Tesco PLC, Waitrose Limited, Aldi Stores Limited, Iceland Foods Limited, Lidl GB Limited, B&M Retail Limited, and TJ Morris Limited (trading as Home Bargains).

https://www.gov.uk/government/news/cma-designates-amazon-as-a-grocery-retailer-to-protect-suppliers

Scania loses appeal against trucks cartel decision

 

Scania loses appeal against trucks cartel decision

The EU General Court has dismissed an appeal by Scania AB, Scania CV AB and Scania Deutschland GmbH (Scania) against the European Commission's 2017 decision finding that Scania had participated in the truck cartel and imposing a fine of EUR880,523,000.

The General Court found that the Commission did not infringe the presumption of innocence through its adoption of a "hybrid" procedure.  The now familiar procedure first involved a settlement decision against the other defendants followed by a mainstream infringement procedure against Scania, the only non-settling defendant.

The General Court rejected Scania’s challenges in relation to the existence of a single and continuous infringement of Article 101 TFEU.  It was irrelevant that certain of Scania’s employees who participated in cartel meetings at a lower level were not aware of meetings held by top management.  The General Court ruled that in order to establish a single and continuous infringement the Commission must show only that the various patterns of conduct are part of an “overall plan designed to achieve a single anti-competitive objective”.  It is not necessary to demonstrate that each such element breaches Article 101 TFEU.

The General Court upheld the Commission’s finding that the information exchanges of concern amounted to infringements which were restrictive by object.  Scania was found to have participated in all elements of the infringement and the Commission was correct to impute liability for the whole infringement to that entity.

It remains to be seen whether Scania will appeal the decision.  If it does, it will face an uphill battle given the General Court’s emphatic rejection of its claims.  The judgment will no doubt fuel the growing number of private antitrust damages claims against the truck manufacturers including in England and Wales.  For now, at least, the General Court’s vindication of the Commission’s decision will make a follow-on claim against Scania so much more straightforward.

 

Case T-799/17, Scania AB and others v European Commission, ECLI:EU:T:2022:48