Breach of Public Contracts Regulations not “sufficiently serious” to warrant damages under Francovich test

 

The Court of Appeal has held that a breach of the Public Contracts Regulations 2015 (SI 2015/102) that results in the wrong bidder being awarded a contract will not automatically constitute a "sufficiently serious" breach to warrant damages in accordance with Francovich v Italy (C-C/90) [1991] ECR 1-5357.

The claimant brought a claim against NHSE.  The High Court found that there was a manifest error by NHSE which, if it had not been made, would have resulted in the claimant winning the tender.  NHSE committed a single, inadvertent breach in an otherwise careful procurement exercise, which caused the wrong result.

In the absence of bad faith of the decision-maker, their "excusability" and state of mind were important factors in considering the "sufficiently serious" test.  The Court of Appeal ruled that a manifest error could be excusable, depending on the facts.

The judgment will be welcome to contracting authorities.  It settles and dismisses any assumption that a breach of procurement regulations resulting in an incorrect contract award will automatically be sufficiently serious to warrant an award of damages.  Aggrieved tenderers will find that the bar for raising a claim for damages is significantly raised.

This is the second case where a party has sought to argue that a particular type of breach or result automatically means that the "sufficiently serious" test is made out. The claimant and appellant attempted to do this (unsuccessfully) in Ocean Outdoor Ltd v Hammersmith and Fulham London Borough Council [2019] EWCA Civ 1642.

Braceurself Ltd v NHS England [2024] EWCA Civ 39

CMA market study into infant formula

 

The CMA has announced a market study into infant formula and follow-on formula in the UK.

The CMA intends to use the market study to consider how the supply of formula has, or may have, adverse effects on consumers, and how it might work better.

In the market study, infant formula comprises infant and follow-on formula as defined by Commission Regulation 2016/127, and formulas labelled as foods for special medical purposes that can be sold without prescription under Regulation 2016/128.

The market study follows work that the CMA has conducted on the rising costs of living where its November 2023 report found that consumers are not always well-equipped to make informed choices for infant formula.  Danon had a 71% share in the UK infant formula market in 2023 and the penetration of own-label alternatives was found to be weak..

The CMA also proposes to consider the market for growing up and toddler milks marketed for children over 1 year old.

The deadline for responses is 13 March 2024.

The CMA must announce within six months if it is intending to make a market investigation reference and must publish its final report on the market study within 12 months. The CMA has indicated it intends to publish its final report in September 2024.

 

https://www.gov.uk/government/news/cma-to-scrutinise-infant-formula-market-through-a-market-study

CAT rules on carriage dispute in collective proceedings against Amazon

 

CAT rules on carriage dispute in collective proceedings against Amazon

The Competition Appeal Tribunal (CAT) has determined the "carriage issue" in two applications to commence collective proceedings, under section 47B of the Competition Act 1998, against Amazon.

 The first application was brought by Ms Julie Hunter and the second by Mr Robert Hammond (each as the proposed class representatives).

The proposed proceedings would both combine standalone claims for damages caused by alleged breaches by Amazon of Article 102 of the TFEU (prior to 31 December 2020) and the Chapter II prohibition of the Competition Act 1998.

Each sets of proceedings allege abuse of a dominant position by Amazon in the market for intermediation services on online marketplaces through the operation of its "Fulfilled by Amazon" and "BuyBox" features.

The CAT ruled that it would not be able to certify both sets of proceedings due to the overlaps between them.  It decided which set of proceedings should be allowed to continue to a certification hearing as a separate provisional issue.

 The CAT concluded that Mr Hammond was most suitable to act as the proposed class representative. It considered that the methodology submitted by Mr Hammond's expert was preferable as it more closely aligned the counterfactual to the alleged abuse.

However, this may not be the final resolution of the matter.  The CAT decided that Ms Hunter's application should be stayed, rather than dismissed. It could still proceed to a certification hearing on the event that Mr Hammond's application for certification were to fail or, if granted, be revoked.  It may even be that the two class representatives might join forces in the future to allow claims to be brought by as wide a body of claimants as possible.

The CAT made no ruling on which class definition was more appropriate, finding that it is not an issue to be determined in a carriage dispute.

Julie Hunter v Amazon.com, Inc and others and Robert Hammond v Amazon.com, Inc and others [2024] CAT 8

Need a pay rise? CMA publishes report on market power in labour markets

 Need a pay rise? CMA publishes report on market power in labour markets

The Competition and Markets Authority (CMA) has published its first report prepared by its Microeconomics Unit, on competition and market power in UK labour markets.
The report examines employer market power and concentration in the labour market. It considers the ability of a firm to pay its workers less than the value of their contribution to the value of the firm’s output.

The CMA finds that market concentration in the labour market has remained roughly constant over the last 20 years. On average, wages are 10% lower in the most concentrated markets, compared to the least.
The report also examines the increase in hybrid and flexible working and the increasing importance of the gig economy.

The report raises a number of unanswered questions which will no doubt inform analysis by policy makers:

·        What lies behind the geographical differences in labour market concentration?
·        How do mergers and acquisitions affect labour market concentration and wages in the UK?
·        What would the impact of changing labour market policies (for example, on non-compete agreements, pay setting and the minimum wage) be for worker mobility and wages?

Competition and market power in UK labour markets - GOV.UK (www.gov.uk)

CMA investigation into fine fragrances cartel

 

CMA investigation into fine fragrances cartel

The CMA has issued an update in its investigation into suspected infringements of the Chapter I prohibition of the Competition Act 1998 involving suppliers of fragrances and fragrance ingredients.

The CMA launched its investigation in March 2023. The investigation was launched with a series of dawn raids alongside the European Commission, the Swiss Competition Commission and the US Department of Justice’s antitrust division. These led to four separate investigations by these antitrust agencies.

The firms under investigation are Firmenich International SA, Givaudan SA, International Flavours & Fragrances Inc and Symrise AG, and their group entities, including UK subsidiaries.

The CMA has extended the investigation to include suspected unlawful coordination between Firmenich International SA, Givaudan SA and International Flavours & Fragrances Inc involving arrangements relating to the hiring or recruitment of certain staff.

Reflecting similar concerns about ‘anti-poaching’ agreements in October, the CMA launched a separate probe into the BBC, ITV and several production companies over concerns about recruiting freelancers.

The CMA expects to publish its next update on the investigation in autumn 2024.

https://www.gov.uk/cma-cases/suspected-anti-competitive-conduct-in-relation-to-fragrances-and-fragrance-ingredients-51257

Challenges to European Commission’s gatekeeper designations

8 January saw the publication of appeals by Apple and Meta against the European Commission's September 2023 decisions designating them as ‘gatekeepers’ for the purposes of Regulation 2022/1925 on contestable and fair markets in the digital sector (Digital Markets Act (DMA)).

Apple’s designation is in relation to its operating system iOS and its online intermediation service App Store.  Apple claims the designation should be annulled insofar as it specified Apple’s operating system iOS as an important gateway for business users to reach end users, and insofar as it imposes on Apple an obligation to comply with the interoperability obligations of Article 6(7) of the DMA.  Apple alternatively asks the General Court to declare Article 6(7) inapplicable pursuant to Article 277 of the TFEU claiming that Article 6(7) is inconsistent with the requirements of the European Charter of Fundamental Rights and the principle of proportionality.  It further alleges that the Commission misinterpreted and misapplied the DMA and made material factual errors in reaching the conclusions that (1) App Store is single core platform service that constitutes an important gateway for business users to reach end users and (2) Apple iMessage is a number-independent interpersonal communications service.

In a separate appeal, Apple is challenging the Commission’s decision to launch a market investigation to determine whether its instant messaging service iMessage falls under the scope of the DMA.

Details have also been published of Meta’s arguments for challenging certain aspects of its designation.  It disputes the Commission’s conclusions that Facebook Messenger and Facebook Marketplace constitute core platform services pursuant to Article 3(9) of the DMA.

ByteDance (owner of Tik Tok) has challenged the platform’s gatekeeper designation outright.   It disputes findings that it has an “entrenched” position in the market.  It has also sought interim measures from the General Court to suspend its obligations under the DMA pending a challenge against its gatekeeper designation.

Microsoft, Google and Amazon have not brought appeals against their designations or the inclusion of their core platform services.

Case T-1080/23 – Apple v Commission (OJ C/2024/563)

Case T-1079/23 – Apple v Commission (OJ C/2024/562)

Case T-1078/23 – Meta v Commission (OJ C/2024/561)

Court of Justice FIFA and UEFA Rulings: Super League ban and ‘home grown’ rules

 

 

Court of Justice FIFA and UEFA Rulings: Super League ban and ‘home grown’ rules  

The European Court of Justice has delivered a series of much awaited rulings on the compatibility with EU competition law of rules imposed by football associations FIFA and UFEA.

The Court issued a preliminary ruling stating that rules imposed by FIFA and UEFA forcing any new interclub football project to seek their approval lacked a framework to ensure they are transparent, objective, non-discriminatory and proportionate.  The Court therefore held that the associations were abusing their dominant position when they arbitrarily banned clubs from forming a European Super League.  The associations' rules on approval, control and sanctions also constitute "by object" infringements of Article 101(1) of the TFEU, as well as unjustified restrictions on the freedom to provide services.

In a separate ruling on UEFA rules, the Court found that a rule requiring football teams to include a least eight locally-trained or “home-grown” players could restrict competition. However, it will be for the national court to determine whether those rules restrict competition as a result of their very object or because of their actual or potential effects.  The Court also considered that the rules in question may give rise to indirect discrimination, based on nationality, against players coming from other member states.  In both scenarios, it remains possible for UEFA and the URBSFA to demonstrate that those rules nevertheless encourage recruitment and training, and that they are proportionate to that objective.

European Superleague Company SL v Unión de Federaciones Europeas de Fútbol (UEFA) and Fédération internationale de football association (FIFA) (Case C-333/21) ECLI:EU:C:2023:101

UL, SA Royal Antwerp Football Club v Union royale belge des sociétés de football association (URBSFA) ASBL (C-680/21) ECLI:EU:C:2023:1010