Competition Damages Claims: Limitation Periods and CAT Rules Overview

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The Consumer Rights Act 2015 introduced a new regime for competition damages claims, allowing for stand-alone and follow-on claims. However, limitations periods under the new regime, specifically Section 47E CA, apply only to claims arising after 1 October 2015. The CAT Rules play a crucial role in determining the limitation periods for bringing damages claims. The application of specific rules and provisions has implications for both individual and collective proceedings, highlighting the complexity and challenges in seeking redress for competition law violations.

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COLLECTIVE ACTIONS UNDER THE CONSUMER RIGHTS ACT 2015 Helen Davies QC (Chair) Aidan Robertson QC James Flynn QC Colin West Fergus Randolph QC Hugo Leith 1 December 2015 brickcourt.co.uk +44 (0)20 7379 3550

Limitation periods under the new competition law regime Fergus Randolph QC brickcourt.co.uk +44 (0)20 7379 3550

New regime As of 1 October 2015, the new regime for competition damages claims came into force pursuant to the Consumer Rights Act 2015 The new provisions allow for stand-alone as well as follow-on claims to be brought before the Competition Appeal Tribunal, either individually or by way of collective redress see sections 47A and 47B Competition Act, as amended by CRA Those provisions apply to claims arising before 1 May 2015 see Schedule 8, paragraphs 4(2) and 5(2) CRA brickcourt.co.uk +44 (0)20 7379 3550

Limitation periods Section 47E CA makes provision for the application of the Limitation Act 1980 limitation periods in relation to ss.47A and 47B claims accordingly 6 years from the time when the cause of action accrues, together with s.32 concealment provisions It includes specific provisions for the suspension of the limitation periods pending determination of a collective proceedings order However, s.47E does not apply in relation to claims arising before 1 October 2015 see Schedule 8, paragraph 8(2). brickcourt.co.uk +44 (0)20 7379 3550

The CAT rules Rule 119(2) CAT Rules 2015 rules 31(1) to 31(3) CAT Rules 2003 apply to claims arising before 1 October 2015 Those rules apply a two year limitation period from the date when the cause of action accrued or from when the infringement decision (where there is one) becomes final Given that many cartels will involve concealment lasting a substantial period of time, it is likely that their limitation periods will have expired and accordingly it will be too late to bring damages claims in their regard This has had a chilling effect on the bringing of stand-alone and collective proceedings brickcourt.co.uk +44 (0)20 7379 3550

Problems The aim of making the CAT the tribunal of choice in competition damages claims has been jeopardised by the last minute amendment to its Rules Stand-alone actions may not be permitted or be possible because Rules 31(1) to (3) only refer to follow-on actions; cf para 4(2) Schedule 8 CRA General uncertainty of the position will lead to substantial foothills litigation with appellate probabilities given the importance of the issues to parties involved brickcourt.co.uk +44 (0)20 7379 3550

Solutions? Insofar as follow-on actions are concerned, where the infringement decision is not final and which therefore require the permission of the CAT, para 5.13 of the 2015 CAT Guide to Proceedings will be relevant the decision on whether to grant such permission will be made in the context of the new regime [t]he approach adopted by the Tribunal prior to 1 October 2015 will therefore not govern its exercise of discretion. Insofar as stand-alone actions are concerned, does the limitation period start to run as there is no infringement decision triggering it and/or could concealment be prayed in aid? Relevance of the EU Competition Damages Directive Article 10 but see Article 22 Transfer from the High Court to the CAT judgment of 30 November in Sainsbury s v. MasterCard brickcourt.co.uk +44 (0)20 7379 3550

Conclusion The limitation provisions are not fit for purpose and cut across the stated desire for a tribunal of choice for competition damages claims The effect will be to draw such claims away from the CAT and into the High Court The hope is that the CAT will apply the rules to the extent possible in as flexible a fashion as is possible brickcourt.co.uk +44 (0)20 7379 3550

Collective actions under the Consumer Rights Act 2015 Aidan Robertson QC brickcourt.co.uk +44 (0)20 7379 3550

Authorisation and certification: guidance from other jurisdictions brickcourt.co.uk +44 (0)20 7379 3550

Introduction Opt-in and opt-out collective actions under new s 47B CA98 and CAT Rules Two aspects considered here: Authorisation of class representative s 47B(8), r 78 Certification of claims as eligible for inclusion - s 47B(6), r 79 brickcourt.co.uk +44 (0)20 7379 3550

Authorisation of representative under s 47B(8) The Tribunal may authorise a person to act as the representative in collective proceedings (a) whether or not that person is a person falling within the class of persons described in the collective proceedings order for those proceedings (a class member ), but (b) only if the Tribunal considers that it is just and reasonable for that person to act as a representative in those proceedings. brickcourt.co.uk +44 (0)20 7379 3550

Just and reasonable r 78(2) CAT Rules (2) In determining whether it is just and reasonable for the applicant to act as the class representative, the Tribunal shall consider whether that person (a) would fairly and adequately act in the interests of the class members; (b) does not have, in relation to the common issues for the class members, a material interest that is in conflict with the interests of class members; (c) if there is more than one applicant seeking approval to act as the class representative in respect of the same claims, would be the most suitable; (d) will be able to pay the defendant s recoverable costs if ordered to do so; and (e) where an interim injunction is sought, will be able to satisfy any undertaking as to damages required by the Tribunal. brickcourt.co.uk +44 (0)20 7379 3550

Fairly and adequately r 78(3) CAT Rules (3) In determining whether the proposed class representative would act fairly and adequately in the interests of the class members for the purposes of paragraph (2)(a), the Tribunal shall take into account all the circumstances, including: (a) whether the proposed class representative is a member of the class, and if so, its suitability to manage the proceedings; (b) if the proposed class representative is not a member of the class, whether it is a pre-existing body and the nature and functions of that body; (c) whether the proposed class representative has prepared a plan for the collective proceedings that satisfactorily includes (i) a method for bringing the proceedings on behalf of represented persons and for notifying represented persons of the progress of the proceedings; and (ii) a procedure for governance and consultation which takes into account the size and nature of the class; and (iii) any estimate of and details of arrangements as to costs, fees or disbursements which the Tribunal orders that the proposed class representative shall provide. brickcourt.co.uk +44 (0)20 7379 3550

Certification of claim under s 47B(6) Claims are eligible for inclusion in collective proceedings only if the Tribunal considers that they raise the same, similar or related issues of facts or law and are suitable to be brought in collective proceedings. brickcourt.co.uk +44 (0)20 7379 3550

Certification of claim under r 79 CAT Rules (1) The Tribunal may certify claims as eligible for inclusion in collective proceedings where, having regard to all the circumstances, it is satisfied by the proposed class representative that the claims sought to be included in the collective proceedings (a) are brought on behalf of an identifiable class of persons; (b) raise common issues; and (c) are suitable to be brought in collective proceedings. r 79(2) suitability the Tribunal shall take into account all matters it thinks fit, including matters set out at (a)-(g). r 79(3) Tribunal to determine whether opt-in or opt-out taking into account all matters it thinks fit brickcourt.co.uk +44 (0)20 7379 3550

CAT Guide to Proceedings 2015 Authorisation of class representative 6.29-6.36 Certification of eligible claims 6.37 brickcourt.co.uk +44 (0)20 7379 3550

Guidance from other jurisdictions? CAT President, Roth J, and a Chairman, Marcus Smith QC, have both said extra- judicially that they would look for assistance on authorisation and certification issues in case law from other comparable jurisdictions but where? Not EU Antitrust Damages Directive 2014/104 omits opt-out Not Australia Federal Court of Australia Act amended 1992, Victoria 2000 NSW 2010 but no authorisation or certification requirements ie pro plaintiff Not NZ a Class Action Bill was submitted to Secretary of Justice in 2009, but government has not sought to enact it USA Canada South Africa brickcourt.co.uk +44 (0)20 7379 3550

Guidance from other jurisdictions USA USA Rule 23 Federal Rules of Procedure & Class Action Fairness Act 2005, $5m + claims to be brought in federal district courts Rule 23(a) criteria for claim: numerosity, commonality, typicality and adequacy Rule 23(b) 3 alternative bases, normally r 23(b)(3) class action is superior to other available methods for fairly and efficiently adjudicating Supreme Court denial of certification in Wal-Mart v Dukes (2011, labour) and Comcast v Behrend (2013, antitrust) 5-4, Scalia J majority opinion in both Front-loading factual and expert issues on whether Rule 23 criteria are met brickcourt.co.uk +44 (0)20 7379 3550

Guidance from other jurisdictions Canada Canada certification is required for a class action 9 of the 10 provinces have opt-out regimes under Class Proceedings Acts (PE the exception) Each province is a separate Crown jurisdiction (akin to UK jurisdictions) case law is provincial, not federal, final appeals to the Supreme Court Class actions provincially limited equivalent of UK domicile rule Some provinces permit multi-jurisdictional certification of an opt-out class (ON, MB, SK, NS, QC) otherwise out of province resident has to opt-in brickcourt.co.uk +44 (0)20 7379 3550

Guidance from other jurisdictions Canada Common law provinces (ie not QC) require plaintiffs to show: The pleadings disclose a cause of action There is an identifiable class of two or more persons that would be represented by the representative plaintiff(s) The claims of the class raise common issues A class proceeding would be the preferable method for resolution of the common issues; A representative plaintiff has been identified who fairly and adequately represents the class, has no conflict of interest with other class members on the common issues and has produced a plan of proceeding that is workable brickcourt.co.uk +44 (0)20 7379 3550

Guidance from other jurisdictions Canada Trilogy of Supreme Court decisions: Pro-Sys Consultants v Microsoft [2013] SCC 57 (appeal from BC) Sun-Rype Products v Archer Daniel Midland [2013] SCC 58 (BC) Infineon Technologies v Option consumateurs [2013] SCC 59 (QC) Evidentiary burden on plaintiffs at certification stage a higher threshold based on evidence as to merits of the claim (c.f. Wal-Mart, Comcast)rejected Test is whether some basis in fact for relevant elements of the certification test Indirect purchaser class actions permitted to proceed, even though passing-on defence not available in Canada under Kingstreet Investments [2007] SCC 1 Indirect purchaser plaintiff must demonstrate damages can be proven on class- wide basis likely to require expert evidence brickcourt.co.uk +44 (0)20 7379 3550

Guidance from other jurisdictions RSA Class action based on judicial interpretation of s 173 of the RSA constitution Children s Resource Centre Trust v Pioneer Food [2012] ZASCA 182 Follow-on class action against bread producers cartel on behalf of all bread consumers in the Western Cape Province SCA held that class actions should be recognised, not only in respect of constitutional claims, but also in any other case where that would be the most appropriate means of litigating the claims of the members of the class Rejected opt-in claim on behalf of bread distributors for lack of cause of action and availability of joinder of actions i.e. could proceed as multi-claimant action Mukaddam v Pioneer Foods [2013] ZACC 23 CC adopted SCA s approach to class actions, but overturned SCA s rejection of opt-in claim cause of action was potentially plausible brickcourt.co.uk +44 (0)20 7379 3550

Guidance from other jurisdictions RSA SCA s conditions for a class action: an objectively identifiable class a cause of action raising a triable issue common issues that can appropriately be dealt with in the interests of all members of the class appropriate procedures for distributing damages to the members of the class representatives must be suitable to conduct the litigation on behalf of the class CC emphasised governing principle of certification in the interests of justice action may proceed even if one or more of the conditions is not met brickcourt.co.uk +44 (0)20 7379 3550

Collective proceedings under the CRA and international jurisdiction Colin West brickcourt.co.uk +44 (0)20 7379 3550

The CATs international jurisdiction CPR Pt 6; Rules of Procedure, r.31 Suitability of CAT for international cases: old rules/new rules Opt-out cases: limitation to UK Claimants (CA98, s.47B(11)(b)(i)) Right to opt in to opt-out (CA98, s.47B(11)(b)(ii)) : scope? brickcourt.co.uk +44 (0)20 7379 3550

International effect of collective proceedings / settlements No potential for non-UK Claimant to be bound by UK opt-out action Other systems not limited to domiciliaries (e.g. Netherlands) Applicability of Regulation 1215/2012 judgment / settlement public policy and the BIS consultation brickcourt.co.uk +44 (0)20 7379 3550

International enforcement Direct enforcement Defence of res judicata / compromise on C who did not opt out Applicability to settlements The Commission s 2013 recommendation A non-uniform approach between Member States? brickcourt.co.uk +44 (0)20 7379 3550

The Consumer Rights Act 2015 and the Competition Appeal Tribunal Rules 2015 Hugo Leith brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims under s.47A, CRA brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims Key development: the CAT formerly limited to hearing claims for damages following on from a binding finding of a competition regulator of an infringement of competition rules. Now, CAT can itself determine the facts grounding liability, and then award damages and other remedies. brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims Possibility of other types of claims? The core claim covered by new s.47A is for breach of statutory duty, for infringing competition rules. Can the statute cover other related claims: eg a core claim for breach of statutory duty, plus a related tort (eg conspiracy) or contract claim arising from the infringement, plus other facts? Rules on damages may be more favourable. brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims Issue focussed on here is whether s.47A is broad enough to cover such claims. Limitations issues also arise: Note the difficulty (already discussed) in applying the transitional limitation provisions under Rule 119 of the CAT Rules 2015, applying rule 31 of the old CAT Rules, where there is no infringement decision. brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims Statutory language is not explicit. New section 47A: (1) A person may make a claim to which this section applies in proceedings before the Tribunal, subject to the provisions of this Act and Tribunal rules. (2) This section applies to a claim of a kind specified in subsection (3) which a person who has suffered loss or damage may make in civil proceedings brought in any part of the United Kingdom in respect of an infringement decision or an alleged infringement of (a) the Chapter I prohibition, (b) the Chapter II prohibition, (c) the prohibition in Article 101(1), or (d) the prohibition in Article 102. (3) The claims are (a) a claim for damages; (b) any other claim for a sum of money; (c) in proceedings in England and Wales or Northern Ireland, a claim for an injunction. brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims Barling J noted in 2013: it is not clear whether, and if so how, the CAT will be able to address issues or causes of action that are not based on competition law but are connected with, and ancillary to, a competition law action. The proposed legislation is silent on this issue (The David Vaughan Lecture, 19 June 2013) brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims Points of ambiguity: Statutory language does not refer only to claims for breach of statutory duty. The statute requires that the claim is in respect of an infringement, and brought for damages or an injunction. Other claims may rely on an infringement, in addition to other elements. brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims Similar issue arose under old s.47A. CA in WH Newson v IMI plc [2013] EWCA Civ 1377 considered alternative conspiracy plea. Arden LJ, [20]: it turns on the meaning of the words any claim for damages these words contain no restriction on the type of cause of action on which a claimant may rely But: while those words of themselves are cause of action-neutral, they have to be interpreted in the context of section 47A read as a whole brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims The statutory context (then) restricted the CAT to findings on liability made by the regulator in its decision. The CAT had no power to add to those findings. The result, at [1]: On its true interpretation section 47A permits a claimant to bring a conspiracy claim provided that all the ingredients of the cause of action can be established by infringement findings in the Commission's decision. brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims CA in Newson remarked that it would be rare for an infringement finding to support a conspiracy claim (at [45]). brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims CA recently strongly endorsed Newson in Emerald Supplies v BA [2015] EWCA Civ 1024 at [152] (judgment 14 October 2015), reversing judgment of Peter Smith J, who had expressed doubts on Newson s reasoning. brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims Arguments for a broad view: On one view, the Newson judgment indicates that the s.47A is not limited to breach of statutory duty actions: The key term in the old wording claim for damages also appears in new s.47A The wording was described by the CA as neutral on the cause of action brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims New statutory wording does not rule out hybrid claims: Question is open-textured: is the claim brought in respect of an infringement? brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims Contrary arguments In Newson, the analysis of the cause of action as neutral rested on the premise that the claim is based on an infringement decision: Confining the claims to the contents of the infringement decision gave the statute a structure and workable boundaries Would other constraints be thought necessary if the CAT is not confined to a regulator s decision? brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims In Emerald Supplies, albeit dealing with the parameters of follow-on claims, CA cautioned on expanding the scope of competition claims, [174]: if these economic tort claims could be advanced, it would have two results, both of which seem to us to be undesirable. it would extend the effect of competition law and upset the balance which the draftsman had thought appropriate when framing the rules for unfair competition brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims Policy factors cut both ways One rationale for reforms was to encourage use of the CAT Private enforcement seen as least effective part of UK system Allowing the CAT to hear hybrid claims would arguably make using the procedure more worthwhile to a claimant But query whether CAT hearing other types of claims would go too far beyond this objective, adding complexity/cost brickcourt.co.uk +44 (0)20 7379 3550

Scope of claims Policy objectives also stress limits on the changes: Desire to guard against a litigation culture : Rules as to class representatives Limitations on damages Test for combining claims Damages-based agreements Interaction of broader causes of action with collective proceedings rules brickcourt.co.uk +44 (0)20 7379 3550