Bound by settlement - truck cartelists' appeal on preliminary issue dismissed

On 11 November 2020, the Court of Appeal emphatically dismissed an appeal brought by five truck manufacturers against a judgment of the Competition Appeal Tribunal ("CAT") handed down in March 2020 relating to the evidential weight to be given to recitals to a European Commission infringement decision issued under the Commission's settlement procedure (Regulation No 622/2008 and Notice OJ 2008 C167/1).

The Court of Appeal upheld the CAT's ruling that it would be an abuse of process for the truck manufacturers, in subsequent follow-on damages proceedings, to deny or not admit facts that they are recorded as having accepted in the European Commission's infringement decision. 

Background to the appeal

In July 2016, following a settlement procedure, the European Commission issued a decision (the "Settlement Decision") finding various entities within the MAN, Volvo/Renault, Daimler, Iveco and DAF groups guilty of collusion in relation to pricing and gross price increases for medium and heavy trucks, and the timing and passing on of costs for implementing new emission technologies. 

By admitting the infringement, as set out in the Settlement Decision, the addressees were offered a 10% reduction in fines and the opportunity to avoid a heavily contested decision and protracted procedure. The Settlement Decision has led to numerous follow-on damages actions, in the UK and across Europe.  In the UK, most of the actions are being heard by the CAT.  

The first of these claims were brought against some or all of the addressees and their UK subsidiaries between late 2016 and late 2017 by Royal Mail, British Telecom, Dawsongroup, Ryder, Veolia, Suez and Wolseley (and others).  These claims have to date been jointly case-managed by the CAT and were the subject of a preliminary issue hearing in December 2019 to determine the legal nature of the recitals to the Settlement Decision. 

In its judgment on 4 March 2020, the CAT held that:

1. in addition to the operative part of the Settlement Decision, a number of the findings in recitals to that Decision were also binding upon the defendants as forming part of the "essential basis" for the operative part, and
2. that it would be a breach of the English law doctrine of abuse of process for the defendants to deny (or not admit) non-binding findings that they had previously admitted as part of the settlement process, in subsequent proceedings for follow-on damages.

The CAT nevertheless enumerated a number of limited exceptions to its ruling on abuse of process, which include, for example, where a defendant relies on new evidence which it could not reasonably have had access to at the time of the proceedings before the Commission.  In such cases, it would not be an abuse for a defendant to seek to advance facts inconsistent with a recital.

The defendants appealed the second limb of the judgment, arguing, inter alia, that the CAT's judgment breached EU law in making recitals that were not binding at EU level binding in national proceedings.  The defendants also sought a preliminary reference to the European Court of Justice.  

The Court of Appeal's judgment

The Court of Appeal unanimously dismissed the appeal. It rejected the truck manufacturers' arguments that the application of the English law on abuse of process was incompatible with EU law.  

The Court of Appeal ruled that where there is a settlement decision and the addressees of that decision have accepted the facts found by the Commission, there is nothing in EU law that mandates the national court in follow-on proceedings to allow non-essential recitals to be challenged or re-litigated.  Agreeing with the CAT, the Court held that it would create great unfairness to the Respondents to have to prove facts that the Appellants had already admitted in the settlement proceedings.

On this basis, the Court of Appeal considered that the matters at issue were acte clair and did not require a reference to the European Court of Justice.  The Court refused permission to appeal to the Supreme Court and ordered the defendants to pay the claimants' costs of the appeals.

Concluding remarks

The issue before the Court of Appeal was straightforward: is it possible for parties to make admissions for the purposes of achieving the benefits of settlement, but then resile from those admissions in subsequent follow-on damages proceedings.  The Court's response was clear: it held that it would be "an affront to most people's ideas of justice" for the truck manufacturers to be allowed to resile from admissions which the Settlement Decision records them as having made to the European Commission, and to put the claimants to proof of those admitted facts.

The Court of Appeal's judgment, together with the CAT's ruling, provide, for the first time, some clarity on the relevant test for determining which recitals in a cartel infringement are binding in follow-on proceedings before an English court.  Perhaps more importantly, however, they curtail a defendant's ability to resile from admissions made to the European Commission in order to benefit from the settlement procedure.

While these judgments only apply to proceedings before the English courts, they are likely to be scrutinised by courts in other EU jurisdictions facing similar issues, and it will be interesting to see how other courts deal with this issue.  

The Court of Appeal's judgment can be found here. 

With thanks to India Case of Ashurst for her contribution.