UK Supreme Court clarifies rules on bringing a follow-on damages claim

On 9 April, the UK Supreme Court handed down its judgment in Deutsche Bahn v Morgan Crucible, in which it clarified the rules regarding both the effect of successful appeals on non-appealing cartelists and the time limits for bringing follow-on damages actions under English law.

Deutsche Bahn brought a private damages claim under the UK Competition Act 1998 against Morgan Crucible, a member of the carbon and graphite cartel, which had been the subject of a 2003 Commission decision. Several addressees of that decision appealed the decision, although Morgan Crucible, having successfully applied for immunity, did not. The main questions in the case were, first, if some cartelists successfully appealed a decision while others did not, could a claimant seek damages from the non-appealing cartelists; and second, if so, when does the two-year limitation period for bringing the claim under the Competition Act start?

On the first point, the Supreme Court held that even if an addressee of the decision successfully appeals against it, this has no effect on the findings of infringement against addressees who did not appeal: the decision continues to apply to them, even if the successful appeal suggests that there was no cartel in the first place. A company which did not appeal could thus theoretically find itself jointly and severally liable for the entirety of the harm caused by a cartel of which it found itself the only remaining member.

This position may change with the EU Directive on damages, recently approved by the EU Parliament. The Directive offers protection for an immunity recipient, by making them liable only towards their own direct and indirect purchasers.

As for the second question, the Competition Act imposes a limitation period of two years, although the time when that period starts has been unclear. Previous judgments have suggested that the start of the limitation period would be postponed for all parties as soon as an addressee of the decision lodged an appeal against liability (but not as appeal solely related to the level of the fine). However, the Supreme Court followed the logic of its conclusion on the first question that the decision continues to apply against a party who did not appeal against it, and held that the limitation period for such parties starts when their right to appeal the decision expires. Deutsche Bahn's claim was therefore time-barred.

Please click on the links below for the other articles in the April 2014 competition newsletter:

• Commission takes action on Standard Essential Patents
• Recent developments in Chinese merger control
• Goldman Sachs held jointly liable for competition fine of investee company
• Pfizer sued for anti-competitive conduct in Australia