Competition Appeal Tribunal rules on extension of time for cartel damages actions (BCL and others Old v BASF and others)

23 November 2009

Katharine Wilson

On 19 November 2009, the Competition Appeal Tribunal (CAT) dismissed an application for a discretionary extension of time to pursue two cartel damages cases, where the Court of Appeal had held that they were time-based because the relevant appeals related to the amounts of fines and not liability, so did not prevent the two-year time period running.  The CAT found that the claimants did not satisfy the requirements of the relevant test for an extension of time.  The main application was brought by BCL Old Co against BASF  and other members of the vitamins cartel.

Background

Section 47A of the Competition Act 1998 (the Act) provides for “follow on” damages actions to be brought in the CAT on the basis of a finding of a competition law infringement (Article 101 or 102 TFEU, or the UK law equivalents) by the Office of Fair Trading, CAT or European Commission.

The CAT’s ruling concerns two claims for damages based on the Commission’s 2001 vitamins cartel decision, specifically the time limit for bringing such actions.

Time limit for bringing follow on damages claims

A follow on damages action based on a decision of the Commission may not be brought in the CAT until after that decision has established the relevant infringement (section 47A(5) of the Act). In addition, such a claim may not be brought without the CAT’s permission during: (a) the period in which an appeal may be brought in the European Courts; or (b), if such an appeal is brought, the period before those proceedings are determined (section 47A(8) of the Act). The CAT’s Rules state that claims must be brought within two years of the later of (i) the end of the period mentioned in section 47A(8); and (ii) the date on which the cause of action accrued. As summarised by the CAT in its ruling, a claimant relying on a Commission decision to bring a claim under section 47A of the Act therefore has a window of two years in which to do so.

BASF, one of the defendants in the two cases, had appealed against the Commission’s vitamins cartel decision in respect of the amount of the fine imposed. The CAT had previously held (judgment of 25 September 2008) that the two year window for bringing follow on claims against BASF did not open until BASF’s appeal against the Commission’s decision had been determined. However on appeal from the CAT, the Court of Appeal (CA) held (judgment of 22 May 2009) that only appeals in respect of liability were relevant in this context; challenges to the amount of a fine imposed by the Commission did not postpone the opening of the two year window. The effect of the CA’s judgment was that the two year window for bringing a follow on damages claim in respect of the Commission’s vitamins cartel decision had already closed before the two claims at issue were brought.

Application for extension of time

The CAT considered whether the time limit for bringing a follow on action should be extended in this case. The CAT assessed this question on the basis of a two stage test, namely: (i) whether the claimants had shown there was good reason for the extension; and (ii) if there was such a good reason, whether other factors, such as the balance of hardship, should lead the CAT to exercise its discretion in favour of extending the limitation period.

In relation to the first claim (brought by BCL Old Co and others and referred to by the CAT as the BCL claim), the CAT found that the reason the claimants had not lodged their claim for damages within the two year window was that their lawyers had interpreted the legal position to be that the two year window did not open until the BASF appeal had been determined (i.e. the same interpretation as that of the CAT before it was overruled by the CA). The CAT held that the claimants in the BCL claim had satisfied the first stage of the test, as the mistaken interpretation of the legal position was not an untenable one. However, the CAT declined to exercise its discretion in favour of extending the limitation period in this case, as it concluded that the claimants “should have taken at least some steps to establish and pursue their claim during the period when they wrongly thought that they were precluded by section 47A from actually starting proceedings”. In addition, the CAT found that the claimants had not acted reasonably promptly once the two year window had, in their view, opened; there was “substantial delay which is not attributable to their misapprehension as to the law”.

In the second claim (brought by Grampian Country Food and others and referred to by the CAT as the Grampian claim), the CAT found that the claimants did not satisfy the first part of the test, as they failed to establish that there was a good reason why they had not lodged their claim in time. The CAT noted that in any event there were no grounds in the Grampian claim for it to exercise its discretion to extend the time limit.

Comment

Following on from the CA’s judgment, which explains when the two year window for bringing a follow on damages claim under section 47A of the Act opens, the CAT’s ruling clarifies the basis on which the CAT will assess applications for an extension of time in such cases. The case serves as a reminder that timing is key in competition law damages cases and that great care should be taken in calculating the period in which damages actions may be brought.

The clarification of the time limit for bringing such follow on actions, combined with the test for assessing applications for an extension, may also be an extra factor for potential claimants to consider when assessing the relative merits of pursuing damages claims in the CAT and the High Court.

Source: BCL Old Co and others v BASF and others; Grampian Country Food and others v Sanofi-Aventis and others, [2009] CAT 29, ruling of 19 November 2009