UK: Court of Appeal rules against representative action in cartel damages case

01 December 2010

Jeremy Robinson

The Court of Appeal has ruled that the High Court was right to strike out the representative elements of a competition law damages claim against British Airways concerning the alleged air freight cartel.  The class of claimants was described as all direct or indirect purchasers of air freight services affected by the alleged price fixing.  The Court found that such claimants did not all have the same interest as each other, as required by the Civil Procedure Rules (“CPR”).  It was necessary to show that such common interest existed at each stage of the proceedings for purposes of a representation action.  Also the claimants could not be shown to have the same interest as regards the recovery of damages, for example because the passing on defence may be possible against some but not others.

Background

On 18 September 2008, the claimants brought proceedings against BA for breach of statutory duty in allegedly fixing charges for air freight.  Emerald imports cut flowers into the United Kingdom from Columbia, using BA’s air freight services, and those of other international airlines.  Emerald alleged that BA was a party to unlawful agreements and/or concerted practices with other airlines for fixing the price of air freight services, and so inflating prices.  Emerald made the claim on its own behalf and on behalf of all other direct or indirect purchasers of air freight services affected by the alleged price fixing.

BA applied to have the representative element of the claim struck out, to which the High Court agreed on 8 April 2009.  The High Court found that there was a lack of jurisdiction to make a representative party order.  The rest of the claim was stayed pending a final decision of the European Commission in its Air Cargo case (COMP 39.258).

The present case is an appeal from the High Court judgment in relation to the striking out of the representative part of the claim.

Court of Appeal findings

The case turned on the interpretation of CPR 19.6.  Paragraph 1 states that


  1. Where more than one person has the same interest in a claim-
    a. The claim may be begun; or
    b. The court may order that the claim be continued,

    by or against one or more of the persons who have the same interest as representatives of any other persons who have that interest.

The Court found that Emerald and the persons in the class it purports to represent do not all have “the same interest”, and consequently, Rule 19.6 could not apply. 

The claimants had applied to amend the pleadings to make clear that the purported class were direct or indirect purchasers (or both) of air freight services from BA and one or more of the other named carriers.  The amendments also sought to limit the description of losses suffered, to exclude any element of inflated prices that claimants had passed on to their customers.

However the Court of Appeal found that the case for a representative action, whether as originally pleaded or as amended, was “fatally flawed.”  In a representative action, those represented in it must have “the same interest”; at all stages of proceedings, not just at the date of judgment, it must be possible to say of any particular person whether or not they qualified for membership of the represented class of persons by having the same interest.  This did not mean that membership of the group had to remain constant and closed throughout: the question was not whether the membership could change, but whether membership of the represented class was capable of being determined.

A further difficulty was that the members of the represented class did not have the same interest in recovering damages for breach of competition law if a defence was available to some of them, but not others.  The example given was whether BA could run a passing-on defence against some claimants and not others, in which case, different claimants might have different interests in the action.

The Court refused to exercise its discretion not to strike out the representative part under CPR 19.6 on the basis of the perceived disadvantages to members of the represented class.  The Court decided that since the case fell outside CPR 19.6, it was unnecessary and undesirable to consider how the discretion would be exercised if the case fell within the rule.

Comment

On 9 November 2010, the European Commission announced that it had imposed fines on eleven air cargo carriers, including BA, for pricing fixing.  Subject to any appeal against this decision, the stay on the rest of proceedings may be lifted.

Source: Court of Appeal judgment in Emerald Supplies Limited, Southern Glass House Produce Limited v British Airways PLC http://www.bailii.org/ew/cases/EWCA/Civ/2010/1284.html