Court of Appeal rules on access to Commission decision and lack of intent to harm in air cargo cartel damages claims

By Peter Willis, Jonathan Speed


Bird & Bird & First for Disputes

On 14 October, the Court of Appeal held that the claimants were not entitled to see, even within a confidentiality ring, an unredacted version of the European Commission's Airfreight cartel decision that contained "Pergan" material - references to airlines that were not addressees of the decision, and references to findings against the addressee airlines that did not form part of the basis for the "operative part" of the Commission's decision. On a more substantive point, the Court of Appeal also held that the claimants could not establish that the members of the cartel had intended to injure the claimants, and therefore struck out the claimants' claims for damage on the basis of conspiracy and unlawful interference with their businesses – around 60% of the total value of their claim.


In the long-running Emerald v BA air cargo cartel damages litigation, the claimants brought proceedings against British Airways in 2010. BA in turn brought contribution claims against 23 other airlines. Frustrated by the continuing failure of the European Commission to publish the decision over 4 years later, Mr Justice Peter Smith, in the High Court, ordered BA and other airlines to disclose into a confidentiality ring the confidential version of the decision that they had received from the European Commission, subject to the redaction of certain categories of information. The category in dispute in this case was "Pergan" material – material contained in the decision that the airlines had not had the opportunity to challenge before the European Court of Justice. This consisted of references in the decision to airlines (the "non-addressee airlines") that had not been found to have infringed the competition rules and were not addressees of the infringement decision (some of these were among the 23 airlines from which BA had sought a contribution). It also consisted of findings in relation to the addressee airlines that did not form part of the "essential basis" of the operative part of the decision – in other words findings that fell outside the scope of the infringement described in the last few paragraphs of the decision. This included, for example, references to communications between the airlines outside the specific time period during which the decision found the cartel to have operated. In an interim order on this issue, the judge initially ordered redaction of the names and other information that would identify the non-addressee airlines, but subsequently ordered that there should be no redaction where the non-addressee airlines were referred to in contemporaneous documents in the Commission's file. Given the Commission's practice of substantiating a large proportion of the findings made in its decisions by reference to contemporaneous documents from its files, this rendered the Pergan protection meaningless. In his definitive ruling on this issue, Peter Smith J rejected all Pergan claims, by both addressee and non-addressee airlines. The judge concluded that the airlines' legitimate interests and the presumption of innocence could be safeguarded by the creation of a confidentiality ring, and the imposition of restrictions on the claimants bringing further proceedings against the airlines. A number of the addressee and non-addressee airlines appealed.

The second appeal (the "Newson" point) related to the judge's rejection of an application by BA and a number of the other airlines to strike out part of the claim. The claimants had brought claims not only for breach of statutory duty (the traditional basis of a claim for damages for breach of Article 101) but also for the torts of unlawful means conspiracy and unlawful interference with the claimants' business. These tort claims relied on breaches of foreign competition laws as the unlawful behaviour, and the effect was to enable the claimants to claim in relation to routes with no connection at all with the EU. The airlines applied to strike out these parts of the claim, relying on 2007 judgments of the House of Lords in OBG v. Allen and others appeals, and of the Court of Appeal in another competition damages claim, Newson Holding v. IMI, in 2013. They argued that as a matter of law, these "economic" torts could not be sustained, because the claimants could not show the necessary intention to harm them. The judge refused the application, ruling that it was premature, in particular because disclosure might reveal the requisite intention. He also considered that BA had been guilty of an abuse of process in bringing this application at this stage, and ordered it to pay the claimants' costs on an indemnity basis.


Addressing first the Pergan point, the Court of Appeal considered the judgment of the EU General Court in the Pergan case itself (Case T-474/04 Pergan Hilfstoffe v. Commission). This judgment resulted from the Commission's investigation into the organic peroxides cartel. The confidential (unpublished) version of the decision contained a detailed description of Pergan's participation in the cartel, but the Commission concluded that it did not have sufficient evidence that this participation continued after the date 5 years before the date on which it started its investigation, when proceedings against Pergan became time-barred. Pergan was therefore not an addressee of the decision, and had not had an opportunity to challenge the findings made against it. It requested the Commission to redact all references to it from the non-confidential published version of the decision. The Commission refused. The General Court annulled the Commission's refusal. It held (at paragraphs 76-80) that:

"76. The Court also observes that the presumption of innocence implies that every person accused is presumed to be innocent until his guilt has been established according to law. It thus precludes any formal finding and even any allusion to the liability of an accused person for a particular infringement in a final decision unless that person has enjoyed all the usual guarantees accorded for the exercise of the rights of defence in the normal course of proceedings resulting in a decision on the merits of the case….
77. As a consequence, findings which the person charged with an infringement, even though he contests their merits, has not had the opportunity to contest before the Community judicature cannot be regarded as established in law. The fact that such findings evade any review by the courts, and therefore, in the event that they are unlawful, any correction by the Community judicature, is manifestly contrary to the principle of the presumption of innocence….
78. …the confidentiality of that information cannot depend on whether, and to what extent, it is of probative value for the purpose of proceedings at national level...
80. …the applicant did not have standing to bring an action against the peroxides decision, given, in particular, that its participation in the infringement was not referred to in the operative part even though it contested the merits of the grounds of that decision in which its participation in the infringement was mentioned….  It must be held that, in those circumstances, there is therefore no public interest in publishing the disputed information that is capable of prevailing over the applicant’s legitimate interest in having such information protected."

The Court of Appeal concluded that the principle of the presumption of innocence that underlies the Pergan judgment applies to national proceedings as well as to the publication of decisions by the Commission. The Court of Appeal noted that the General Court had specifically considered the evidential value of the information, and had concluded that it did not justify the publication of the information. The fact that the airlines could defend themselves against the allegations of infringement in the national proceedings was not sufficient to override the need for the protection of their Pergan rights. The non-addressee airlines had not been able to bring annulment proceedings before the General Court to challenge the findings against them in the decision, nor had the addressees been able to challenge those findings that fell outside the scope of the infringement decision. They were therefore entitled to the presumption of innocence in relation to those findings. The Court considered that addressee and non-addressee airlines should have the same level of protection in national courts as they did in the EU Courts. The creation of a confidentiality ring and the imposition of the claimants' undertakings were not sufficient to confer upon the airlines the level of protection to which they were entitled as a matter of Community law. The Court also considered that to the extent that the Judge had a discretion to strike a balance between the preservation of Pergan protection and requiring disclosure of an unredacted copy of the decision to the claimants, he had erred in exercising that discretion, in particular noting that the advantage of the parties being on an equal footing did not override the presumption of innocence in favour of the addressee and non-addressee airlines. The Court therefore allowed the appeals on the Pergan point.

The Newson point turned on the question of whether it was possible for the airlines to have intended to harm the claimants (shippers whose products are transported by air, rather than the freight forwarders who contract with the airlines to carry the shippers' products). The airlines argued that disclosure would not answer the question. The airlines could not have known, and would have been indifferent to, where any loss would fall. They could not know at the time of making any arrangements whether any price increase resulting from the cartel would be borne by the shippers, or whether that loss would be passed on down the supply chain – to manufacturers, distributors or even end consumers. Nor could the airlines have known whether the freight forwarders would even pass the overcharge on to the shippers. The court confirmed previous authority that the ability of a claimant to pass on a loss went to intent and not to damages (thereby rejecting the claimants' argument that it was a mitigation of loss). The Court accepted that if the airlines had intended to harm an identifiable and known class of claimants, but it was not clear at the outset which of them would suffer loss, then those that suffered loss would be able to establish intent to harm them. But in this case it was not clear whether any of the shippers would in fact suffer loss. The court also felt strongly that the economic torts should not be allowed to circumvent the limitations of geography and law under Article 101 and further that the claimants' arguments, if successful, would have diluted the concept of intention so as to render it more like a "foreseeability " test.


Both the Pergan and the Newson parts of the judgment are important. The judgment on the Pergan appeal provides useful clarity on the extent of the protection conferred in national proceedings by the EU principle of the presumption of innocence. Against the background of a number of recent endorsements of confidentiality rings by the European Commission as effective means of safeguarding the parties' and the EU institutions' respective interests in proceedings before the national courts, the judgment highlights the absolute nature of the presumption, and the fact that a confidentiality ring cannot not address all EU law concerns. The delay in publication of the Airfreight decision was exceptional – the July 2015 Pilkington judgment of the General Court has further cut down the grounds on which an addressee of a Commission decision can stall publication of the decision, and claimants in future are likely to have earlier access to non-confidential versions of decisions to support their claims, giving rise to less temptation for judges to take matters into their own hands.

The judgment on the Newson appeal will have a significant impact not only on the future development of the Emerald claim (the claimants submitted that it would remove about 60% of the value of the claim) but also on future competition damages claims. Claims based on conspiracy and unlawful interference have become increasingly popular in recent years, as a means of bolstering competition claims and extending their geographic scope. Establishing the requisite intent in future seems confined to the somewhat unlikely scenario of upstream and downstream supply chains whose positions on pass-on are known in advance, and competition-only claims are therefore likely to become the norm again.

Bird & Bird advised Polar Air Cargo LLC on both the Pergan and Newson elements of the appeal.

For further information please contact the below or any other member of Bird & Bird's Competition & EU group and/or Bird & Bird's Dispute Resolution group with whom you usually deal.