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This judgment has finally concluded a 4½ year saga under which BCL and others have sought in vain to bring a cartel damages claim against BASF.  The claim relates to losses allegedly suffered as a result of BASF’s participation in the vitamins cartel, for which it and a number of other undertakings were fined by the European Commission in 2001.

Having been the subject of two separate actions on various issues up to the Court of Appeal, the Supreme Court finally disposed of the case by ruling against BCL’s contention that EU law required the court to allow an action that had, as the Court of Appeal finally ruled, been brought out of time. 

Background to BCL’s claim

The facts of the case are somewhat unusual.  In November 2001, the European Commission adopted a decision finding that a number of undertakings, including BASF, had participated in a cartel with respect to the sale of vitamins, in breach of what is now Article 101 of the Treaty on the Functioning of the European Union.

In contrast to other participants, BASF has not subsequently sought to deny that it operated the cartel.  However, it did appeal against the fine that had been imposed (but not its liability for the infringement), with the General Court giving judgment in March 2006.  Two years later in March 2008, BCL filed a claim for damages against BASF under section 47A of the Competition Act.

Rule 31 of the Competition Appeal Tribunal Rules 2003 sets a two year deadline for bringing a damages claim, beginning with the latest of: the date on which the cause of action accrued; the date on which a right to bring an appeal expires; or the date of the final judgment in an appeal. The Competition Appeal Tribunal (CAT) upheld BCL’s action as within time, only to be subsequently overruled by the Court of Appeal.  The Court of Appeal found that an appeal against a penalty only did not extend the deadline for a damages claim.

BCL then applied to the CAT for a discretionary extension of time in which to bring to its claim.  The CAT found that it had discretion to extend the time limit for bringing the damages action, but refused to do so in this case.  Again, BCL appealed to the Court of Appeal, only for it to find that the CAT did not in any event have power to extend the deadline for bringing damages actions.

Appeal to the Supreme Court

BCL’s final appeal to the Supreme Court was on EU law grounds.  BCL argued that the EU law principles of effectiveness and legal certainty applied, on the basis that the operation of the two year limitation period and the CAT’s lack of discretion to extend the limitation period made it “practically impossible or excessively difficult” for BCL to pursue its claim for follow-on damages against BASF.

Following a detailed review of relevant EU and European Court of Human Rights case law, the Supreme Court rejected BCL’s case in its entirety.  It viewed the legal position as clear notwithstanding the contradictory positions taken in the two previous cases as between the CAT and Court of Appeal. It considered that the interpretation of the correct date of commencement of the limitation period ultimately adopted was sufficiently foreseeable by BCL.  BCL’s temporary triumphs before the CAT made no difference to this conclusion:

“Clearly, it is unfortunate if Competition Appeal Tribunals arrive at conclusions on the commencement of a limitation period and on the power to grant an extension of time which are held erroneous on appeal to the Court of Appeal.  But an appellate system is there to remedy error and to establish the correct legal position.  I do not accept that its ordinary operation is the hallmark of a lack of legal certainty or effectiveness.  The language and effect of the Competition Act were subsequently, and rightly, held by the Court of Appeal to be clear” [paragraph 39].

Moreover, “Absolute certainty is not the test, but it was eminently and sufficiently foreseeable that the English legal position would be established on both points to the effect which the Court of Appeal held” [paragraph 43].

A clue to the Supreme Court’s thinking behind the position it took may be found in an obiter discussion of the appropriate relief the principles of effectiveness or legal certainty had been found to have been breached.

The court was clear that it found it “impossible to think that European law requires the setting aside as between civil parties of a limitation defence, which a defendant, who is independent of the State, has successfully established under domestic law, on the ground that its existence or scope under domestic law was uncertain until the court decision establishing it.  For a successful party other than the State to be deprived in this way of the fruits of victory on limitation would mean that there was little point in raising the limitation defence in the first place.  No-one would then ever know with clarity what the true legal position was” [paragraph 44].

Any remedy for BCL would instead lie against the UK State – opening up the possibility of liability for damages equivalent to those BCL would have claimed from BASF being instead laid at the door of theUKtaxpayer.

Comment

This judgment confirms the Court of Appeal’s findings on two issues.  First, the two year deadline for bringing a damages action under section 47A of the Competition Act is not suspended by an appeal that only relates to the penalty imposed by the decision.  Secondly, the CAT has no power to grant an extension to the statutory deadline for bringing a damages action.

Taking a broader view, this is just the latest in a string of competition damages cases that have focused on fairly basic procedural issues.  We still await clear judgments awarding significant damages that would operate as a strong deterrent to cartelists.