Argos Ltd and Another v Office of Fair Trading
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lloyd |
| Judgment Date | 19 October 2006 |
| Neutral Citation | [2006] EWCA Civ 1318 |
| Docket Number | Case No: 2005/1071, 1074 and 1623 [2004] CAT 17, [2005] CAT 22 2005/1071and 1074 2005/1623 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 October 2006 |
[2006] EWCA Civ 1318
Lord Justice Chadwick
Lord Justice Wall and
Lord Justice Lloyd
Case No: 2005/1071, 1074 and 1623
[2004] CAT 24, [2005] CAT 13, and
[2004] CAT 17, [2005] CAT 22
2005/1071and 1074
2005/1623
Mark Brealey Q.C. and Mark Hoskins (instructed by Burges Salmon) for Argos Ltd
Nicholas Green Q.C. and Marie Demetriou (instructed by
DLA Piper UK LLP) for Littlewoods Ltd
Paul Lasok Q.C. and Mark Hoskins (instructed by
DLA Piper UK LLP) for JJB Sports plc
Brian Doctor Q.C., Jon Turner Q.C. and Kassie Smith for the OFT
in appeals 1071 and 1071
Stephen Morris Q.C., Jon Turner Q.C. and Anneli Howard for the OFT in appeal 1623,
all instructed by the Solicitor to the Office of Fair Trading
Table of Contents paragraph number
Introduction 1
The statutory provisions 8
The Chapter I prohibition – agreements and concerted practices 21
Vertical and horizontal agreements and concerted practices 28
The Football Shirts appeal: the facts 35
The factual background 36
The Football Shirts appeal on liability – conclusion 102
The Toys and Games appeal: general 107
The factual background 112
The appeals on penalty – general 146
The guidance as to the appropriate amount of any penalty 147
The Guidance as to the amount of the penalty: its relevance to the Tribunal 160
Relevant product market – the principle 166
Non-discrimination – the principle 174
The Football Shirts appeal: penalty 181
Application of the Guidance 182
Conclusion on JJB's penalty appeal 212
The Toys and Games appeals: penalty 213
The Tribunal's conclusions on penalty 213
Toys and Games penalty appeals: result 291
Introduction
This is the judgment of the court, to which all its members have contributed. The judgment relates to appeals arising out of two distinct investigations by the Office of Fair Trading (OFT) under the Competition Act 1998 (the 1998 Act, or the Act) . One, referred to at the hearing as Toys and Games, was into agreements between Hasbro UK Ltd, Argos Ltd and Littlewoods Ltd fixing the price of Hasbro toys and games. The OFT's amended decision, number CA98/8/2003, was issued on 21 November 2003. It found that Hasbro, Argos and Littlewoods had been parties to an agreement in breach of the Chapter I prohibition under the 1998 Act. It imposed substantial penalties on Argos and Littlewoods, but not on Hasbro because of a leniency agreement in relation to that party. Argos and Littlewoods both appealed to the Competition Appeal Tribunal (the Tribunal) against the finding of breach of the Act and against the penalty imposed. The Tribunal rejected the appeal on liability though it reduced the penalties on each appellant. Each of Argos and Littlewoods appeals to this court, with the permission of Jonathan Parker LJ, on both liability and penalty.
The other investigation, known as Football Shirts, was into price-fixing of replica football kit. The OFT's decision, CA98/06/2003, was issued on 1 August 2003. It found that price-fixing agreements in breach of the Chapter I prohibition had been entered into by the Football Association, Manchester United plc, Umbro Holdings Ltd and a number of retailers including JJB Sports plc (JJB) , Sports Soccer Ltd and Allsports Ltd in 2000 and 2001. It imposed penalties on the parties, apart from one which was by then in administration. JJB and Allsports appealed to the Tribunal against the finding of infringement and the penalty; Umbro and Manchester United appealed only on the amount of the penalty. On liability the Tribunal held that JJB had infringed the Chapter I prohibition, but not in all the respects in which the OFT had found, so that appeal was allowed in part. Allsports' appeal on liability was dismissed. On the appeals on penalty, the amount of each penalty was varied, in the case of JJB by a significant reduction. Only JJB appeals to this court, on liability and penalty, again with permission granted by Jonathan Parker LJ.
The facts of the Toys and Games appeal on the one hand and the Football Shirts appeal on the other are different and unconnected. However, the appeals on liability are only on points of law, and similar points arise on liability and also to some extent on penalty in each appeal. These appeals are the first to the Court of Appeal arising from these provisions of the 1998 Act. Accordingly, the appeals were directed to be heard in succession, by the same court.
The judgment which follows is regrettably long. The judgments under appeal were themselves very long, as were the decisions of the OFT against which the appeals to the Tribunal were brought. The length of the Tribunal's judgments reflects a number of factors, not the least being the conscientious attention to detail applied by the Tribunal to the process of deciding the cases before it, and explaining its reasoning. The cases were hard fought before the Tribunal, and a great deal was at stake. The sheer size of the judgments, especially those on liability, makes them quite difficult to manage, as the Tribunal itself no doubt found when composing them. The method adopted by the Tribunal of dealing with different aspects of the fact-finding process in different parts of the text allowed the judgments, perhaps inevitably, to be exposed to a close textual analysis by Counsel by reference to the use of different words or phrases in different passages, which may well have been intended to refer to the same things with no difference of meaning, submitting that different meanings must have been intended by the use of different words.
Complicated as appeals of this kind to the Tribunal are often likely to be, it may be that the Tribunal will, over time, find it possible to deal with such appeals in judgments which are not so long as those under appeal in the present cases. A decision of the Tribunal such as those with which we are concerned is no different in principle from a decision of any other tribunal or a court after a trial involving disputed issues of fact, and maybe law. The reasoning of Griffiths LJ (as he then was) in Eagil Trust Co Ltd v. Pigott-Brown [1985] 3 All ER 119 at 122, endorsed by the Court of Appeal as being of general application in English v. Emery Reimbold & Strick Ltd [2002] EWCA Civ 605, [2002] 1 W.L.R. 2409, applies to such a judgment of the Tribunal as to any other. Griffiths LJ said:
"a judge should give his reasons in sufficient detail to show the Court of Appeal the principles on which he has acted and the reasons that have led him to his decision. They need not be elaborate. I cannot stress too strongly that there is no duty on a judge, in giving his reasons, to deal with every argument presented by counsel in support of his case. It is sufficient if what he says shows the parties, and if need be, the Court of Appeal the basis on which he has acted … (see Sachs LJ in Knight v. Clifton [1971] Ch 700 at 721) ."
The same applies to findings of fact, so that the Tribunal may not need to make a finding on every disputed factual issue. Nor is it always necessary for the Tribunal to set out each party's submissions in detail before explaining its reasons for deciding the case. We therefore express the hope that, in future, it will be possible for the Tribunal to express its findings of fact and its reasoning in more succinct form. Its efforts to do so will have the support of this court, provided always that the essential tasks identified by Griffiths LJ have been fulfilled.
We are conscious that our own judgment is very long and has taken a long time to prepare, but it does deal with appeals by three parties against findings both on liability and penalty in two separate cases, on points which have not previously arisen in the Court of Appeal. Without further delay or apology, we proceed to the substance of the appeals. After setting out the statutory provisions and discussing points of general application, we will deal with the Football Shirts appeal and then the Toys and Games appeals in turn on liability, and then turn to the penalty appeals, first setting out matters of general relevance, and then discussing the Football Shirts appeal and the Toys and Games appeals on penalty successively.
The statutory provisions
The statutory provisions governing liability, penalty, procedure and appeals are the same in relation to all the appeals.
The Chapter I prohibition is set out in section 2 of the 1998 Act as follows:
"(1) Subject to section 3, agreements between undertakings, decisions by associations of undertakings or concerted practices which-
(a) may affect trade within the United Kingdom, and
(b) have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom,
are prohibited unless they are exempt in accordance with the provisions of this Part.
(2) Subsection (1) applies, in particular, to agreements, decisions or practices which-
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;"
This provision applies, within the United Kingdom, an equivalent prohibition to that set out in Article 81 of the EC Treaty.
In order that the national legislation should be applied consistently with the way in which the Treaty provisions are...
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