Bord Na Mona Horticulture Ltd and Another v British Polythene Industries Plc and Others

JurisdictionEngland & Wales
JudgeThe Honourable Mr Justice Flaux,The Hon Mr Justice Flaux
Judgment Date28 November 2012
Neutral Citation[2012] EWHC 3346 (Comm)
CourtQueen's Bench Division (Commercial Court)
Docket NumberCase No: 2011 FOLIO 1442
Date28 November 2012

[2012] EWHC 3346 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before :

The Honourable Mr Justice Flaux

Case No: 2011 FOLIO 1442

Between:
(1) Bord Na Mona Horticulture Limited
(2) Bord Na Mona Plc
Claimants
and
(1) British Polythene Industries Plc
(2) Combipac Bv
(3) Bischof + Klein Gmbh & Co Kg
(4) Fls Plast A/S
Defendants

Kieron Beal QC and Fraser Campbell (instructed by Paul Hastings LLP) appeared on behalf of the Claimants.

Paul Lasok QC and Ben Rayment (instructed by Maclay, Murray & Spens LLP) appeared on behalf of the Defendants.

Hearing dates: 24 and 25 September 2012

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

The Hon Mr Justice Flaux The Honourable Mr Justice Flaux

Introduction and background

1

The first defendant ("BPI") applies to strike out the claim and/or for summary judgment in its favour. In addition the second defendant ("Combipac") applies to set aside service of the claim form upon it outside the jurisdiction, on the basis that if the claim against BPI falls away, this court has no jurisdiction over Combipac.

2

The claimants are companies incorporated in the Republic of Ireland. The Bord Na Mona was formerly a statutory corporation established under the Irish Turf Development Act 1946. The group provides a wide variety of horticultural and environmental services as well as supplying horticultural and biomass energy products such as peat for energy production. Over a number of years the claimants have purchased substantial quantities of plastic industrial bags, into which the claimants package their supplies of peat and other horticultural products, from companies in the United Kingdom and Ireland (including from BPI or its subsidiaries), the Netherlands (including Combipac another subsidiary of BPI), Germany, Denmark, Sweden and Austria. The majority of these bags were purchased from BPI or its subsidiaries, particularly in the period 1990 to 2002.

3

The claims by the claimants in these proceedings concern alleged breaches of what is now Article 101 of the Treaty on the Functioning of the European Union (formerly Article 81 of the EC Treaty) which provides as follows:

"The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which:

(a) directly or indirectly fix purchase or selling prices or any other trading conditions;

(b) limit or control production, markets, technical development, or investment;…"

4

The claimants rely upon the decision of the European Commission COMP/ 38354 of 30 November 2005 that, in breach of what was then Article 81, the defendants amongst others had participated in a cartel operating in the industrial bags sector during the period January 1982 to June 2002. The Commission found that Combipac (which was a subsidiary of BPI being wholly owned by other subsidiaries of BPI) had participated in the cartel from January 1982 to 9 November 2001 and that BPI had participated from 25 April 1997 (when Combipac acquired Wavin an active participant in the cartel previously) until 9 November 2001. In November 2001, BPI contacted the European Commission and voluntarily provided evidence of the infringement in a so-called leniency application. In return for providing details of the cartel and their participation in it, BPI and Combipac avoided liability for a fine of 52.95 million Euros. Importantly, at the present stage of these proceedings, prior to disclosure, BPI has yet to disclose its leniency application or any of its dealings or negotiations with the Commission. Furthermore, the published version of the Decision contains a number of redacted passages where individuals are named. Although such redaction is quite normal in a regulatory context, for reasons I will elaborate below this does make it difficult for the Court or the claimants to discern at this stage, prior to disclosure, what precise findings the Commission has made as to the involvement of senior management of BPI in the activities of the cartel.

5

The Commission found that the German, French, Spanish and Benelux markets constituted the relevant territory in which the cartel operated for the purposes of its decision. In the present case, the critical question is whether, as Mr Lasok QC contends on behalf of BPI and Combipac, the Decision of the Commission precludes the claimants from contending that either anti-competitive conduct of the cartel occurred not just in the markets in France, Germany, Benelux and Spain to which the Decision relates, but in the markets in the United Kingdom and Ireland or that the operation of the cartel in the markets in France, Germany, Benelux and Spain had the effect of preventing, restricting or distorting competition in the neighbouring markets in the United Kingdom and Ireland. As set out in more detail hereafter, the claimants put their case in both ways.

6

Mr Lasok contends that the Decision is that the only markets in which the members of the cartel adopted anti-competitive practices were France, Germany, Benelux and Spain and that to the extent that the claimants seek to argue that the cartel operated in the United Kingdom and Ireland or that, even if it was operating only in the German, French, Spanish and Benelux markets, the cartel activity had an effect on neighbouring markets in the United Kingdom and Ireland, that case is contrary to the Decision of the Commission and thus in breach of Article 16 of the Modernisation Regulation No 1/2003 which provides:

" Uniform application of Community competition law

1. When national courts rule on agreements, decisions or practices under Article 81 or Article 82 of the Treaty which are already the subject of a Commission decision, they cannot take decisions running counter to the decision adopted by the Commission. They must also avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings it has initiated. To that effect, the national court may assess whether it is necessary to stay its proceedings. This obligation is without prejudice to the rights and obligations under Article 234 of the Treaty."

7

For that reason, amongst others, Mr Lasok contends that, however the claimants' claim against BPI is formulated, it is unsustainable and should be struck out, alternatively summary judgment should be entered for BPI. Mr Beal QC for the claimants contends that none of the ways in which the claim is put is contrary to the Decision of the Commission, rather the claimants rely upon the decision and seek to supplement it by further evidence not before the Commission which will demonstrate either cartel activity in the United Kingdom and Ireland or that the cartel activity found by the Commission had an effect on the market in the United Kingdom and Ireland and/or caused the claimants to pay artificially high prices for the bags they purchased from the subsidiaries of BPI.

8

Before considering the rival contentions of the parties in more detail, I propose to summarise the Decision of the Commission to the extent that it is relevant to the issues I have to determine and to deal with some of the conclusions and inferences which the parties invited me to draw from the Decision. For obvious reasons, I do not propose to burden this judgment with more citation from the Decision than absolutely necessary to draw out the salient points. However, I have considered and read the whole Decision carefully and borne it in mind in reaching my decision.

The Decision of the European Commission

9

Article 1 of the Decision stated as follows:

"The following undertakings have infringed Article 81 of the Treaty by participating, during the periods indicated, in a complex of agreements and concerted practices in the plastic industrial bags sector in Belgium, Germany, Spain, France, Luxembourg and the Netherlands, consisting in the fixing of prices and the establishment of common price calculation models, the sharing of markets and the allocation of sales quotas, the assignment of customers, deals and orders, the submission of concerted bids in response to certain invitations to tender and the exchange of individualised information:

(a) Combipac B.V., from 6 January 1982 until 9 November 2001, and British Polythene Industries PLC, from 25 April 1997 until 9 November 2001;"

10

The Article then goes on to set out the dates between which the other participants in the cartel had participated, many of them for the entire period from January 1982 to June 2002. In the body of its Decision, set out in a series of Recitals, the Commission found that, although the cartel structure included an overall group, Valveplast, and regional or functional subgroups which appeared to be distinct, for various reasons, including that the members of Valveplast and the subgroups were essentially the same and that quotas fixed at Valveplast level were reflected at subgroup level, the cartel as a whole formed a consistent and coordinated entity (Recital [444]). The Commission then found that the conduct of the various members of the cartel in reality constituted a single infringement in the form of a series of anticompetitive practices throughout the entire period the cartel operated and not a number of separate infringements (Recital [445]).

11

The Commission found that although there were four categories of plastic industrial bags, they form a relatively homogenous...

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