Britned Development Ltd v ABB AB
Jurisdiction | England & Wales |
Judge | Mr Justice Marcus Smith |
Judgment Date | 09 October 2018 |
Neutral Citation | [2018] EWHC 2616 (Ch) |
Court | Chancery Division |
Docket Number | Claim No. HC-2015-000268 |
Date | 09 October 2018 |
[2018] EWHC 2616 (Ch)
THE HONOURABLE Mr Justice Marcus Smith
Claim No. HC-2015-000268
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice
Rolls Building
Fetter Lane
London EC4A 1NL
Mr Robert O'Donoghue, QC and Mr Hugo Leith (instructed by Squire Patton Boggs (UK) LLP) for the Claimant
Mr Mark Hoskins, QC, Ms Sarah Ford, QC and Ms Jennifer MacLeod (instructed by Freshfields Bruckhaus Deringer LLP) for the Defendants
Hearing dates: 7–9, 12–16, 19–23 February, 5–6 March 2018
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.
CONTENTS
A. INTRODUCTION | Para. 1 |
(1) The Cartel | Para. 1 |
(2) BritNed's claim and ABB's response to that claim | Para. 4 |
(3) Approach and the structure of this Judgment | Para. 9 |
B. LEGAL PRINCIPLES AND APPROACH | Para. 10 |
(1) Elements of the tort | Para. 10 |
(2) A preliminary pleading point: the Overcharge Claim and the definition of “overcharge” | Para. 13 |
(3) A presumption of overcharge and the principle of effectiveness | Para. 19 |
(4) ABB's prior bad conduct | Para. 24 |
C. THE EVIDENCE | Para. 26 |
(1) Introduction | Para. 26 |
(2) Factual witness evidence | Para. 28 |
(a) General points | Para. 28 |
(b) BritNed's factual witnesses | Para. 32 |
(i) Mr Mathew Rose | Para. 33 |
(ii) Mr Michael Jackson | Para. 36 |
(c) ABB's factual witnesses | Para. 39 |
(i) Mr Hans-Åke Jönsson | Para. 40 |
(ii) Mr Peter Leupp | Para. 47 |
(iii) Mr Stefan Ekman | Para. 52 |
(iv) Mr Magnus Larsson-Hoffstein | Para. 56 |
(v) Mr Hans-Magnus Röstlund | Para. 61 |
(3) The documentary evidence | Para. 64 |
(4) The Decision of the European Commission | Para. 67 |
(a) The law regarding the bindingness of decisions | Para. 67 |
(b) My approach in the case of the Decision | Para. 68 |
(5) The expert evidence | Para. 72 |
(6) Overview | Para. 76 |
D. THE NATURE AND OPERATION OF THE CARTEL | Para. 80 |
(1) General nature and operation | Para. 81 |
(2) ABB and the Cartel | Para. 90 |
E. THE CHARACTERISTICS OF SUBMARINE CABLES | Para. 97 |
(1) Introduction | Para. 97 |
(2) The difference between submarine and underground cable projects | Para. 98 |
(3) Alternating current or direct current | Para. 103 |
(4) Cable width | Para. 108 |
F. THE HISTORY OF THE BRITNED TENDER | Para. 111 |
(1) Genesis | Para. 111 |
(2) The lots | Para. 114 |
(3) Transmission capacity | Para. 115 |
(4) The OJEU Notice (August 2005) | Para. 117 |
(5) BritNed's negotiating team | Para. 118 |
(6) Expressions of interest (September to October 2005) | Para. 120 |
(7) ABB's tender team and its approach to tendering | Para. 122 |
(a) The ABB tender team | Para. 122 |
(b) ABB's methodology during the “technical” process | Para. 126 |
(i) Pre-tender communications | Para. 128 |
(ii) Initial design on tender | Para. 129 |
(iii) Costings | Para. 130 |
(iv) Risk review | Para. 133 |
(v) Submission of a tender | Para. 134 |
(vi) Use of Product Pricing Models | Para. 135 |
(c) The process post-tender | Para. 136 |
(8) Pre-qualification to tender | Para. 137 |
(9) Tender evaluation “Phase One” | Para. 138 |
(10) ABB's discussions with Nexans | Para. 141 |
(11) The ILEX Study (May 2006) | Para. 142 |
(12) Prysmian did not submit a tender (June 2006) | Para. 143 |
(13) Areva did not submit a tender (June 2006) | Para. 146 |
(14) Nexans' tender (June/July 2006) | Para. 147 |
(15) ABB's tender (June 2006) | Para. 148 |
(16) BritNed's position at this point | Para. 149 |
(17) Evaluation by BritNed | Para. 150 |
(18) Tender evaluation “Phase Two” (July 2006 onwards) | Para. 152 |
(19) Best and final offers (March 2007) | Para. 158 |
(20) Last and final offers (March 2007) | Para. 160 |
(21) Final cable price negotiations (April 2007) | Para. 161 |
(22) Letter of intent and contract | Para. 167 |
(23) The price offered by ABB over time | Para. 169 |
G. COMPETITIVE PRESSURES ARISING IN THE NEGOTIATION PROCESS | Para. 171 |
(1) Introduction | Para. 171 |
(2) The limited response from bidders that BritNed had to contend with | Para. 173 |
(3) The various commercial pressures that BritNed sought to deploy during the negotiations | Para. 176 |
(a) The commercial pressures identified | Para. 176 |
(b) Keeping Siemens in | Para. 177 |
(c) Full bipole versus simple bipole | Para. 182 |
(d) Comparison with NorNed | Para. 184 |
(e) Risk of the project not going ahead | Para. 188 |
(f) ABB's lack of its own cable laying vessel | Para. 190 |
(g) Perception that ABB needed the work | Para. 197 |
(4) The advantage ABB derived from its participation in the Cartel | Para. 201 |
(a) Introduction | Para. 201 |
(b) BritNed's position | Para. 204 |
(c) Approach to analysing ABB's knowledge advantage | Para. 211 |
(d) Who knew about the Cartel and who did not know about the Cartel? | Para. 220 |
(e) What these persons knew regarding the BritNed bid? | Para. 226 |
(i) The fact that projects were allocated by the Cartel and that BritNed was allocated to ABB | Para. 227 |
(ii) Likely absence of competition from Japan/Korea | Para. 230 |
(iii) Level of competition from European suppliers as regards cable projects | Para. 234 |
(iv) Level of competition as regards the Converter element and Lot 3 | Para. 243 |
(v) Conclusion | Para. 247 |
(f) Whether, and if so how, any “useful” knowledge regarding competition could have been deployed within ABB | Para. 249 |
(i) Introduction | Para. 249 |
(ii) Direct influence on the level of the bid | Para. 252 |
ABB's process and the distinction between direct costs and common costs | Para. 252 |
Influencing the level of direct costs | Para. 255 |
Influencing the level of common costs | Para. 266 |
(iii) Indirect influence on the level of the bid | Para. 273 |
Communication of market capacities | Para. 275 |
Affecting the commercial approach of ABB | Para. 279 |
(g) Conclusions | Para. 284 |
H. THE EXPERTS' ANALYSIS | Para. 285 |
(1) Introduction | Para. 285 |
(2) The approach of Dr Jenkins | Para. 288 |
(a) A summary of Dr Jenkins' approach | Para. 288 |
(b) Statistical tools and devices | Para. 293 |
(i) What is a coefficient? | Para. 293 |
(ii) Correlation | Para. 294 |
(iii) Measuring correlation | Para. 295 |
(iv) Regression analysis | Para. 299 |
(v) Testing how good a model is: statistical significance | Para. 303 |
(vi) The Practical Guide on Quantifying Harm | Para. 309 |
(vii) One-sided and two-sided hypothesis testing | Para. 310 |
(c) Dr Jenkins' dataset | Para. 312 |
(d) Information regarding each project forming part of Dr Jenkins' dataset | Para. 314 |
(e) Dr Jenkins' process of normalisation | Para. 316 |
(f) Dr Jenkins' regression analysis | Para. 318 |
(3) The approach of Mr Biro | Para. 321 |
(a) A summary of Mr Biro's approach | Para. 321 |
(b) Mr Biro's first approach: a price comparison analysis controlling for ABB's actual costs of supply | Para. 323 |
(i) Overview | Para. 323 |
(ii) Comparable projects | Para. 325 |
(iii) Multiple margins and margin consolidation | Para. 326 |
(iv) Calculation of gross margin | Para. 327 |
(c) An econometric analysis of the relationship between prices and ABB's actual costs of supply | Para. 334 |
(d) A price comparison analysis which does not directly control for ABB's actual costs of supply, but instead uses proxy measures based on the technical characteristics of the projects | Para. 339 |
(5) A critical assessment of the two approaches | Para. 343 |
(a) Introduction | Para. 343 |
(b) The reliability of the ABB data | Para. 349 |
(i) Dr Jenkins' criticisms | Para. 349 |
(ii) Reliability of direct costs | Para. 356 |
(iii) Reliability of common costs | Para. 361 |
(iv) Baked-in inefficiencies | Para. 365 |
(v) Cartel savings | Para. 369 |
(vi) Lost bids | Para. 372 |
(vii) Successful Cartel submarine bids | Para. 374 |
(c) Reliability of Dr Jenkins' model | Para. 376 |
(i) The relevant uncertainties | Para. 376 |
(ii) The inclusion of Cartel projects | Para. 382 |
(iii) The inclusion of underground cable projects | Para. 388 |
(iv) Exclusion of the time trend variable | Para. 398 |
(v) Exclusion of the order backlog variable | Para. 402 |
(d) Which approach is preferable? | Para. 414 |
(i) The reliability of Mr Biro's model | Para. 414 |
(ii) The reliability of Dr Jenkins' model | Para. 417 |
(iii) Appropriateness | Para. 419 |
I. MY ASSESSMENT OF THE OVERCHARGE | Para. 422 |
(1) The “gist” damage: accrual of a cause of action | Para. 422 |
(2) Quantification of the overcharge | Para. 430 |
(a) Introduction | Para. 427 |
(b) Was there a directly influenced overcharge in ABB's common costs? | Para. 438 |
(c) Baked-in inefficiencies | Para. 445 |
(d) Cartel savings | Para. 454 |
(e) Was there an indirect influence on ABB to be uncompetitive? | Para. 459 |
(3) Conclusion | Para. 464 |
J. THE LOST PROFIT CLAIM | Para. 466 |
(1) Introduction | Para. 466 |
(2) The law | Para. 468 |
(3) The facts | Para. 470 |
(a) Introduction | Para. 470 |
(b) BritNed's default position | Para. 472 |
(c)... |
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