Britned Development Ltd v ABB AB

JurisdictionEngland & Wales
JudgeMr Justice Marcus Smith
Judgment Date09 October 2018
Neutral Citation[2018] EWHC 2616 (Ch)
CourtChancery Division
Docket NumberClaim No. HC-2015-000268
Date09 October 2018
Between:
Britned Development Limited
Claimant
and
(1) ABB AB
(2) ABB Ltd
Defendants

[2018] EWHC 2616 (Ch)

Before:

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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