Director General of Fair Trading v Proprietary Association of Great Britain; Re Medicaments and Related Classes of Goods (No 2)

JurisdictionEngland & Wales
JudgeLORD JUSTICE BROOKE
Judgment Date26 July 2001
Neutral Citation[2001] EWCA Civ 1217
Docket NumberCase No: C/2000/3582
CourtCourt of Appeal (Civil Division)
Date26 July 2001
Director General Of Fair Trading
Respondent In Appeal/Applicant
and
(1) The Proprietary Association Of Great Britain
(2) The Proprietary Articles Trade Association
Appellants In Appeal/Respondents

[2000] EWCA Civ J1221-6

Before :

The Master Of The Rolls

Lord Justice Brooke and

Lord Justice Robert Walker

Case No: C/2000/3582

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM RESTRICTIVE PRACTICES COURT

IN THE MATTER OF THE RESALE PRICES ACT 1976

AND IN THE MATTER OF MEDICAMENTS AND RELATED CLASSES OF GOODS

AND IN THE MATTER OF APPLICATIONS TO DR PENELOPE ROWLATT AS A MEMBER OF

THE RESTRICTIVE PRACTICES COURT TO RECUSE HERSELF AND TO THE RESTRICTIVE

PRACTICES COURT TO RECUSE ITSELF

Royal Courts of Justice

Strand, London, WC2A 2LL

Jonathan Sumption, QC, Catherine Otton-Goulder, QC, and Margaret Gray (instructed by CMS Cameron McKenna, London, EC1A 4DD) for the Appellants in Appeal/Respondents

Trevor Philipson, QC, Jon Turner, Kassie Smith and James Eadie (instructed by The Treasury Solicitor, London, SW1H 9JS) for the Respondent in Appeal/Applicant

LORD PHILLIPS, MR

This is the Judgment of the Court.

1

On the 2 nd October 2000 the Restrictive Practices Court began the trial of a contested application by the Director General of Fair Trading ("the Director General") under the Resale Prices Act 1976 ("the 1976 Act"). The purpose of the application is to discharge an order made by the Court in 1970, by which it exempted branded medicaments and certain related goods from the general statutory ban on resale price maintenance ("RPM"). The Director General contends that this industry-wide restrictive practice in the over-the-counter medicaments industry can no longer be justified, and that it now operates seriously to the injury of the general public for so long as it persists.

2

The case is contested by two trade associations (the Appellants to this appeal) who represent a large number of the manufacturers and retailers of branded over-the-counter medicaments.

3

On 15 th and 16 th November 2000, the Appellants moved the Court on two applications ("the Applications") with the purpose of vacating the trial:

a)

That one of the members of the Court, Dr Penelope Rowlatt ("Dr Rowlatt"), recuse herself on the ground of apparent bias;

b)

That the whole Court should recuse itself on the ground that they are infected by the apparent bias of Dr Rowlatt.

4

The Court handed down a reasoned Judgment on Friday 17 th November 2000, dismissing the applications.

5

On Tuesday 21 st November 2000 we gave the Appellants leave to appeal, heard the appeal and allowed it in relation to both applications. We now give our reasons for that decision.

Procedure

6

The Restrictive Practices Court is a superior Court of record and, in consequence, its decisions are not subject to judicial review by the High Court. Section 10 of the 1976 Act provides that an appeal lies from any decision or Order of the Court, in the case of proceedings in England and Wales, to the Court of Appeal. The Section goes on to provide that the appeal lies on a question of law only and the Court's decision on a question of fact is final and that the appeal is by way of case stated.

7

We are satisfied that the question of whether or not members of the Restrictive Practices Court are disqualified from continuing to hear the Director General's application is a question of law. That question falls to be determined on the basis of the facts stated in the case. Rule 62(1) of the Restrictive Practices Court Rules provides that the Judgment of the Court, insofar as facts are stated in it, is deemed to be a case stated for the purpose of any appeal on a question of law to which those facts give rise. The parties have agreed, however, that in addition to the facts set out in the Judgment below we should have regard to the facts placed before the Court in support of the applications in an Affidavit sworn by Christine Bendall, the Solicitor with the conduct of the case on behalf of the Appellants. The statement of facts which follows is based on these agreed sources.

The Facts

The Appellants are the Proprietary Association of Great Britain ("PAGB") and the Proprietary Articles Trade Association ("PATA"). PAGB is an association of manufacturers, importers and suppliers of branded "pharmacy only" and "general sales list" medicines, vitamins and mineral supplements sold over the counter (without the need for a prescription) in the United Kingdom. The majority of PAGB members have established and maintain a system of resale price maintenance in relation to the sale of such branded goods in the United Kingdom. (In this judgment we shall refer to those products as "OTCs" and the manufacturers, importers and suppliers as the "suppliers"). PATA is an association whose members include, as well as 23 members of PAGB, three trade associations whose members comprise 98% of all registered retail pharmacies trading in the United Kingdom, with the significant exception of Boots The Chemist which itself accounts for 25% of sales in the OTC market. PATA's function is to monitor the compliance by retailers with RPM and to report any instance of non-compliance so that the supplier can take action to enforce compliance.

RPM is enforced by the insertion into contracts of supply between suppliers and their customers of a term requiring the wholesaler to sell to the retailer, or the retailer to sell to the public, either at prices not less than those stipulated by the supplier or (less often) at the precise prices stipulated by the supplier. Such a term as a matter of contract is enforceable as between the parties to the contract of supply. But the Resale Prices Act 1976 ("the 1976 Act"), as did its predecessor the Resale Prices Act 1964, makes it unlawful in general for suppliers to provide for minimum or fixed prices to be charged on the resale of goods in the United Kingdom. The 1976 Act however makes provision (as did the 1964 Act) for suppliers to apply to the Court for an order exempting goods of any specified category from the general prohibition provided that the conditions laid down in section 14 of the 1976 Act are satisfied.

In 1970 on application by PAGB and PATA the Court granted an exemption in respect of OTCs. On the 8th January 1998 the Director General gave notice that he intended to seek the leave of the Court to apply for the discharge of the 1970 Order and accordingly the removal of the exemption. On the 11th March 1999 leave was granted and the Director General thereupon proceeded with the application. The form of the proceedings is the same as if the 1970 Order had not been obtained, and PAGB and PATA must again establish their entitlement to exemption under section 14 of the 1976 Act.

The Court was established by the Restrictive Trade Practices Act 1956 and its existence was continued by section 1(1) of the Restrictive Practices Court Act 1976 ("the 1976 Court Act"). The 1976 Act and the 1976 Court Act were both repealed and the Court was abolished by section 1(a) and (b) of the Competition Act 1998 as from the 1st March 2000. But section 74 of that Act (and the transitional provisions in Schedule 13) provided that the abolition did not affect an application to the Court (such as the present) made under the 1976 Act which had not been determined by the 1st March 2000. Section 7(1) of the 1976 Court Act requires that any hearing shall be conducted by a court comprising a presiding judge and at least two other members. Lightman J was the presiding judge and, since the application raised issues of accountancy and economics, Mr James Scott (an accountant) and Dr Rowlatt (an economist) were appointed as the two other members. Section 7(2) of the 1976 Court Act provides that on the hearing of proceedings before the Court, the opinion of the judge upon any question of law shall prevail, but subject to this the decision of the Court shall be taken by all the members sitting or, in the event of a difference of opinion, by the votes of the majority of the members.

12

The interlocutory stages in the proceedings culminated in the trial being fixed to commence on the 2nd October 2000. The documentation put before the Court in this case is quite enormous. A special courtroom had to be adapted for the hearing within the Principal Registry of the Family Division building in High Holborn. The first two and a half weeks of the trial were set aside for pre-reading. This proved a most onerous task. The closely packed bundles of documents number some 170. The Respondents alone had put in lengthy witness statements (often more than one) of some 39 witnesses of fact and even lengthier witness statements (again more than one) of some 19 experts. To add to the task the Respondents contended that a number of the 39 witnesses of fact were also, to some extent, expert witnesses. The Director General submitted statements by 6 witnesses of fact and 5 expert witnesses. The size of the task before the Court was reflected in the fact that the Respondents appear by five Counsel and the Director General by four.

13

Practically all the witnesses of fact required to attend for cross-examination had attended and the Court was proceeding with hearing the expert witnesses. The programme agreed before the Applications changed events was that the expert evidence and outstanding factual evidence would be completed within two weeks. Leaving out of account a Ms Kelly who might be regarded at least in part as a witness of fact, the first and perhaps the most important expert witness to be called on behalf of the Respondents was Professor Lord Peston the distinguished economist who attended on Wednesday the 8 th November and Thursday 9 th November. Shortly before that took place there occurred the events which led to the Applications, which had the effect of bringing the proceedings to a halt on Friday the 10 th November 2000.

1...

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