Royal Mail Group Ltd v DAF Trucks Ltd
| Jurisdiction | England & Wales |
| Judge | Sir Julian Flaux C,Lord Justice Newey,Lord Justice Green |
| Judgment Date | 27 February 2024 |
| Neutral Citation | [2024] EWCA Civ 181 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2023-001010 AND CA-2023-001109 |
[2024] EWCA Civ 181
Sir Julian Flaux THE CHANCELLOR OF THE HIGH COURT
Lord Justice Newey
-and-
Lord Justice Green
Case No: CA-2023-001010 AND CA-2023-001109
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COMPETITION APPEAL TRIBUNAL
Royal Courts of Justice
Strand, London, WC2A 2LL
Daniel Beard KC, Daisy Mackersie and James Bourke (instructed by Travers Smith LLP) for the Appellants
Tim Ward KC, Ben Lask KC and Ligia Osepciu (instructed by Bryan Cave Leighton Paisner LLP) for the Respondents
Hearing dates: 19, 20 and 21 December 2023
APPROVED JUDGMENT
This judgment was handed down remotely at 10:30am on Tuesday 27 February 2024 by circulation to the parties or their representatives by email and by release to The National Archives.
Introduction
This appeal concerns the quantum of follow-on damages awarded by the Competition Appeal Tribunal (“the CAT”) in its judgment dated 7 February 2023 to Royal Mail Group Limited (“Royal Mail”) and companies in the BT Group (“BT”) (to which I will refer together as the Claimants). The claims arise following the determination of the European Commission in 2016 that five truck manufacturers, including the defendants, DAF, had colluded on pricing arrangements and had carried out a single and continuous infringement of Article 101 TFEU and Article 53 of the EEA Agreement between 1997 and 2011.
The CAT found that this collusion caused a 5% increase in prices charged to the Claimants (for truck and truck “body” purchases and lease payments) during this period, and dismissed DAF's arguments that the Overcharge was mitigated or offset by the Claimants passing on the Overcharge. DAF appeals, either with the permission of the CAT or with permission granted by me, on the basis that the Tribunal erred in assessing the quantum of the loss; in its inclusion of truck “bodies” (in addition to trucks) in the Overcharge; in finding there was no mitigation by way of supply pass on of the Overcharge; and in its findings as to the cost of financing the Overcharge.
Factual and procedural background
On 19 July 2016, the European Commission adopted the Settlement Decision in Case 39824 – Trucks, (“the EC Decision”) finding that five European truck manufacturing groups (DAF, MAN, Daimler, Iveco, and Volvo/Renault) had infringed Article 101 of the TFEU and Article 53 of the EEA Agreement between 17 January 1997 and 18 January 2011. The manufacturers, including DAF, signed up to the EC Decision, thereby admitting the infringement. The infringement was “by object” rather than “by effect”.
On 1 December 2016 and 13 October 2017, Royal Mail and BT respectively issued follow-on claims for damages in the Chancery Division. In June and July 2018 respectively, those claims were transferred by consent to the CAT. The trial of those claims in the CAT took place over 25 days in May and June 2022. Because the infringement constituted a breach of statutory duty giving rise to a cause of action in tort, if the Claimants could prove actionable harm or damage caused by the infringement, they would be entitled to damages. Accordingly, the trial was concerned only with issues of causation and quantum of damage, including mitigation.
As already noted, judgment was handed down on 7 February 2023. In broad terms the CAT found that the infringement caused loss to both Claimants in the form of an Overcharge which it assessed at 5% for both Royal Mail and BT on their value of commerce over the whole of the relevant period. DAF's various “mitigation” defences including supply pass-on failed. However, there was a dissenting opinion from one of the members of the CAT, Mr Ridyard, on the supply pass-on issue. The Orders of the Chair, Michael Green J, concerning damages and interest for both Royal Mail and BT were made on 3 March 2023. In a Permission to Appeal Ruling dated 16 May 2023, the CAT granted DAF permission to appeal on one ground (supply pass-on) on the basis there was another “compelling reason” for the appeal (its impact on other competition cases where supply pass-on is an issue) but refused permission on its other grounds.
DAF then applied for permission to appeal to the Court of Appeal on three of its remaining grounds. On 11 July 2023, I granted permission to appeal on all those grounds, on the basis that they had a real prospect of success or alternatively there was a compelling reason for them to be heard so that this Court could give guidance on quantum-related issues and issues arising out of the EC Decision.
The judgment of the CAT
The CAT produced a careful and detailed judgment running to some three hundred pages. In the introductory sections, it set out an outline of the EC Decision and of the infringement. The facts relating to the claimants were set out at Section F and the facts relating to DAF at Section G. In that Section at [102] to [107] the CAT noted that DAF called four witnesses of fact but that none of them had given evidence explaining how the cartel operated and all had denied any knowledge of the cartel or the unlawful exchange of confidential information between the cartelists. The CAT recorded that Mr Beard KC, counsel for DAF, had speculated as to the motives of the culpable individuals but said that whatever their motives, that did not alter the facts or the data and it was those that determined whether there was an Overcharge, not the subjective intentions and beliefs of those involved in the infringement. The CAT did not accept that analysis, saying at [108]:
“We do not wholly accept that. DAF's expert evidence on the theory of harm is based on speculation as to how the Infringement would have worked within DAF and then draws conclusions on such speculation as to how the Infringement would not have had an effect on prices. We think that any such theory would be more soundly based on what actually happened factually within DAF in terms of how the information was used and how the Infringement managed to continue over such a long period, presumably for the mutual benefit of all the Cartelists.”
The CAT went on to refer to speculation by Mr Beard KC in his closing submissions as to how the confidential information might have been used to beneficial effect within DAF, for example in better understanding the relative positioning in the market of DAF's products as against those of the other cartelists. The CAT rejected this speculation, saying at [116]–[117]:
“We take no account of this speculation and it is an inappropriate way of approaching this issue by DAF. The burden remains on the Claimants to prove causation but where DAF has elected to call no evidence as to how the Cartel was operated by DAF and how it used the information to its advantage it is not open to its Counsel to speculate as to what actually happened. This was highly commercially sensitive information that was disclosed among the Cartelists over a long period of time. The Commission found that this information enabled the Cartelists to be better able to calculate their competitors' approximate net prices. Further, the basis of a finding of an infringement by object is that it is very likely to have had negative effects on transaction prices. Therefore, in our view, this means that, if DAF wished to argue that, because of the way it used the confidential information obtained through the Cartel, there was no effect on prices, it would have had to adduce factual evidence to such effect. In other words, DAF's admissions and the Settlement Decision establish a prima facie case that the Cartel had an adverse effect on transaction prices.
117. That is not to say that DAF is unable to rely on its expert evidence to argue that the data shows that there was no Overcharge paid by these Claimants. But even their expert was unable to explain or come up with a rational economic basis for DAF's participation in the Cartel over such a long period. While Prest does not entitle the Claimants to say that they have therefore proved that DAF's participation in the Cartel led to higher prices it does mean that it is not open to DAF to argue that, as a matter of fact, the information was not used by it to achieve prices that were higher than they would otherwise have been without that information exchange.”
The CAT considered the general principles of law at Section H. It dealt with causation and quantum at [167] to [175]. As to causation, it explained that the Claimants' cause of action is in tort and damages are compensatory, referring to Sainsbury's Supermarkets Ltd v Mastercard Incorporated [2020] UKSC 24 (“ Sainsbury's SC”) at [194]. The Claimants must establish both (a) a breach of competition law and (b) actionable harm or damage caused by that breach. In this case, the former “is established by the findings of the Infringement in the Settlement Decision”, but the latter must also be proved by the Claimants, which “will not accrue until there has been actionable damage”. They “must satisfy the test for causation before there can be consideration of the quantification of their actual loss” ([168]). The CAT cited the explanation of Marcus Smith J at [424]–[427] of BritNed Development Ltd v ABB AB and ors [2018] EWHC 2616 (“ BritNed”) as to what a claimant has to prove in terms of actionable damage ([169]). It concluded at [172] that the Claimants “are required to establish that they suffered monetary harm as a result of the Infringement and they must do...
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