Sel-imperial Ltd (Claimant Respondent) v The British Standards Institution (Defendant Applicant)

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Roth
Judgment Date23 April 2010
Neutral Citation[2010] EWHC 854 (Ch)
Docket NumberCase No: HC09C00277

[2010] EWHC 854 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Before: MR JUSTICE ROTH

Case No: HC09C00277

Between
Sel-imperial Limited
Claimant Respondent
and
The British Standards Institution
Defendant Applicant

Charles Hollander QC and Robert O'Donoghue (instructed by Orr Litchfield) for the Claimant/Respondent

Jonathan Crow QC and Tim Ward (instructed by Herbert Smith LLP) for the Defendant/Applicant

Hearing dates: 11 th and 12 th February 2010

Mr Justice Roth

Mr Justice Roth:

1

This is an application by the defendant to strike out the claim under CPR rule 3.4(2)(a) on the ground that it discloses no reasonable grounds for bringing the claim, alternatively for summary judgment pursuant to CPR rule 24.2(a)(i) on the basis that the claim has no real prospect of success. Save on one point, as explained below, it is a “pleadings-based” application: that is to say, the defendant relies on the pleaded case and not any extraneous evidence. Hence it is to be assumed for the purpose of this application that the allegations of fact pleaded by the claimant can be made out.

The Facts

2

The defendant is the British Standards Institution (“BSI”), a non-profit organisation incorporated by Royal Charter. It is engaged in the development and publication of private, national and international standards covering a wide range of industries and goods. BSI standards are often recognised as establishing a set of codes or benchmarks of quality or good practice. BSI is also one of the UK national standardisation bodies under Annex II to EU Directive 98/34. The drawing up of such standards is generally conducted with the close involvement of bodies or organisations from the relevant industry.

3

However, BSI is also involved in a distinct, but related, activity that is material to this case. It is engaged in certification for compliance with its standards through its “Kitemark” schemes. Not every BSI standard has an associated Kitemark. BSI currently has over 30,000 standards in publication whereas it runs some 430 Kitemark schemes. Where a standard has an associated Kitemark scheme, BSI recruits and trains inspectors who carry out inspection of a particular business or firm that applies for a Kitemark to determine whether it meets the standard, in which case it will be granted a licence to carry the BSI Kitemark. The Kitemark logo is widely recognised by consumers. BSI charges for this inspection and certification service.

4

These proceedings concern one aspect of a particular BSI standard, known as “PAS 125”. “PAS” stands for “publicly available specification”. A PAS is described by the BSI as “a step in the process of standardisation.” It does not have the status of a full British Standard, which requires several further stages of development, but it can be made available more quickly to satisfy a market need and it can form the basis of a Kitemark certification scheme.

5

PAS 125 is entitled “Vehicle Body Repair Specification”. It was first published in late 2006, coming into force on 1 January 2007. A revised version was published in 2008, but the revisions are immaterial for present purposes. As indicated by its title, it is designed to provide a specification for automotive vehicle body repair, and it covers both the repair process and the management of that process (documentation, internal auditing, etc.). The Foreword to PAS 125 states that it:

“is published for information only for the purpose of a Kitemark conformity certification scheme to provide assurance that automotive vehicle body repair activities have been independently evaluated and that the repairer's controls are in accordance with stated requirements.”

Section 1 of PAS 125 states that the specification applies to passenger cars and light commercial vehicles.

6

The development of PAS 125 was the result of an approach to the BSI from the Motor Insurance Repair Research Centre (generally known as “Thatcham”), a non-profit organisation funded by the British motor insurance industry. PAS 125 was accordingly sponsored by Thatcham, along with a number of so-called “project partners” including the Institute of Automotive Engineer Assessors and The Institute of the Motor Industry, and its preparation involved consultation with the automotive repair industry, insurance companies and other bodies. Among those listed in the Acknowledgments at the start of PAS 125 are Norwich Union Insurance, RBS Insurance, Zurich Financial Services and the Society of Motor Manufacturers and Traders.

7

Section 4.5 of PAS 125 covers Materials. The one aspect of the specification with which this case is concerned is paragraph 4.5.1, which provides:

Parts, components and fasteners

Parts, components and fasteners shall be either

a) Original Equipment branded with the vehicle manufacturer's trade mark;

b) Original Equipment branded with the component manufacturer's trade mark and independently certified under a recognized conformity certification scheme;

c) of Matching Quality independently certified under a recognized conformity certification scheme; or

d) alternative parts of a non safety-related status supplied under a work provider agreement.”

8

A note to this paragraph states that “Original Equipment” and “Matching Quality” are defined terms under the EC Motor Vehicle Block Exemption, Regulation 1400/2002. In fact, Regulation 1400/2002 does not use the term “original equipment” but “original spare parts”, defined in article 1(1)(t) to mean

“spare parts which are of the same quality as the components used for the assembly of a motor vehicle and which are manufactured according to the specifications and production standards provided by the vehicle manufacturer for the production of components or spare parts for the motor vehicle in question.”

It is accepted by BSI that this is the meaning to be given to “Original Equipment” in paragraph 4.5.1. A “recognised conformity certification scheme” is defined in paragraph 3.6 of PAS 125 to mean:

“third party quality assurance programme for products based on ISO/IEC Guide 28.”

9

The result of these provisions is that in order for a vehicle repair workshop to satisfy paragraph 4.5.1 of PAS 125, any parts used in repair which are not “original equipment” must be independently certified under such a “recognised conformity certification scheme” unless they are “non-safety related”.

10

The claimant (“SEL-Imperial”) imports and distributes parts for motor vehicle repairs and specialises in particular in external bodywork panels. A substantial proportion of the several thousand parts which it supplies are so-called “replica parts”, i.e. parts which are not “original equipment” in terms of the PAS 125 definition and which are often less expensive. It states that it supplies some 20–25% of the market for replica vehicle body parts in the United Kingdom. SEL-Imperial asserts (and for the purpose of this application that must be accepted) that the cost of independently certifying a part under a recognised conformity certification scheme is relatively high, amounting to some £750-£1000 per part.

11

However, SEL-Imperial makes clear that it does not complain about the terms of PAS 125 as such, including specifically the distinction made between “safety-related” and “non safety-related” parts in paragraph 4.5.1. The basis for its claim is the interpretation that has been given to these terms in the application of PAS 125 under the BSI Kitemark scheme.

12

PAS 125 contains no definition of “parts of a non safety-related status” as used in paragraph 4.5.1(d). However, it is alleged that for the purpose of establishing whether a vehicle repair workshop complies with PAS 125 so as to qualify for a Kitemark, BSI has determined that all body parts in front of the “A-pillar” of a motor vehicle are “safety-related”. The A-pillar is the foremost and outermost roof support extending from the vehicle chassis to the roof. SEL-Imperial claims that this interpretation is over-inclusive, unnecessarily causing a large number of body parts to fall outside sub-paragraph 4.5.1(d) and thus, where they are replica parts, to require independent certification.

13

Motor insurers, who commission a large proportion of vehicle repair work, typically require that such work is done by an approved repairer. There is another accredited certification body, independent of the BSI, namely Consortium for Automotive Registration Services (Quality Assurance) Limited (“CARS QA”), that also can certify compliance with PAS 125 and may adopt a different and narrower interpretation of “safety-related” for the purpose of paragraph 4.5.1(d). But SEL-Imperial contends that the role and influence of the BSI Kitemark is such that there are significant incentives for repair workshops to hold the Kitemark. In particular, three of the five largest UK motor insurers (RBS, Norwich Union and Zurich) have made achievement of the PAS 125 Kitemark mandatory for their network of approved repairers. Moreover, SEL-Imperial relies on a survey as showing that insurers representing 65.5% of all motor premiums have made the Kitemark a mandatory requirement for their networks. It is also alleged that repairers holding the Kitemark can benefit from lower insurance premiums.

14

Accordingly, it is claimed that BSI's broad interpretation of “safety-related” has substantially limited the demand for replica parts which are not independently certified under a recognized conformity certification scheme so as to fall within paragraph 4.5.1(c). That has therefore limited SEL-Imperial's ability to provide lower price replica parts which, it claims, had also acted as a competitive constraint on original equipment manufacturers in their pricing of replacement parts.

The Present Application

15

SEL-Imperial's claim is brought only under competition law. It relies...

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