On 4 March 2020, the UK Competition Appeal Tribunal (the “Tribunal“) handed down a significant judgment in the UK’s follow-on Trucks cartel litigation, in which it determined those parts of the European Commission (“Commission“) settlement decision that are binding in establishing liability.[1] The Tribunal also considered whether it can be an ‘abuse of process‘[2] for defendants to contest facts previously admitted in their settlement with the Commission.
Which parts of the Commission decision are binding?
To understand the genesis of this issue, it is first vital to understand the composition of a Commission decision. Each decision is comprised of two parts. First, a relatively short ‘operative part‘ which succinctly articulates what the Commission has decided. Second, a substantial number of antecedent recital paragraphs which address both the background and reasoning for the decision. The number of recitals will generally be much shorter in a settlement decision. Under EU law, the general position is that a national court “cannot take a decision running counter to the decision adopted by the Commission” (Article 16 (1) of Council Regulation (EC) 1/2003 (“Article 16“)). However, as Article 16 has yet to be adjudicated on in the context of competition infringements by the EU courts, there is no firmly established approach to setting the parameters of what is binding on the courts and litigation parties in follow-on claims.
In the case of Trucks, the only common ground between the parties was that Article 1 of the decision was operative and therefore binding. Accordingly, the Tribunal had to engage in a rigorous textual analysis of the Commission’s decision, so as to better understand the relationship between the operative part and the recitals. This task involved breaking down the constituent parts of the formal operative part on an article by article basis and identifying aspects which were either unclear, imprecise or ambiguous. Consequently, the Tribunal – expressly mindful of its obligations under Article 16 – settled on a broad test, determining that a recital will be binding in cases where it is:
“an essential basis or the necessary support for a determination in the operative part, or necessary to understand the scope of the operative part”.
The Tribunal then identified the corresponding parts of the recitals which related to each aspect of the formal operative part under consideration and assessed whether those recitals were binding based on the above test. Importantly, binding parts of the recitals included those which dealt with penalties and how the fine was calculated.
On initial inspection, the Tribunal’s approach appears to set a low threshold to identifying the recitals which bind defendants and UK courts, and as such reduces the evidential burden on prospective claimants. However, the Tribunal did emphasise that the analysis is “a fact specific exercise in each case” and expressly rejected the argument that any factual finding or assessment directly related to an infringement de facto amounts to “necessary support“. Not every fact relevant to the anticompetitive conduct will be binding. Notably, not all facts and details will be binding as they may be “merely illustrative evidence“. Defendants can take further comfort from the Tribunal’s willingness to explore explicit examples of merely evidential facts which would not be binding (e.g. “details and examples of occasions when and how the collusion took place“). On the facts of the Trucks case, this meant less than 20 recitals (or parts thereof) were found to be binding, out of 136.
Abuse of Process
The Tribunal also found that the English law doctrine of abuse of process applies to follow-on damages claims. The repercussions of this are, broadly, that it may be abusive for defendants to deny the facts that the Commission’s decision records them as having admitted, or even to ‘not admit’ those facts in their defences, thus requiring the claimants to prove them. This determination centres on equitable principles and the Tribunal grappled with the question of whether it would bring the administration of justice into disrepute and/or be unfair to the claimants to permit defendants to contest facts already admitted to during their settlement with the Commission.
While the Tribunal did not decide whether the defendants’ approach to the Trucks decision was abusive, it did provide some guidance for future cases. Importantly, the Tribunal identified six principles which would shape its decision as to whether a defendant’s behaviour constitutes an abuse. Drawing these together, the Tribunal identified the following points:
- Unless the claimant does not object, it is an abuse of process for a defendant simply to deny (or even not admit) facts set out in a recital relied on by a claimant.
- Where a defendant seeks to put forward a contrary position to a finding in the Decision on the basis that: (a) it does not accurately reflect the underlying document referred to; or (b) new evidence has emerged which it could not reasonably have had access to at the time of the proceedings, it will be for the Tribunal to decide whether it is an abuse to do so.
- In all other circumstances, it is for the defendant seeking to put forward a positive case contrary to a finding in a recital to set out the reasons why it should be able to do so in that particular instance, and then for the Tribunal to decide.
Conclusion
The Tribunal’s judgment makes clear that claimants cannot rely on a decision wholesale before the courts in establishing liability or expect the court to accept itself as bound by each and every recital therein. Indeed, many aspects of a decision are unlikely to be binding. However, there is a tightrope to be walked between identifying the non-binding aspects of a Commission decision and (in the UK courts at least) not committing an abuse of process by resiling from something previously admitted to the Commission without good cause. There is something here to consider for both claimants and defendants when considering case by case what the meaning and effect of any particular decision might be. This issue will undoubtedly arise, whether by way of preliminary issue or at trial, in every case following on from a Commission decision.
[1] Cases 1284/5/7/18 and 1290-1295/5/7/18 – Royal Mail Group Limited v DAF Trucks Limited & Others; BT Group PLC & Others v DAF Trucks Limited & Others; Ryder Limited & Another v MAN SE & Others; Suez Groupe SAS and Others v Fiat Chrysler Automobiles N.V. & Others; Veolia Environnement S.A. & Others v Fiat Chrysler Automobiles N.V. & Others; Wolseley UK Limited & Others v Fiat Chrysler Automobiles N.V. & Others; Dawsongroup PLC & Others v DAF Trucks N.V. & Others [2020] CAT 7. See: https://www.catribunal.org.uk/sites/default/files/2020-03/1284-1295_Trucks_Judgment_%5B2020_CAT_7%5D_040320.pdf
[2] This refers to the English common law doctrine concerning the prevention of unfair or prejudicial conduct during legal proceedings. In this case, the aspect of the doctrine under discussion was the rule that if a party relies on or admits a fact in one case, that party is prohibited from contending the contrary to be true in another case.
