Illegal Cartel Damages Claims Launched Too Late

In a ruling which underlined that, in commercial litigation, timing can be all important, alleged victims of an illegal price-fixing cartel have had their compensation hopes dashed by the Supreme Court after they launched proceedings outside the statutory time limit.

The European Commission had, in 2003, found that company A had engaged with others in an illegal cartel affecting the market in electrical, mechanical, carbon and graphite products. No penalty was imposed on company A, which had acted as a whistleblower; however others involved in the cartel were heavily fined.

A number of members of the cartel, although not company A, had challenged the Commission’s decision; however their appeals were dismissed by the European Court of Justice (ECJ) in December 2008. Various companies that claimed to have suffered financial loss due to the cartel’s activities launched ‘follow-on’ proceedings against company A in December 2010 under Section 47A of the Competition Act 1998.

By Section 47A(8) of the Act, such proceedings had to be instituted within two years of the exhaustion of avenues of appeal against the Commission’s decision. In those circumstances, an issue arose as to whether time started to run in December 2008, when the ECJ dismissed the cartel members’ appeal, or in February 2004, when time expired for an appeal by company A.

The Competition Appeal Tribunal found that the companies’ claims were time-barred; however, that ruling was subsequently overturned by the Court of Appeal, which ruled that their claims against company A could proceed.

In upholding company A’s appeal, the Supreme Court found that the Commission had reached a series of decisions addressed to each of those involved in the cartel. Time had therefore begun to run on the expiry of the period in which company A could have lodged an appeal to the ECJ. In those circumstances, the companies’ claims had been launched more than four years out of time.