FOC TL
2 years since the rjdecision appeal expiry date. or, 2 years from the loss (eg even if the rjdecision was 10 years ago, if the loss to consumers/citizens, carried on until 2 years ago, it can be foc’d)
non-foc claims’ TL, for competition breaches in the ordinary courts must be brought within six years
[final = binding=no longer appealable] decision of the CMA.ec, or a sectoral regulator (eg ofcom), or of the CAT.ecj on appeal from a decision of the CMA.ec, can be used to foc in the CAT.ecj or in the ordinary courts….. cat FOCS time limit is 2 years, from the latest of:
a. the appeal expiry date [against the cma.ec]
b. date the loss is sustained [even if is after the appeal expiry date]
look at [cma.ec.regulators.catappeals] final rjdecisions, to foc in [cat.ecj.ordcourts], on the basis that rjdecision is causing/caused loss of ew to wpi [citizens and/or to consumers]….use the wonderful southafrican wpi guidelines, as my model to draft all my coas
Gemalto Holding BV and others v Infineon Technologies AG and others [2022] EWCA Civ 782
In its judgment of 10 June 2022, the Court of Appeal upheld the High Court’s decision that a €480 million claim against manufacturers of smart card chips (“SCCs”) found to have infringed EU competition law was time-barred.[1]
it was common ground that there had been “deliberate concealment” of facts relevant to the cause of action of the Claimants (“Gemalto“). ruled that the essential elements of Gemalto’s claim could, on the facts, have been identified upon the announcement of a Statement of Objections (the “SO“) by the EC in Smart Card Chips, in combination with other materials available to Gemalto. The six-year statutory limitation period was therefore deemed to have started running from time of the SO being announced.
the concealment is the cartel: the suppliers of Gemalto’s suppliers concealed , from Gemalto, the content of the decision (that held that Gelmato was their victim). only when the decision was published in 2016 did Gemalto read the Decision and realised they had a claim for damages against their suppliers. Gemalto did have access however to the existence (not full content) of the SO (against these suppliers). CMA publicised not the SO but did publish a press release stating that ‘it believes, subject to defences, that there is prima facie case that certain persons have participated in an unlawful cartel regarding suppliers of SCCs… And Bloomberg, the same day, revealed the names of the suppliers that had received the SO,’ ….so Gemalto knew a lot… enough to start PAP v the suppliers from the date of the SO press release.
The Decision: 2014. various manufacturers of SCCs, including Infineon and Renesas, were found to have infringed competition law by coordinating the pricing of SCCs and exchanging competitively sensitive information between September 2003 and September 2005.
In July and September of 2012, Gemalto received two requests for information (“RFIs“) from the EC owing to its status as a purchaser of SCCs.
the EC issued a press release identifying that an SO had been issued to “a number of suppliers of smart card chips”. Although the press release did not name those suppliers, it was the subject of press attention and Bloomberg reported the same day that certain SCC suppliers, including Infineon and Renesas, had received the SO.
the Decision was finally published on 16 December 2016.
Gemalto in 2019 brought a follow-on damages claim in relation to SCCs that were the subject of the infringement against entities in the Renesas and Infineon groups (the “Defendants“). the preliminary issue hearing took place in January 2022 to determine whether Gemalto’s claim was time-barred.
prior to 9 March 2017, the applicable statutory limitation period is set out in the Limitation Act 1980 (the “Limitation Act“). Different limitation rules, set out in the Competition Act 1998 (the “Competition Act“).
The ordinary rule applicable to tort claims, set out in section 2 of the Limitation Act, is that claims are time-barred six years from the date on which the cause of action accrued. As the infringement in Smart Card Chips ended in September 2005, it was common ground that Gemalto’s claim would be time-barred.
However, where there is “deliberate concealment” of facts relevant to the cause of action (which is frequently alleged in follow-on damages claims of this nature and indeed was agreed between the parties in this case), the limitation clock only starts to run from the time a claimant discovered, or could with reasonable diligence have discovered, the relevant facts.
The key issues considered by the High Court and the Court of Appeal were:
- What test should be applied in determining at what point the limitation clock will start to run where there has been deliberate concealment?
- Was the existence of the SO capable of founding a reasonable belief in the existence of the infringement?
- Was adequate information available to Gemalto about the facts relevant?
Issue 1: What test should be applied in cases of deliberate concealment?
Two alternative tests were considered by both Bacon J and the Court of Appeal:
- The “statement of claim test”: “whether the claimant had, or could with reasonable diligence have, obtained such knowledge as would allow it and its professional (independent) advisors (stakeholders) properly to plead a claim that would not be liable to be struck out as unarguable or lacking a sufficient evidential basis”.
- The so-called “FII test” (established by the Supreme Court in Franked Investment Group Litigation v HMRC [2020] UKSC 47). the claimant must know about the (defendants) concealment “with sufficient confidence to justify embarking on the preliminaries to the issue of proceedings, such as submitting a claim to the proposed defendant, taking advice and collecting evidence.“
the Court of Appeal held that limitation begins to run when the claimant realises that it has a worthwhile claim; a worthwhile claim arises “when a reasonable person could have a reasonable belief that (in a case of this kind) there had been a cartel”. emphasised that what constitutes a “worthwhile claim” requires a common-sense application and does not, as Gemalto sought to argue, require “a complex balance of the chance of success”. following the FII decision test, it is no longer necessary, in concealment cases, for the claimant to have discovered every essential element of the claim that has been concealed in order for the limitation clock to start running. Provided that, in a case such as this, the claimant knows that there may have been an infringement of competition law and who participated in it, that is sufficient in order to embark on bringing a claim. It is not necessary to know all of the details.
Issue 2: Was it right to place reliance on the SO?
Before the High Court, (prior to the CA) , Gemalto, (to justify not bringing the claim earlier because they only learned years later that they had been victims of competition breaches. this is the concealment carried out by the suppliers, so that Gemalto would not bring a claim against them), argued that an SO cannot be relied upon, in principle, as the basis for pleading a claim in damages, because it only represents a preliminary step by the Commission; attempting to do so would make the pleading liable to be struck out. Gemalto argued that claimants cannot rely on the inference of an infringement without direct knowledge of the primary facts. Furthermore, Gemalto argued that the judicial policy objective of avoiding the filing of speculative claims meant that such a claim should be struck out.
HC: the mere announcement (not the content) of an SO by the Commission cannot provide sufficient information to plead a claim. However, it is reasonable in principle for a claimant to rely upon the announcement of the SO as a basis for a belief in the existence of the infringement referred to in that SO.
prior case law: in cases involving an alleged secret cartel, the courts will take a generous approach to the sufficiency of a pleading.(ie, the courts will admit the claim)
The CA agreed with HC that an SO may allow a claimant to identify that they have a worthwhile claim. “once the regulator publicises the fact that it believes, subject to defences, that there is prima facie case that certain persons have participated in an unlawful cartel, a claimant knows that it has a worthwhile claim. A claim pleaded on the basis of that information and inferences drawn from it would never be struck out without the court being able to see the (full content of the) Statement of Objections itself,
CA: the minimum details are usually covered in the press release announcing the issuance of the SO, and if not, are routinely available in the specialist and trade press”.
Issue 3: Could Gemalto have identified the essential elements of the cause of action when the SO was announced in April 2013?
It was common ground that the essential elements of Gemalto’s cause of action were:
(i) an agreement or concerted practice between undertakings;
(ii) having as its object or effect a prevention or distortion of competition that is appreciable;
(iii) which affects trade between EU Member States, or within the UK; and
(iv) which has caused loss and damage to the claimant.
It was also common ground that, in order to be able to plead elements (i) and (ii), the following matters need to be identified:[3]
- the identity of the undertakings;
- the coordination of market behaviour;
- the geographic scope of the coordination; and
- the time period that the coordination took place in.
Gemalto accepted that items 2 and 3 above (the identification of the potential coordination of market behaviour and the geographic scope of any such coordination) could be ascertained from the SO press release. Item 1 (the identity of the undertakings), whilst not available from the press release, was subsequently reported in a press article by Bloomberg.
However, Gemalto argued that item 4 (the time period of the potential -cartel- coordination) was not available to it as at the date of the SO press release in April 2013. However, the RFIs received (from the EC) by Gemalto in 2012 did identify a (cartel) period of 2003 to 2006 . Gemalto’s case was that that period was not sufficiently precise for the purposes of pleading a claim, as the RFIs indicated that the EC’s allegations related only from 2003 to 2005.
HC: it is typical for follow-on damages claims to rest on incomplete information, and that identifying all key elements of a cartel with precision would be an impossible burden for a claimant prior to disclosure. Gemalto could have legitimately pleaded an infringement covering the period 2003 to 2006 on the basis of the period identified in the two RFIs (2003 to 2005).
CA: to issue a claim, the complete details of the infringement do not need to be known, including as to the precise period of the infringement.
so, Gelmato lost the appeal.
Conclusion
EC press releases regarding SOs may give claimants adequate information to bring a claim. Thus, the limitation clock does not start to tick when the EC has publicised its Decision.
Different limitation rules in the Competition Act apply after 9 March 2017. The effect is that the period of investigation by the relevant competition authority is not to be counted for limitation purposes. If a finding of infringement is made, the investigation period is only deemed to end one year after the competition authority’s decision becomes final. Had those rules applied to Gemalto’s claim, it would not have been time-barred.
Gemalto v. Infineon:
the UK Court of Appeal considered the application of section 32(1)(b) of the Limitation Act 1980 (LA 1980) in a follow-on damages claim. Dismissing the claimants’ appeal, the Court of Appeal found that the claim was time-barred under the test laid down by the Supreme Court in Test Claimants in the Franked Investment Group Litigation v. HMRC.
The Gemalto judgment reaffirms the application of the FII test to section 32(1) of the LA 1980, over the statement of claim test applied by the Court of Appeal in Arcadia Group Brands v. Visa and DSG Retail v. Mastercard.
Purpose and history of the LA 1980
Section 32 of the LA 1980 protects prospective claimants in actions: (i) for fraud; (ii) arising from mistake; or (iii) in cases when the facts or existence of the cause of action were deliberately concealed. It prevents limitation from running until the claimants have discovered the fraud, mistake or concealment. Section 32 ensures that “a claimant is not disadvantaged, so far as limitation is concerned, by reason of being unaware of the circumstances giving rise to his cause of action”, while striking a reasonable balance with the competing aim of “protecting defendants from stale claims”, according to Canada Square Operations v. Potter.
Development of cartel damages claims
The right to bring a private action for damages arising from an infringement of competition law is well-established in English law. As of 2001, there were, however, no reported cases of damages being awarded in any competition damages claims, leading the government to introduce reforms to improve claimants’ rights of redress, including the statutory right for claimants to bring follow-on claims in the specialist Competition Appeal Tribunal (CAT), in addition to their existing right to bring such claims in the High Court (section 47A of the Competition Act 1998) (CA 1998). This led to a bifurcation in the limitation periods for follow-on damages claims before the High Court and the CAT.
Claims in the High Court were subject to the LA 1980, providing claimants with six years from the date on which the cause of action accrued to bring a claim, postponed if the material facts of the infringement were deliberately concealed by the defendant, according to sections 2 and 32(1).
Claims in the CAT were governed by the Competition Appeal Tribunal Rules 2003 and the CA 1998, providing claimants with two years to bring a claim from the ‘relevant date’, according to Rule 31, defined as the later of the date on which cause of action accrued, or the date on which the infringement decision becomes final, which is the date of the decision, plus the period for issuing an appeal, or if the decision is appealed, on conclusion of the appeal itself.
In due course, parallel jurisprudence developed as the courts and the CAT sought to interpret the application of the limitation provisions in each of the forums.
Judgments interpreting the CAT limitation rules found that the ‘relevant date’ may vary between defendant addressees of the same infringement decision depending on: (i) whether a defendant had issued an appeal; (ii) if the appeal related to the infringement itself, or the fine or remedies imposed; and (iii) the progress of that appeal. This led to uncertainty for claimants. Further, claimants wishing to bring follow-on claims prior to the expiry of the ‘relevant date’ could only do so with permission of the CAT, giving rise to the threat that prospective claims in the UK would be defeated by defendants seizing courts in other jurisdictions.
Meanwhile, a series of claims issued in the High Court raised questions regarding the application of the LA 1980 to competition claims. In Arcadia and DSG, the Court of Appeal confirmed that the statement of claim test also applied to competition claims, such that limitation ran from the time when a claimant had, or could with reasonable diligence have, sufficient knowledge to properly plead a claim that would not be liable for strike out.
Changes to the law on limitation for cartel damages claims
The limitation regime for cartel damages claims was subsequently amended twice, by the Consumer Rights Act 2015 (CRA 2015) and by Directive 2014/104/EU (the Damages Directive) in 2017.
The CRA 2015 introduced reforms to the CAT, including a collective proceedings regime and the right for claimants to bring standalone claims in the CAT. The CRA 2015 further provided that the LA 1980 applied to any claims issued in the CAT with a cause of action arising on or after 1 October 2015, thereby effectively aligning the limitation period for private damages claims in the CAT with that in the High Court.
The Damages Directive was implemented into UK law under schedule 8A to the CA 1998. It provides a single limitation period for all competition damages claims with a cause of action arising on or after 9 March 2017, whether follow-on, standalone, individual or collective, and whether in the High Court or the CAT. This regime is separate to, and replaces, the LA 1980 as it applied to competition damages claims. The limitation period under Schedule 8A is six years, beginning with the later of the day on which the infringement of competition ceases, or the ‘claimant’s day of knowledge’ (“the day on which the claimant first knows or could reasonably be expected to know (a) of the infringer’s behaviour, (b) that the behaviour constitutes an infringement of competition law, (c) that the claimant has suffered loss or damage arising from that infringement, and (d) the identity of the infringer”).
FII and the worthwhile claim test
In FII, a tax case, the Supreme Court considered the application of section 32 of the LA 1980 to a claim involving mistake under section 32(1)(c). The Supreme Court found that limitation begins to run from the point in time when a claimant knows, or could with reasonable diligence know, that it made a mistake with sufficient confidence to justify embarking on the preliminaries to the issue of proceedings.
In subsequent cases, the Court of Appeal did not have an opportunity to consider the application of the test in FII to competition damages claims. In DSG, handed down a few months later, the Court of Appeal applied the statement of claim test. The Court of Appeal in OT Computers v. Infineon Technologies, (a case in which Foxton J, at first instance, had applied the statement of claim test), did not opine on whether the FII test applied, as this issue was not on appeal.
The Gemalto decision
The applicable test under section 32(1)(b) of the LA 1980 to competition damages claims was considered by the Court of Appeal in Gemalto. The claimants issued proceedings following on from an infringement decision of the European Commission dated 3 September 2014. As the claim was issued in the High Court and related to a cause of action predating the Damages Directive, the applicable limitation statute was the LA 1980.
Following a preliminary issue trial in January 2022, the High Court held that the claim was statute barred under section 32(1)(b) of the LA 1980, as Gemalto had issued its claim more than six years after it had discovered the infringement, or could with reasonable diligence have discovered the infringement. By the time of the announcement of the Statement of Objections, taking into account all other information available to it, Gemalto had sufficient material to be able to form a reasonable belief as to the essential elements of a claim for damages arising from the cartel and to plead a claim.
On appeal, the Master of the Rolls held that the worthwhile claim test formulated in FII applied to deliberate concealment cases. The Court of Appeal found that limitation begins to run “when the claimant recognises that it has a worthwhile claim, and that a worthwhile claim arises when a reasonable person could have a reasonable belief […] that there had been a cartel”. Once a claimant knows that there may have been a cartel, it can embark on the preliminaries to the issue of proceedings, such that limitation begins to run.
The Master of the Rolls noted that the test in FII does not entitle a claimant to delay the start of the limitation period until it has certainty about its claim succeeding, or the existence or details of the cartel – limitation will start to run when the claimant discovers that a cartel may have been concealed. On the facts, the Master of the Rolls held that Bacon J was correct to find that the proceedings were time barred under the LA 1980, applying the test in FII. Lord Justices Green and Birss agreed with the Master of the Roll’s judgment.
Obiter, Green LJ commented on the implication of this finding on competition damages cases, concluding that it would be inconsistent with FII to interpret the LA 1980 as deferring the running of time until the publication of the infringement decision. The issue of a Statement of Objections was a “pivotal” moment following which “all possible victims of the defendant know that the regulator has reached the point when it considers that there is a real case to answer”.
Ultimately, the Gemalto judgment provides welcome affirmation of the application of the worthwhile claim test in FII to competition damages claims.
Secrecy is at the heart of cartels … As a result, victims are often unaware that they have been harmed financially until details of the cartel come to light during regulatory investigations. This information asymmetry pervades CL disputes, resulting in defendants being required to disclose vast amounts of data and documents.
Additionally, the secretive nature of cartels….when does the limitation clock begin to tick?:
when relevant facts are ht of action have been revealed :
section 2 of the LA(limitation Act) 1980: “an action founded on tort(1) shall not be brought after the expiration of six years from the date on which the coa accrued.” This is usually the date of publishing/announcing of sufficient relevant facts [of an infringement decision], by a public regulator [eg cma, or ec
section 3 LA: However, where “any fact relevant has been deliberately concealed, from him, by the defendant…the period of limitation shall not begin to run until the plaintiff has discovered the… concealment… or could with reasonable diligence have discovered it”
if a (potential) claimant fails to discover (because of lack of reasonable diligence) the relevant facts, prior to the regulator’s announcement [of an infringement decision], the limitation clock may have expired, since it started ticking the moment he should have discovered it using reasonable diligence…. thus, reasonable diligence is crucial, as suspends the clock’s ticking, and i do not to lose the right to claim on time limit grounds.
On 19 July 2019, Gemalto issued a foc against Infineon and Renesas for damages arising out of an infringement of competition law by the defendants for the supply of smart card chips. The foc was based on the EC’s infringement decision dated 3 September 2014 (the Decision).
On the basis that the cartelists coordinated their prices between 2003 and 2005, ordinarily, limitation would have expired by 2011. The question was :
a. whether the date [when gelmato could have discovered the relevant facts by using reasonable diligence] was the date of the Decision (sept 2014). if so, Gelmato is still within the time limit to issue a claim)
or
b. whether the date [when gelmato could have discovered the relevant facts by using reasonable diligence], was before the ec Decision, because had Gemalto been reasonably diligent, it could have discovered the relevant facts to claim, prior to the announcement of the Decision (sept 2014). if so, the time limit for Gelmato to foc, is expired.
The legal test
Before considering the facts of the case, it is worth setting out the applicable legal tests as to the operation of section 32(1) Limitation Act 1980 as summarised by Bacon J. in Gemalto and as derived from a line of case law.(4)
Firstly, the judge established that limitation would run from the moment in time at which the claimant could plead sufficient facts to establish the following constituent elements of a competition law damages claim:
“(i) an agreement or concerted practice between undertakings; (ii) having as its object or effect a prevention or distortion of competition law that is appreciable; (iii) which affects trade between Member States, or within the UK; and (iv) which has caused loss and damage to the claimant.“(5)
Secondly, the particular facts that would enable a claimant to plead to (i) and (ii) above are:
“(i) the identity of the undertakings who had participated in the agreement; (ii) the fact that the agreement involved the coordination of market behaviour for [in this case, smart card chips] in breach of the EU competition rules; (iii) the fact that the geographic scope of the cartel extended to the EEA; and (iv) the time period covered by the agreement.”(6)
It was conceded by Gemalto that knowledge of these facts would also permit it to infer that the cartel had affected trade between Member States, or within the UK. Based on then knowing that Gemalto had purchased cartelised products, knowledge of loss and damage could also reasonably be inferred.
In addition, as to the requisite level of knowledge, the judge held that the appropriate test was the so-called ‘statement of claim test’. In other words, a claimant would require knowledge of facts that would permit it to properly plead its case, benefitting from a judicial acknowledgement of the asymmetry of knowledge of information in competition law damages claims. It is not necessary for the claimant to be certain of these facts: a reasonable belief, on an objective basis, in their accuracy is sufficient.
The facts
The judge recognised that the application of the legal tests was a fact-sensitive question. The judgment should accordingly be read as pertaining primarily to the smart card chips cartel and the individual circumstances of the claimant, Gemalto.
In short, the judge held that Gemalto had sufficient knowledge of the facts of the cartel for it to plead properly to a damages claim prior to the announcement of the Decision on the basis of two key events:
- Firstly, during the EC investigation, Gemalto as a direct purchaser of smart card chips had received two Requests for Information (RFI) from the European Commission in 2012. The RFIs indicated the market – smart card chips – as well as the suspected time period of the infringement and its EEA scope. They also contained specific questions as to the manufacturers of smart card chips, namely Philips, Samsung, Renesas and Infineon. The RFIs were widely discussed within Gemalto.
- Secondly, on 22 April 2013, the EC issued a Statement of Objections (SO) to the smart card chip manufacturers, which was also discussed internally within Gemalto.
While the judge held that the RFIs provided many of the required factual details for Gemalto to plead its claim, it was the issuing of the SO that put Gemalto in a position to reasonably believe that it had suffered loss and damage. As an SO is issued by the EC following a detailed review of the evidence before it and based on a strong belief that the addressees of the SO breached EU competition law, a claim filed after the issuing of as SO would not have been speculative in this regard.
The judgment
The judge ultimately found that (a) Gemalto had sufficient facts available to properly plead its case and (b) could have been sufficiently confident that a breach of European competition law had occurred by the time the EC issued the SO. Accordingly, the limitation period had expired in April 2019, six years after the SO, and three months before Gemalto’s claim was filed in July 2019.
Implications of the judgment
By its very nature, the assessment of whether limitation has started running prior to the publication of an infringement decision is highly fact-sensitive. For example, many prospective claimants will not have been issued with RFIs that provided key information for them to plead their case prior to the adoption of a decision, and cartelists that elect to settle their cases with the regulator will frequently not be issued with an SO. Even where an SO is issued, the announcement will not normally contain sufficient information for claimants to prepare pleadings without the benefit of having been provided with further information during an RFI process. A careful analysis of specific circumstances will always be required.
However, the case serves as a reminder that parties to competition law damages claims should carefully consider whether the limitation period has already started running prior to the adoption of an infringement decision, particularly where claims are filed towards the end of the six-year period following the decision, where there are parallel proceedings in other jurisdictions and where the investigation by the regulator was drawn out. In some cases, a claimant will accordingly be required to either enter into standstill agreements with defendants or to issue a claim and stay proceedings until a decision is adopted to preserve its rights.
Parties should also be mindful of the associated costs of bottoming out a limitation defence: being highly fact sensitive, limitation disputes will usually be determined as a preliminary issue involving detailed witness statements, legal submissions and a hearing.
Lastly, it should be noted that the impact of the judgment is limited to claims arising out of cartel behaviour that occurred prior to 9 March 2017.(7) Limitation periods for cartels that occurred after this date will start running from the date the anti-competitive behaviour ended and the claimant has sufficient knowledge to properly plead its case (as before), but, importantly, will be suspended during an investigation of the cartel by a competition authority, including any subsequent appeals,(8) and during consensual dispute resolution.(9) Going forward, in most cases limitation will therefore run for a period of six years from the date one year after the decision becomes final (i.e. when the time period for appealing the decision has expired or, if the decision is appealed, any avenues for appeal have been exhausted)