The recent judgment in Provimi v Aventis has established that where there is an English element to a cartel, a claimant may now bring a private civil action in London in respect of all its European losses, instead of having to pursue separate claims in multiple jurisdictions ( EWHC 961 (COMM)). This represents a real break-through in competition litigation where the costs and procedural difficulties of pursuing multiple proceedings has often been a deterrent for claimants.
This decision, coupled with the coming into force of the Enterprise Act 2002 (2002 Act) on 20 June 2003, greatly increases the scope for legal challenge in this area. The 2002 Act, among other things, introduces a new offence for involvement in "hard-core" cartel activity, and provides the option of bringing a case in the Competition Appeal Tribunal (CAT) as well as in the High Court (see also feature article "Enterprise Act: Competition aspects", www.practicallaw.com/A29048 and News brief "Criminalisation of cartels", www.practicallaw.com/A27272).
A number of vitamin manufacturers were recently made to pay for their cartel activities during the 1990s. Their exposure resulted in F. Hoffmann-La Roche Ltd, in particular, being fined US$500 million by the US Department of Justice (www.practicallaw.com/A12144) and EUR462 million by the European Commission (the Commission) for infringing Article 81 of the EC Treaty (prohibition against anti-competitive behaviour) (www.practicallaw.com/A20789), the largest fines ever imposed by either body.
Meanwhile, the parent claimant company, Provimi B.V., which had bought vitamins from the cartelists across Europe, decided to bring a private action for damages against the cartelists, if possible, in a single European jurisdiction (see also "Cartel damages" (www.practicallaw.com/A31086), Bulletin, Competition, this issue). The claimants chose the English courts because of the procedural advantages in the English system, including the ability to seek discovery from the cartelists, the experience of the English courts in awarding damages (including exemplary damages) in complicated cases and the greater speed of the English court process leading to the likelihood of an earlier trial date.
The claimant's English and German subsidiaries had been affected by the cartels' pricing policies. The sales relating to the German claims took place in Germany between German companies. The cartelists, who were joined as defendants to these claims, were domiciled in France and Switzerland respectively. In order to establish the English courts' jurisdiction in respect of these claims, an English "anchor" defendant was required. The German purchasing companies therefore sued the cartels' English subsidiaries on the basis that their activities in England had been essential to the successful operation of the cartels throughout Europe and that, but for the English subsidiaries' adherence to the cartel prices in England, the German companies would have been able to buy vitamins in England (or elsewhere as a consequence of the normal operation of competition) at the appropriate, non-cartel-affected price.
The cartelists challenged this, arguing that the German sales had no connection with England and that the English subsidiaries could not be held liable for wider losses caused by the cartels unless it could be established that they had implemented cartel prices, knowing of the cartels' existence.
The High Court ruled that:
The German purchasing companies could bring the claims in England against the cartels' English subsidiaries for losses suffered in relation to purchases that had taken place in Germany.
There was no need to prove knowledge on the part of the cartelists' subsidiaries and that the mere implementation of the cartels by the subsidiaries was enough to establish their liability.
The court relied on the EC competition concept of an "undertaking". Although this term is not defined in the EC Treaty, the European Court of First Instance has found that the concept includes all relevant economic units forming a unitary group and is not confined to the legal concepts of ownership or control (Case T-352/94 Mo Och Domsjö AB v Commission  ECR II 1989). The Commission had addressed its decision to the parent company cartelists (see above), but it was delivered in respect of the behaviour of the "undertaking" as a whole to which they belonged; namely, the corporate group as a whole, including their English subsidiaries. The court therefore held that the claims could proceed against an English subsidiary as part of the "undertaking" that infringed Article 81.
Several issues remain to be resolved in this case, including questions of causation and damage, and the cartelists have announced that they will appeal the jurisdiction point.
Under the 2002 Act, parties will, in future, be able to pursue competition claims in either the CAT or the High Court, and transfers will be possible between the two (see also feature article "UK competition complaints: Taking a stand", www.practicallaw.com/A30353). The CAT is designed to provide a venue and judges with greater expertise in determining competition cases with their often difficult and esoteric economic issues. However, the High Court has, at least for the time being, much more experience of dealing with interim applications (such as jurisdiction challenges) and issues of causation and damage. With the option of taking action in more than one tribunal and the possibility of transfers, the tactics for pursuit of competition proceedings will become ever more important.
A recent US development could also alter radically the future of international private enforcement of competition law violations. In another case brought against F.Hoffmann-La Roche Ltd for its organisation of the vitamins cartels, the District of Columbia Circuit Court of Appeals held that international purchasers of cartel-affected products could bring claims in respect of worldwide purchases in the US, as the cartels had involved fixing prices in the US as well as abroad (Empagran SA et al v F. Hoffmann-La Roche Ltd et al, www.practicallaw.com/A28597). The fact that foreign buyers had bought vitamins solely in foreign markets did not mean that they lacked standing to sue.
This decision conflicts with earlier US case law and is likely to be ultimately determined by the US Supreme Court where there may be considerable political pressure to overturn it. In the meantime, the uncertainty in relation to the US position and the possibility of triple damages (available in the US for breaches of anti-trust law) increases the value of any claim or settlement being made in respect of an international cartel.
Diana Good is a partner, Michael Sanders is a managing associate and Patrick Boylan is an associate at Linklaters. Linklaters represented Provimi B.V. and another victim of the cartels in this case.