First standalone damages claim transferred to the CAT from the High Court

In brief

On 30 November 2015, Mr Justice Barling made the first order transferring a standalone damages claim from the High Court to the Competition Appeal Tribunal (CAT). The transfer became possible after section 16 Enterprise Act 2002 was fully brought into effect under the Consumer Rights Act 2015 (CRA). The £100m claim will now go to trial on 25 January 2015. Mr Justice Barling specifically clarified that the limitation rules applicable in the CAT did not apply to existing claims being transferred into its jurisdiction.

The damages action

Sainsbury’s is claiming damages for losses allegedly suffered because of the UK multilateral interchange fee (MIF), in place since 2006. Interchange fees are charged by a cardholder’s bank (the issuing bank) to a merchant’s bank (the acquiring bank) for each sales transaction at a merchant outlet with a payment card.

In 2007, the European Commission adopted a decision finding that MasterCard’s multilateral fee arrangements across Europe, (the “intra-EEA fall back interchange fee”) restricted competition and breached Article 101(1) Treaty on the Functioning of the European Union (TFEU) by artificially inflating the basis on which acquiring banks set their charges to merchant banks. The Commission did not impose fines on MasterCard but prohibited the company from applying its intra-EEA fall back fees for consumer credit and debit cards and from adopting measures having a similar effect. The Decision was upheld by both the General Court and the Court of Justice of the European Union (ECJ).

Sainsbury’s damages action is only in relation to the UK MIF. This arrangement was not the subject of the Commission Decision, but Sainsbury’s argues that the infringing behaviour in the Decision directly parallels the operation of the UK MIF, which therefore in any event breached competition rules. The allegedly high rate of the UK MIF caused it to pay excessive merchant fees. Given the pre-CRA, section 47A Competition Act 1998 regime, Sainsbury’s had no choice in December 2012 but to launch its standalone claim in the High Court.

The legislative changes

Until 01 October 2015, when the CRA significantly expanded its jurisdiction, the CAT could only hear “follow on” claims. These claims follow on from a pre-existing finding of a competition law infringement by the UK competition authorities or the European Commission. From that date, section 47A was revised to enable the CAT also to hear standalone and hybrid claims.

On the same date, the CRA and the Section 16 Enterprise Act Regulations (the “2015 Regulations”) brought into effect further powers for the High Court to transfer follow on, stand alone or hybrid competition damages claims to the CAT.

The transfer

In November 2015, Mr Justice Barling wrote to the parties in his capacity as a High Court Judge to propose taking advantage of these new provisions to transfer the claim to the CAT. When considering whether to make an order to transfer a claim from the High Court to the CAT, the judge must consider all of the circumstances of the case, including the wishes of the parties. In his judgment, Mr Justice Barling noted specific features of the CAT which make it an attractive forum for hearing competition litigation claims. These include the often complex and technical nature of the claims and the frequent requirement for expert economic evidence, the possible multi-disciplinary constitution of the CAT’s panel (for example, comprising both lawyers and leading economists) and the “outstanding logistical and legal support provided by the CAT staff and legal assistants”. An additional important factor was that the CAT was able to hear the claim within a similar timescale to that of the High Court, and Mr Barling himself could sit as Chairman of the CAT panel.

The defendants’ solicitors agreed to the transfer. While in principle in favour of a transfer, the claimant’s solicitors asked for clarification that the CAT’s interim limitation rules would not operate to limit the scope of the claim to two years, and queried the effect of the transfer on costs.

Limitation

The claimant’s solicitors were concerned that the transitional limitation arrangements set out in Rule 119 of the 2015 CAT Rules would have the effect of time barring much of the claim. Rule 119 states that the limitation periods under the 2003 CAT Rules continue to apply to claims arising before 01 October 2015. Commentators have suggested that these transitional provisions may profoundly limit the ability of claimants to bring standalone claims in the CAT.

Under Rule 31 of the 2003 CAT Rules, a two year limitation period operates from the date that the decision becomes final after any appeal or the expiry of the deadline within which a decision can be appealed. Alternatively, a claimant has two years to bring a claim from the date on which the cause of action accrued. Therefore, if Rule 119 did apply, the CAT would only have jurisdiction “in respect of that portion of the present claim for which the cause of action arose less than two years prior to the commencement of the claim”. In the High Court, the Limitation Act 1980 provides that a comparable claim may be brought within six years from the accrual of the cause of action.

Mr Justice Barling held that, regardless of the scope of Rule 119, it did not apply in this case. In his view, Rule 119 clearly applied only to claims originating in the CAT, not to those which were commenced in the High Court and transferred.

Conclusion

The judgment is robustly formulated to dispense with some of the major concerns raised in relation to the late insertion of Rule 119 into the 2015 CAT Rules and to encourage transfers. We speculate that the judge has taken this opportunity, and so soon after the CRA came into force, to circumvent the apparent anomaly in relation to limitation periods for bringing standalone claims in the CAT. As part of the purpose of the CRA was to expand the jurisdiction of the CAT as a forum to hear a wider scope of competition claims, this judgment makes that outcome far more likely. The judge’s dismissal of the relevance of Rule 119 to existing High Court claims now paves the way for more proceedings to transfer from the High Court to the CAT in appropriate cases.

It remains the case that the new CRA opt-in and opt-out (class) actions can only be launched in the CAT, and that standalone cases launched in the CAT will remain subject to the interim limitation periods. The “precise ambit” of Rule 119 in relation to such claims will no doubt be the subject of dispute in future cases.

However, the way now seems clear for standalone individual claimants to take advantage of the more favourable limitation periods in the High Court, before applying to transfer proceedings to the CAT to take advantage of that forum’s particular competition expertise. Where they do not apply to transfer the case, the judge may seize the initiative and raise the issue of his or her own volition.

Sainsbury’s Supermarkets Limited v MasterCard Incorporated and other 2015 EWHC 3472 (Ch)