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||Neutral Citation Number:  EWHC 3346 (Comm)
||Case No: 2011 FOLIO 1442
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
||Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
THE HONOURABLE MR JUSTICE FLAUX
|| (1) BORD NA MONA HORTICULTURE LIMITED
(2) BORD NA MONA PLC
||- and -
||(1) BRITISH POLYTHENE INDUSTRIES PLC
(2) COMBIPAC BV
(3) BISCHOF + KLEIN GmbH & CO KG
(4) FLS PLAST A/S
Kieron Beal QC and Fraser Campbell (instructed by Paul Hastings LLP) appeared on behalf of the Claimants.
Paul Lasok QC and Ben Rayment (instructed by Maclay, Murray & Spens LLP) appeared on behalf of the Defendants.
Hearing dates: 24 and 25 September 2012
HTML VERSION OF JUDGMENT
Crown Copyright ©
The Honourable Mr Justice Flaux:
Introduction and background
- The first defendant ("BPI") applies to strike out the claim and/or for summary judgment in its favour. In addition the second defendant ("Combipac") applies to set aside service of the claim form upon it outside the jurisdiction, on the basis that if the claim against BPI falls away, this court has no jurisdiction over Combipac.
- The claimants are companies incorporated in the Republic of Ireland. The Bord Na Mona was formerly a statutory corporation established under the Irish Turf Development Act 1946. The group provides a wide variety of horticultural and environmental services as well as supplying horticultural and biomass energy products such as peat for energy production. Over a number of years the claimants have purchased substantial quantities of plastic industrial bags, into which the claimants package their supplies of peat and other horticultural products, from companies in the United Kingdom and Ireland (including from BPI or its subsidiaries), the Netherlands (including Combipac another subsidiary of BPI), Germany, Denmark, Sweden and Austria. The majority of these bags were purchased from BPI or its subsidiaries, particularly in the period 1990 to 2002.
- The claims by the claimants in these proceedings concern alleged breaches of what is now Article 101 of the Treaty on the Functioning of the European Union (formerly Article 81 of the EC Treaty) which provides as follows:
"The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production, markets, technical development, or investment;..."
- The claimants rely upon the decision of the European Commission COMP/38354 of 30 November 2005 that, in breach of what was then Article 81, the defendants amongst others had participated in a cartel operating in the industrial bags sector during the period January 1982 to June 2002. The Commission found that Combipac (which was a subsidiary of BPI being wholly owned by other subsidiaries of BPI) had participated in the cartel from January 1982 to 9 November 2001 and that BPI had participated from 25 April 1997 (when Combipac acquired Wavin an active participant in the cartel previously) until 9 November 2001. In November 2001, BPI contacted the European Commission and voluntarily provided evidence of the infringement in a so-called leniency application. In return for providing details of the cartel and their participation in it, BPI and Combipac avoided liability for a fine of 52.95 million Euros. Importantly, at the present stage of these proceedings, prior to disclosure, BPI has yet to disclose its leniency application or any of its dealings or negotiations with the Commission. Furthermore, the published version of the Decision contains a number of redacted passages where individuals are named. Although such redaction is quite normal in a regulatory context, for reasons I will elaborate below this does make it difficult for the Court or the claimants to discern at this stage, prior to disclosure, what precise findings the Commission has made as to the involvement of senior management of BPI in the activities of the cartel.
- The Commission found that the German, French, Spanish and Benelux markets constituted the relevant territory in which the cartel operated for the purposes of its decision. In the present case, the critical question is whether, as Mr Lasok QC contends on behalf of BPI and Combipac, the Decision of the Commission precludes the claimants from contending that either anti-competitive conduct of the cartel occurred not just in the markets in France, Germany, Benelux and Spain to which the Decision relates, but in the markets in the United Kingdom and Ireland or that the operation of the cartel in the markets in France, Germany, Benelux and Spain had the effect of preventing, restricting or distorting competition in the neighbouring markets in the United Kingdom and Ireland. As set out in more detail hereafter, the claimants put their case in both ways.
- Mr Lasok contends that the Decision is that the only markets in which the members of the cartel adopted anti-competitive practices were France, Germany, Benelux and Spain and that to the extent that the claimants seek to argue that the cartel operated in the United Kingdom and Ireland or that, even if it was operating only in the German, French, Spanish and Benelux markets, the cartel activity had an effect on neighbouring markets in the United Kingdom and Ireland, that case is contrary to the Decision of the Commission and thus in breach of Article 16 of the Modernisation Regulation No 1/2003 which provides:
"Uniform application of Community competition law
1. When national courts rule on agreements, decisions or practices under Article 81 or Article 82 of the Treaty which are already the subject of a Commission decision, they cannot take decisions running counter to the decision adopted by the Commission. They must also avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings it has initiated. To that effect, the national court may assess whether it is necessary to stay its proceedings. This obligation is without prejudice to the rights and obligations under Article 234 of the Treaty."
- For that reason, amongst others, Mr Lasok contends that, however the claimants' claim against BPI is formulated, it is unsustainable and should be struck out, alternatively summary judgment should be entered for BPI. Mr Beal QC for the claimants contends that none of the ways in which the claim is put is contrary to the Decision of the Commission, rather the claimants rely upon the decision and seek to supplement it by further evidence not before the Commission which will demonstrate either cartel activity in the United Kingdom and Ireland or that the cartel activity found by the Commission had an effect on the market in the United Kingdom and Ireland and/or caused the claimants to pay artificially high prices for the bags they purchased from the subsidiaries of BPI.
- Before considering the rival contentions of the parties in more detail, I propose to summarise the Decision of the Commission to the extent that it is relevant to the issues I have to determine and to deal with some of the conclusions and inferences which the parties invited me to draw from the Decision. For obvious reasons, I do not propose to burden this judgment with more citation from the Decision than absolutely necessary to draw out the salient points. However, I have considered and read the whole Decision carefully and borne it in mind in reaching my decision.
The Decision of the European Commission
- Article 1 of the Decision stated as follows:
"The following undertakings have infringed Article 81 of the Treaty by participating, during the periods indicated, in a complex of agreements and concerted practices in the plastic industrial bags sector in Belgium, Germany, Spain, France, Luxembourg and the Netherlands, consisting in the fixing of prices and the establishment of common price calculation models, the sharing of markets and the allocation of sales quotas, the assignment of customers, deals and orders, the submission of concerted bids in response to certain invitations to tender and the exchange of individualised information:
(a) Combipac B.V., from 6 January 1982 until 9 November 2001, and British Polythene Industries PLC, from 25 April 1997 until 9 November 2001;"
- The Article then goes on to set out the dates between which the other participants in the cartel had participated, many of them for the entire period from January 1982 to June 2002. In the body of its Decision, set out in a series of Recitals, the Commission found that, although the cartel structure included an overall group, Valveplast, and regional or functional subgroups which appeared to be distinct, for various reasons, including that the members of Valveplast and the subgroups were essentially the same and that quotas fixed at Valveplast level were reflected at subgroup level, the cartel as a whole formed a consistent and coordinated entity (Recital ). The Commission then found that the conduct of the various members of the cartel in reality constituted a single infringement in the form of a series of anticompetitive practices throughout the entire period the cartel operated and not a number of separate infringements (Recital ).
- The Commission found that although there were four categories of plastic industrial bags, they form a relatively homogenous group and constituted the market of plastic industrial bags (Recital ). Since the mid 1970s one of those categories, FFS (form, fill and seal) bags, has gradually predominated. As a consequence, as the Commission found at recital  as demand for FFS bags has increased, demand for the other types of bags has decreased, in other words, as Mr Beal submitted, these products are more or less substitutable one for another.
- As regards the geographical area affected by the cartel, the Commission made an important finding at Recital  which both sides relied upon in their submissions before me:
"The evidence in the Commission's file demonstrates that the industrial bag producers concerned together adopted anticompetitive practices affecting the German, French, Spanish and Benelux markets. Although some evidence appears to show that arrangements occasionally concerned other countries, the Commission does not have any evidence in its possession suggesting that these were anything but isolated instances. On the basis of the evidence in the file, the Germany, French, Spanish and Benelux markets constitute the relevant territory for the purposes of this Decision."
- Mr Lasok made the point that it is difficult to track down within the Commission's Decision what the "isolated instances" concerning other countries were but submitted it may be a reference to recital  which referred to the block bags subgroup "marginally" covering the United Kingdom, Switzerland, Sweden and Italy. This may well be right but what this demonstrates is that, as Mr Beal submitted, the Commission has not conducted an exhaustive investigation into activity in other countries, specifically the United Kingdom and Ireland, a matter to which I will return when I consider the parties' submissions in more detail below.
- Mr Beal sought to contend that the Commission had decided that Valveplast had a wider European dimension than the German, French, Spanish and Benelux markets identified in the Decision. He drew my attention to recital  which referred to a document created in the early 1980s concerning the setting up of Valveplast which was entitled "Some basic points regarding an agreement to regulate the supply of valve bags in Western Europe" which then laid down rules for a system of quotas, the setting of minimum prices and allocation of major customers.
- I agree that there are references in the Decision to what might be described as a wider pan-European aspect of Valveplast, but it seems to me that the claimants are stuck with recital  in terms of interpreting the Decision, which says that on the evidence available to the Commission, the cartel adopted anticompetitive practices affecting the particular markets it identified. For reasons I will elaborate later, that does not preclude the claimants from seeking to establish by further evidence beyond that before the Commission that there was cartel activity in other markets or that the cartel activity to which the Commission was referring affected neighbouring markets, but in terms of what the claimants can read into the Decision, as I say, they are stuck with recital .
- Mr Lasok sought to suggest that BPI had not actively participated in the cartel but was only responsible vicariously for its subsidiaries. The Commission set out the structure of the BPI group and the information provided by BPI as to responsibility and reporting to senior management at recitals  to :
"(80) The ultimate parent company of the BPI group, British Polythene Industries PLC, based in the United Kingdom, took its current name in 1990 (it was previously called Scott & Robertson Plc). It began developing its industrial bags business in 1983 when it acquired Anaplast Limited.
(81) The industrial bags business is divided between the British part and the continental part. The business in the United Kingdom and Ireland are the responsibility of the subsidiary British Polythene Limited. That company developed through the acquisition of several other firms (Anaplast in 1983, Visqueen in 1988, Flexer Sacks in 1993 and CVP in Ireland in 1993).
(82) As far as continental operations are concerned, British Polythene Industries PLC acquired Wavin PFP BV on 25 April 1997 via Combipac BV, a subsidiary of BPI Europe BV, itself a joint subsidiary of British Polythene International Limited and British Polythene International (No 2) Limited, both subsidiaries of British Polythene Industries PLC. Combipac BV controls operations at the Hardenberg and Roeselare sites under the business name ''bpi.indupac''. Combipac BV also controls the operations of Formipac (''bpi.belgium'') at Zele, which were bought in November 1997 from Bonar Phormium.
(83) On 25 April 1997 British Polythene Industries PLC also bought, via its subsidiary Francepac, the business of Wavin Emballage SA, a subsidiary of the Wavin group. Francepac SA is a direct subsidiary of British Polythene Industries PLC and markets output from the Hardenberg plant in France.
(84) Since 1990, the group's operations have been organised along functional division lines. The industrial bags business initially formed part of larger divisions and then gradually developed into an independent unit ("Heavy duty sacks and Ireland" in 1996, "Industrial products" in 1998, "bpi.industrial" and "bpi.belgium" in 2000). The operations of bpi.indupac (Hardenberg plant) and Francepac then came under the bpi.industrial division while Formipac (Zele plant) came under bpi.belgium. In April 2004, bpi.indupac and Francepac were transferred to the bpi.europe division.
(85) As far as internal organisation and the reporting chain are concerned, each division is run by a director, assisted by a board composed of the division's executive directors and representatives of the board of directors of British Polythene Industries PLC. Division boards meet quarterly.
(86) Within the divisions, each operation or site is under the responsibility of a managing director who takes charge of operational and commercial aspects and reports quarterly to the division director. According to the explanations given by BPI, decisions on prices and customers are taken by the managing directors and their commercial managers. BPI points out that these decisions are in principle taken at the local level by the commercial managers, who report monthly to the managing directors, except in the case of key accounts and large contracts, which are dealt with directly by the managing directors."
- Mr Lasok submitted that what that showed was that decisions were taken at the lower level in the organisation and reported back to managing directors who approved the decision. Reporting from managing directors went to the director of division. This did not mean that decisions were taken by the Board of BPI but as Mr Lasok put it, BPI was "effectively hung" by the reporting line before the Commission, in terms of joint and several liability. Mr Lasok relied upon (i) the fact that BPI was not identified by the Commission in recital  as one of the participants in the cartel and (ii) the reference in recital  to BPI being liable in its capacity as parent company of Combipac from 25 April 1997 to 9 November 2001 in support of a submission that BPI's liability was only vicarious, as parent company of Combipac and Francepac.
- However, elsewhere in the Decision the Commission made findings about the degree of involvement of senior management of BPI in the activities of subsidiaries in the group which suggests it was sceptical as to the explanation being provided by BPI. Specifically, at recitals  to , the Commission made the following findings:
"(686) As regards the liability of the ultimate parent company, British Polythene Industries PLC, BPI Indupac (formerly Wavin PFP) and BPI Belgium (Formipac) do not have legal personality and are directly controlled by Combipac BV, a wholly owned subsidiary of the intermediate holding company, BPI Europe BV, which is itself jointly owned by two companies in the group, BPI International Limited and BPI International (No 2) Limited, both in turn wholly controlled by the ultimate parent company, British Polythene Industries PLC.
(687) Francepac SA is directly controlled by British Polythene Industries PLC.
(688) Francepac SA perpetuated the infringement that had been begun by Wavin Emballage SA, in particular through its [Position] […Y], who continued to take part in the collusive arrangements that went on in the France group, which he had previously attended as an employee of Wavin.
(689) Moreover, the industrial bags business as a whole is directly controlled at parent company level, since the group is organised by sectoral divisions, each division being represented by a board which includes members of BPI plc's board of directors and meets quarterly.
(690) In its reply to the Statement of Objections BPI does not contest this fact. However, it says that the operational structure of the group is quite different from its legal structure. In 1998 a group Management Board was set up, consisting of the managing directors of each division and the group's main executive directors. The Management Board is the real management body running the BPI group.
(691) According to BPI, the Management Board does not concern itself with day-to-day operational management or with questions of pricing, which are a matter for the commercial and sales managers.
(692) However, BPI also indicates that its commercial managers send a monthly report to the managing director they work under, who then sends a quarterly report to the Management Board and to the CEO. The detailed explanation given in the reply to the request for information shows without any doubt that the upward movement of information in the group is highly structured and effective, and that the organisation of operations in large divisions has enabled the Management Board constantly to channel and guide the activities of the group's subsidiaries.
(693) Several senior officers of the group, who were [Position] of the parent company British Polythene Industries PLC, were also operational managers of subsidiaries directly involved in the cartel. […]
(694) Lastly, several managing directors of the group have personally played varying parts in the meetings of the cartel […].
(695) In those circumstances, British Polythene Industries PLC should therefore be held responsible for the infringement from 25 April 1997, jointly and severally with Combipac BV.
(696) This Decision should accordingly be addressed to Combipac BV and British Polythene Industries PLC."
- Although this passage has been heavily redacted to prevent identification of the name and position of individuals, it is arguable nonetheless that senior officers of the parent company BPI were also operational managers of subsidiaries directly involved in the cartel and some of those senior managers were aware of and attended meetings of the cartel. It is correct that these paragraphs are referring to continental operations, not operations in the United Kingdom and Ireland and it is a fair point that, had they been referring to operations in the United Kingdom and Ireland, the Commission would surely have concluded there was evidence before it of cartel activity in the United Kingdom and Ireland. However, what this does demonstrate is that, at least so far as the cartel in the geographical markets in which the Commission found it was operating is concerned, the Commission considered there was a greater level of participation by BPI management than the mere reporting line to which Mr Lasok referred. Specifically, the Commission was saying that the purpose of the reporting was to enable the Management Board of BPI to exercise power from the top (recital ). Furthermore, even from the redacted Decision it is arguable that managing directors who were members of the Board or reported to it were themselves directly involved in the operation of the cartel (recitals  and ).
- I also agree with Mr Beal that the Commission was not finding that BPI was jointly and severally liable in the period from when it acquired Wavin, through Combipac, in April 1997 until November 2001, simply on the basis of vicarious liability for Combipac's participation. The Commission found at recital  that BPI replaced Wavin as a member of Valveplast when it took over its French and Benelux operations, in other words, BPI was running the continental operations from the United Kingdom.
- Mr Beal pointed out that the Commission's approach will have been that BPI and its subsidiaries were to be regarded as a single economic entity, the effect of which as a matter of European law was summarised by Etherton LJ in KME Yorkshire Ltd v Toshiba Carrier UK Ltd  EWCA Civ 1190 at :
"The jurisprudence on this aspect is, in my view, plain and settled. Article 101 is concerned with agreements, decisions and concerted practices by and between undertakings. An undertaking for this purpose is any entity engaged in economic activity, regardless of its legal status and the way in which it is financed. Furthermore, in this context the concept of an undertaking includes an economic unit which may consist of more than one legal or natural person, such as a group of companies. Where, for example, a company does not decide independently on its own conduct on the market, but in all material respects carries out the instructions given to it by its parent company, having regard to the economic, organisational and legal links between them, the unlawful conduct of the subsidiary will be imputed to the parent company. In such a situation, in the language of EU jurisprudence, the parent exercises a "decisive influence" over its subsidiary. The subsidiary is not absolved from its own personal responsibility, but its parent company is liable because in that situation they form a single economic entity for the purposes of Article 101. In EU jurisprudence, the (rebuttable) presumption is that a parent company exercises a decisive influence over the market conduct of a wholly owned subsidiary and that they therefore constitute a single undertaking within Article 101: Case C-97/08P Akzo Nobel NV & Os v Commission  ECR 1-8247 (Advocate General Kokott at paras. 39-44, ECJ paras. 54-61 and 77); T-25/06 Alliance One International Inc v Commission 9 September 2011 (paras 80-85); Case T-43/02 Jungbunzlauer AG v Commission  ECR II-3435 (para. 129)."
- In those circumstances, submitted Mr Beal, what limits responsibility for participation in a cartel so far as the Commission is concerned is the duration and not the extent of participation, in the sense of whether the participant has done this, that or the other in the cartel. All participants are jointly responsible, in much the same way as are joint tortfeasors or participants in a joint enterprise in criminal law. The approach of the Commission is explained at paragraphs 193 and 198 of the judgment of the European Court in Case C49/92P: Commission v Anic Partecipazioni  ECR 1-4125 at 4222-3:
"193. The conception on which the Polypropylene Decision is founded is expressed particularly clearly in the same point 83, when the Commission indicates that 'The essence of the present case is the combination over a long period of the producers towards a common end', and that 'each participant must take responsibility not only for its own direct role but also for the operation of the agreement as a whole. The degree of involvement of each producer is not therefore fixed according to the period for which its pricing instructions happened to be available but for the whole of the period during which it adhered to the common enterprise'.
198. It follows from those paragraphs of the contested judgment that Anic, in the same way as the other undertakings involved, had to be considered a co-perpetrator of a single infringement which manifested itself in a pattern of unlawful conduct forming an integrated set of schemes, not several forms of conduct to be considered in isolation."
- The Commission itself in its Decision at recital  made the point that whatever limited part each participant might have played in the cartel, did not rule out liability for the infringement as a whole, citing the European Court in Anic:
"The mere fact that each of the participants in a cartel may have played a specific part in it adapted to its situation does not rule out that it can be liable for the infringement as a whole, including the acts of other members, since those acts have the same unlawful object and the same anticompetitive effect. An undertaking that has participated in such a joint infringement through conduct contributing to attaining the common object is also liable, throughout the entire period of its participation therein, for the conduct of other undertakings in the context of the same infringement. That is the case where it is established that the undertaking in question was aware of the offending conduct of the other participants or that it could reasonably have foreseen it and that it was prepared to take the risk."
- It follows, as I see it, that the Commission was not really concerned with establishing what the precise involvement of BPI as opposed to Combipac and Francepac was, once it had concluded as it did that (i) they were wholly owned subsidiaries of BPI so it was a single economic entity and (ii) there was a single infringement not a series of separate infringements.
- Furthermore, the Commission having established that there was a cartel which had as its object the restriction of competition by market-sharing in the German, French, Spanish and Benelux markets it identified, did not need to go on to investigate whether or not the cartel had had an anti-competitive effect in other EU countries. The Commission said this expressly at recital :
"It is settled case law that, for the purpose of the application of Article 81 of the Treaty, there is no need to take account of the actual effects of an agreement when it has as its object the prevention, restriction or distortion of competition within the common market. Consequently it is unnecessary to demonstrate the actual anticompetitive effects since the anticompetitive object of the behaviour at issue has been established."
- It is true, as Mr Lasok pointed out, that having reached that conclusion, the Commission went on in paragraphs 533 to 536 to conclude that the anticompetitive decisions of the cartel had produced actual effects in the geographical markets in which the Commission found the cartel was operating. However I agree with Mr Beal that there is no suggestion in the Decision that the Commission investigated whether the anti-competitive effects of the cartel spilled over into the neighbouring markets, specifically that in the United Kingdom and Ireland and, in any event, the Commission simply did not make any findings about that.
The relevant test on strike out and summary judgment applications
- So far as the present case is concerned, BPI's application to strike out under CPR 3.4 is limited to sub-rule (2)(a), in other words it is contended that the Particulars of Claim disclose no reasonable or valid cause of action. Alternatively, BPI applies under CPR 24 for summary judgment on the grounds that the claims have no realistic prospect of success.
- Mr Lasok relies upon what he submits are the principles to be applied to strike out in competition claims enunciated by Sir Andrew Morritt C in Humber Oil Terminals v Associated British Ports  EWHC 352 (Ch) at :
"The general principles to be applied on an application under CPR Rule 3.4 are well known and not in doubt. They are summarised in the judgment of Lewison J in The Federal Republic of Nigeria v Santolina Investment Corporation and others  EWHC 437 (Ch) para 4. Their application to competition claims or defences was amplified in the judgment of Roth J in Sel-Imperial Ltd v The British Standards Institution  EWHC 854 (Ch) paras 17 and 18 in these terms:
"17. Moreover, it is important that competition claims are pleaded properly. To contend that a party has infringed competition law involves a serious allegation of breach of a quasi-public law, which can indeed lead to the imposition of financial penalties as well as civil liability. A defendant faced with such a claim is entitled to know what specific conduct or agreement is complained of and how that is alleged to violate the law. As Laddie J observed in BHB Enterprises Plc v Victor Chandler (International) Ltd  EWHC 1074 (Ch),  EuLR 924, at :
"These are notoriously burdensome allegations, frequently leading to extensive evidence, including expert reports from economists and accountants. The recent history of cases in which such allegations have been raised illustrate that they can lead to lengthy and expensive trials."
Subsequent experience only reinforces the accuracy of that observation.
18. This is not to adopt an over-technical approach to pleadings. It is consistent with the overriding objective to enable the case to be dealt with expeditiously and fairly. It is only through the clear articulation of each party's position in its statement of case, with appropriate factual detail, that the other side can know what case it has to meet and what issues any experts have to address, and that the court can effectively exercise its case management powers.""
- So far as the application to strike out is concerned, I accept Mr Beal's submission that Mr Lasok's submissions overlook two important qualifications, one of general application and the other specifically referable to competition claims. First, the court will not grant an application to strike out a claim unless it is certain that the claim is bound to fail: see Hughes v Colin Richards & Co  EWCA Civ 266, and where any defect in a statement of case is capable of being cured by amendment, the court should refrain from striking out unless it has afforded an opportunity to the party to amend its statement of case. That is a point which becomes of relevance when considering the so-called follow on claim in paragraphs 27 and 28 of the Particulars of Claim.
- Second, that where the claim involves damages arising out of infringements of competition law by cartels which by their nature are clandestine and the court is considering an application by an alleged participant in the cartel to strike out a claim prior to disclosure and evidence, the court will tend to allow a more generous ambit for pleadings, where what is being alleged is necessarily a matter which is largely within the exclusive knowledge of defendants, than it might in other cases. I agree that a more generous approach to pleadings is appropriate and has been recognised in a number of such cases. The principles in play are well described by Sales J in Nokia Corporation v AU Optronics Corporation  EWHC 731 (Ch) at [62-67]:
"62. In a case involving an allegation that a secret cartel has operated in breach of Article 101 there is an inevitable tension in domestic procedural law between the impulse to ensure that claims are fully and clearly pleaded so that a defendant can know with some exactitude what case he has to meet (and also so that disclosure obligations can be fully understood, expert witnesses given clear instructions and so on), on the one hand, and on the other the impulse to ensure that justice is done and a claimant is not prevented by overly strict and demanding rules of pleading from introducing a claim which may prove to be properly made out at trial, but which will be shut out by the law of limitation if the claimant is to be forced to wait until he has full particulars before launching a claim. In working out how that tension is to be resolved, it is important to bear in mind the general and long established approach referred to above and the existence of other protections for defendants within the procedural regime, including the following. [He then identifies procedural protections such as requests for further information and summary judgment applications where appropriate, together with the professional obligations of counsel in relation to pleadings]
67. In my judgment, the availability of such procedural protections for a defendant to ensure that a claim is fully and properly explained in good time before trial (as against the possible loss to a claimant of an entire, potentially meritorious claim), indicates that in resolving the tension referred to above and determining whether a cause of action has been sufficiently pleaded in a statement of case (particularly in the claim form and/or the particulars of claim when an action is commenced), the balance is to be struck by allowing a measure of generosity in favour of a claimant. Such an approach is appropriate and in the overall interests of justice and the overriding objective set out in CPR Part 1.1. It is an approach supported by the authorities cited above."
- This generous approach to the pleadings in cartel claims has been endorsed by the Court of Appeal, not only in Cooper Tire & Rubber Company Europe Ltd v Dow Deutschland  EWCA Civ 864 but most recently by Etherton LJ in KME Yorkshire Ltd v Toshiba Carrier UK Ltd  EWCA Civ 1190 at :
"As was stated by the Court of Appeal in Cooper Tire & Rubber Company Europe Ltd v Dow Deutschland Inc  EWCA Civ 864 at paragraph , however, it is in the nature of anti-competitive arrangements that they are shrouded in secrecy and so it is difficult until after disclosure of documents fairly to assess the strength or otherwise of an allegation that a defendant was a party to, or aware of, the proven anti-competitive conduct of members of the same group of companies. That same generous approach was for the same reason taken by Sales J in Nokia Corporation v AU Optronics Corporation  EWHC 731 in dismissing an application to strike out or to grant summary judgment against the claimant in proceedings for damages for infringement of Article 101. That approach is appropriate in the present case prior to disclosure of documents."
- In the case of applications for summary judgment, it is well established that the court should not engage in a mini-trial where there is any conflict of evidence. The dangers of too wide a use of the summary judgment procedure were emphasised by Mummery LJ at [4-18] of his judgment in Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical  EWCA Civ 661.  and  of that judgment seem to me particularly apposite to the present case:
"5. Although the test [whether the claim has a real prospect of success] can be stated simply, its application in practice can be difficult. In my experience there can be more difficulties in applying the "no real prospect of success" test on an application for summary judgment (or on an application for permission to appeal, where a similar test is applicable) than in trying the case in its entirety (or, in the case of an appeal, hearing the substantive appeal). The decision-maker at trial will usually have a better grasp of the case as a whole, because of the added benefits of hearing the evidence tested, of receiving more developed submissions and of having more time in which to digest and reflect on the materials.
18. In my judgment, the court should also hesitate about making a final decision without a trial where, even though there is no obvious conflict of fact at the time of the application, reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case."
- The same point was made by Lewison J (as he then was) in Federal Republic of Nigeria v Santolina Investment Corporation  EWHC 437 (Ch), at [4(vi)] citing the Doncaster Pharmaceticals case:
"Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case."
Summary of claims
- Mr Beal QC set out in summary form in a helpful Note to accompany his oral submissions the three claims which the claimants were advancing in these proceedings:
(1) A claim in respect of purchases of industrial bags direct from members of the cartel in the relevant markets (Germany, France, Benelux and Spain), specifically from the third defendants in Germany and Combipac in the Netherlands. Mr Beal describes this as a "follow on" claim.
(2) A claim which relies on the findings by the Commission of infringements in the relevant markets and seeks to supplement that by factual and expert evidence to demonstrate the effect of the cartel activity on neighbouring markets, specifically the market in the United Kingdom and Ireland. Mr Beal describes this as a hybrid claim.
(3) A claim which relies upon the findings of the Commission in conjunction with evidence from a tendering exercise conducted by the claimants in 1999 to support the inference that anti-competitive activity such as price fixing took place in relation to the claimants' purchases in the United Kingdom and Ireland and/or a claim that the infringements identified by the Commission caused the claimants to pay a higher price for those purchases. This is described by Mr Beal as a "stand alone" claim.
- Although, as I say, this is a helpful summary, on occasion it is difficult to tie in this analysis of the claims being made with the pleading. Claim (1), which Mr Beal describes as a follow-on claim appears to be the claim pleaded at paragraph 28 of the Particulars of Claim, although it is fair to say that the pleading goes further than the summary, in that it seeks to assert in paragraph 28(2) that the relevant geographic market as found by the Commission was the European Union.
- Claim (2), the so-called hybrid claim appears to be the claim advanced in paragraph 27 of the Particulars of Claim, which talks about the fact that in practice, there was no separate discernible price payable in the United Kingdom and Ireland distinct from the price payable in the German, French and Benelux markets. This plea is thus about the spill-over anti-competitive effect of the cartel on neighbouring markets. However, some confusion arises since this claim is included in the section of the pleading headed "The follow-on claim for damages" and, as with the claim under paragraph 28, it too seeks to assert that the cartel operated on a pan-European level. Furthermore, as I see it, there is something of an overlap between this claim and that part of the stand alone claim which asserts that the infringement found by the Commission caused the claimants to pay a higher price for those purchases (as opposed to the allegation in the stand alone claim that there was price-fixing or other cartel activity going on in the market in the United Kingdom and Ireland).
- Claim (3) is the claim set out in paragraphs 31 to 37 of the Particulars of Claim. The tendering exercise and what can be inferred from it is set out at paragraph 38, the Particulars of Loss. That pleading is then supplemented by the witness statement of Ms Duncan of the claimants' solicitors and by the expert report of Dr Graeme Hunter exhibited to that statement.
Significance if any of the distinction between follow on and stand alone claims
- Much of BPI's energy on its application was devoted to detailed submissions as to why the claimants did not have a sustainable "follow on" claim in these proceedings. This approach may be explicable by the fact that the claimants' own pleading seeks to differentiate between a follow on claim and a stand-alone claim. I was unimpressed by BPI's submissions in this regard. It seems to me that what matters for present purposes is not the label which is put on the claims but whether, at this stage the claimants have arguable claims with a real prospect of success as opposed to fanciful claims, which are not contrary to the findings in the Decision and thus which are not precluded by Regulation 16 of the Modernisation Regulation.
- In order to make good the point that the label placed upon the claim or claims should not matter, it is necessary to analyse the distinction between the two different types of claim and then to look at the claims actually being advanced and examine whether those claims are contrary to the findings of the Commission. The distinction between a follow on claim and a stand alone claim can be summarised as follows. Where the relevant regulator, be it the European Commission or the OFT, has found an infringement of a relevant prohibition, then under section 47A of the Competition Act 1998 as amended, a person who has suffered loss and damage as a consequence of the infringement may commence proceedings before the Competition Appeal Tribunal. In considering such a follow-on claim, the Tribunal is bound by the decision of the regulator on the infringement and cannot supplement or go beyond the regulator's findings.
- However, the injured party has the right to bring proceedings in Court for a so-called stand alone claim, a right unaffected by the enactment of section 47A claiming damages for infringement of the relevant provision. Indeed sub-section (10) expressly preserves the right to bring any other proceedings (that is other than before the Tribunal) in respect of the infringement. Where there has been no decision of the regulator that there has been an infringement, the injured party will have to allege and prove in due course whatever infringement it relies upon. Where there is a decision of the regulator that there has been an infringement, the injured party can rely upon that decision in its proceedings and the defendant will be bound under section 58 of the Competition Act by the regulator's findings of fact.
- The distinction is explained by Lloyd LJ at  of his judgment in Enron Coal Services Ltd v English Welsh & Scottish Railway Ltd  EWCA Civ 2 in these terms:
"The right to bring a follow-on claim before the Tribunal does not affect the right of a party to bring the sort of proceedings in court that were already possible, so a party which considers itself to have been the victim of anti-competitive behaviour, and to have suffered loss as a result, has a choice: it may bring ordinary proceedings in the High Court (I speak only of England, even though the 1998 Act applies throughout the UK), or, if a relevant regulator has held there to have been an infringement, it may bring proceedings in the Tribunal. If it proceeds in court, it can allege, and must prove, whatever infringements it wishes to rely on as having caused loss. If a regulator has found there to have been an infringement, before or during the course of the proceedings, it will have the benefit of section 58 under which it can rely on the regulator's findings of fact. On the other hand, it may proceed in the Tribunal, in which case it is limited to the infringements found by the regulator, but the question of infringement is concluded by the regulator's decision, leaving only the issues of causation and quantification of loss to be decided by the Tribunal."
- Provided that in its court proceedings the injured party does not, in breach of Article 16 of the Modernisation Regulation, put forward a case which is contrary to the decision of the Commission, the injured party may advance a case which goes beyond the findings of fact of the Commission and seek to prove a more extensive infringement. It may be that such a case, of which the claims in the present case are an example, is not strictly speaking a stand alone claim but a hybrid one mid-way between follow-on and stand alone, but it seems to me that, unless it can be said that the further case which the claimant seeks to prove is contrary to the Decision of the Commission, it should be open to a claimant to supplement the findings of the Commission with further evidence. That this is so is implicit from the last sentence of that paragraph of Lloyd LJ's judgment and also from the judgments in KME Yorkshire Limited v Toshiba Carrier UK Ltd of Sir Andrew Morritt C at first instance ( EWHC 2665 (Ch)) at  and Etherton LJ in the Court of Appeal ( EWCA Civ 1190 at .
- In my judgment, this must also be correct as a matter of principle. Of course, where the Commission has conducted a detailed enquiry into all the available evidence and has concluded that there was no infringement or that infringement was limited to certain markets, it will be difficult for a claimant to seek to contend or prove the contrary. However, there may be cases where the evidence before the Commission is limited or where its investigations only encompass certain markets so that it finds infringement in those markets but does not go on to find infringement in other markets due to lack of evidence. In principle, in the latter case, if the claimant obtains further evidence which was not before the Commission, it should be open to the claimant to prove at trial infringement in those other markets.
Are the claims contrary to the Decision of the Commission?
- In the present case, the essence of the Commission's findings on the evidence available to it as to the markets in which infringement took place is at Recital  which I have already quoted above but which is of sufficient significance to merit re-quotation:
"The evidence in the Commission's file demonstrates that the industrial bag producers concerned together adopted anticompetitive practices affecting the German, French, Spanish and Benelux markets. Although some evidence appears to show that arrangements occasionally concerned other countries, the Commission does not have any evidence in its possession suggesting that these were anything but isolated instances. On the basis of the evidence in the file, the Germany, French, Spanish and Benelux markets constitute the relevant territory for the purposes of this Decision." (my emphasis)
- Despite all Mr Lasok's attempts to argue the contrary, in my judgment the correct analysis of the Commission's Decision is that it was not ruling definitively that any infringement was limited to the markets in Germany, France, Spain and the Benelux countries. Rather what was being said by the Commission was that the evidence before it only pointed to a continuing infringement which had as its object the prevention, restriction and distortion of competition in those markets. As the passages underlined demonstrate it was not saying that, having reviewed exhaustively evidence across the European Union, it had concluded that there was no cartel having as its object or its effect the prevention, restriction and distortion of competition in any other markets.
- As Mr Beal rightly points out, there is no information before the Court as to what the evidence in the Commission's file was and the Court cannot and should not make any assumption as to the extent of the Commission's investigation into what was happening in other countries. Mr Beal stated on instructions that the Commission had certainly not approached his clients during their investigations and submitted that given that his clients are major purchasers of industrial bags, if there had been a thorough investigation by the Commission into possible cartel activity in the United Kingdom and Ireland, one might have expected an approach to be made to his clients. That submission seems to me to have considerable force. Indeed, Mr Lasok accepted in his submissions before me that there is no evidence that the Commission ever investigated the bidding process in 1999, which forms an important part of the claimants' case that these defendants were participating in a cartel which affected the market in the United Kingdom and Ireland and with which I deal in more detail below.
- Furthermore, as I have found in the section of this judgment dealing with the Decision, the Commission does not seem to have investigated at all the effect which the cartel activity did or did not have on neighbouring markets such as the United Kingdom and Ireland. In the circumstances, I do not see how it can be said that, to the extent that the hybrid and stand alone claims seek to establish by further evidence not before the Commission, such as the 1999 bidding process, that there was cartel activity in the United Kingdom and Ireland and/or that the infringement in the German, French, Spanish and Benelux markets had an anti-competitive effect in neighbouring markets in the United Kingdom and Ireland, those claims and allegations are contrary to the Decision of the Commission. Accordingly, in my judgment Article 16 of the Modernisation Regulation is not engaged.
- That conclusion goes a long way towards holing BPI's application below the waterline, in the sense that, as I have indicated, a central plank of its case is that the claims now advanced are contrary to the Decision of the Commission. However, BPI had other points about the pleaded case with which it is necessary to deal in more detail.
The follow on claim
- So far as the first claim identified in Mr Beal's summary of claims is concerned, whilst the summary limits this "follow on" claim to purchases direct from the members of the cartel in the relevant German, French, Spanish and Benelux markets, the pleaded case at paragraph 28 of the Particulars of Claim seeks to contend that the Commission's decision was that the relevant market was the European Union. In my judgment, that contention is contrary to what the Commission found and is not sustainable. Equally, to the extent that the pleading in relation to the hybrid and stand alone claims contains similar contentions (the orchestration on a pan-European level by Valveplast referred to at paragraph 27.4 and a further reference to the relevant geographical market being the European Union in paragraph 34.5) those contentions are also unsustainable.
- However, in my judgment, even with any such offending contentions removed, the pleaded claims are arguable ones. It seems to me the most sensible course would be for the claimants to produce an amended pleading deleting such references in those paragraphs and elsewhere. I should emphasise that in so concluding I am not suggesting that, to the extent that the claimants are able to demonstrate, independently of the Commission's Decision that there was a cartel or other collusive activity in the United Kingdom and Ireland, a claim on that basis would be contrary to the Decision of the Commission. I consider that claim below.
- The follow on claim includes direct purchases from participants in the cartel in the relevant geographical market, including from Combipac in the Netherlands. Mr Lasok sought to suggest that that claim was unsustainable as contrary to the Commission's Decision because the findings were that the object of the cartel was to distort competition in those markets so that only purchases by local purchasers would be affected by the cartel. The fallacy in this somewhat technical point is the one I have identified earlier in the judgment, that it overlooks that the Commission was content with concluding that the participants had engaged in an "object" infringement and neither needed to nor did go on to consider the effect of the cartel, save to a limited extent and certainly did not consider whether it had an anti-competitive effect on neighbouring markets. Not only is a claim by an Irish purchaser from a Dutch participant in the cartel that it has paid a higher price than it would otherwise have done had the cartel not existed not inconsistent with the Decision, but it is fully arguable.
The hybrid and stand alone claims
- These claims both rely upon the findings of the Commission which are binding and seek to supplement them with other evidence, including expert evidence, to establish (i) (in the case of both claims) that the activity of the cartel in the geographical markets to which the Decision related had the effect of preventing, restricting or distorting competition in neighbouring markets and/or (ii) (in the case of the stand alone claim) that there was collusive anti-competitive activity in the United Kingdom and Ireland. As I said earlier, there is an obvious overlap between the hybrid claim and that part of the stand alone claim which relates to what might be described as spill over anti-competitive effect, as opposed to actual cartel activity in the United Kingdom and Ireland. Indeed I am not sure that they are not simply two ways of putting the same point, so the contentions and the objections to them can be considered together.
- The essence of Mr Beal's argument on this point is that, even if, contrary to his primary submission, the Decision precludes the claimants from running a case before this court that there was a cartel which had as part of its object the prevention, restriction or distortion of competition in markets other than those specifically identified in the Decision, nonetheless one effect of the operation of the cartel in those markets was to prevent, restrict or distort competition in the United Kingdom and Ireland. In particular, the claimants contend that the prices at which they were able to purchase plastic industrial bags in the United Kingdom and Ireland, whether from the various subsidiaries of BPI or others, were not discernibly different from the prices payable in the German, French or Benelux markets and were higher than they would have been but for the operation of the cartel and that there was no discernible difference between the prices being charged in the United Kingdom and Ireland and those being charged (by the members of the cartel) in continental Europe.
- Mr Beal submits that it is arguable that a legitimate inference can be drawn that the other members of the cartel were prepared to allow BPI and its subsidiaries to charge the prices they did in the market in United Kingdom and Ireland without seeking to move into that market and undercut BPI and its subsidiaries. Putting it another way, he submits that if the cartel on the continent had not existed, the claimants would have had the benefit of a lower price being available on the continental market, which would have meant the suppliers in the United Kingdom and Ireland (principally the subsidiaries of BPI) were constrained to charge lower prices themselves. The claimants could then have purchased at a lower price either from suppliers on the continent or from suppliers in the United Kingdom and Ireland.
- Of particular significance to the claimants' case is that, at the end of the bidding process in 1999 (which was the first time the claimants had engaged in a competitive bidding process and with which I deal in more detail below) the price which the claimants were paying BPI and its subsidiaries was 16.5% less than it had been paying over previous years. The claimants' case is that this is evidence of the extent to which they had been overcharged in previous years and that the effect of the cartel price fixing in continental Europe was to set a price in continental Europe which did not operate as a competitive restraint on the market in the United Kingdom and Ireland. But for that price fixing, the claimants could have bought their bags more cheaply from suppliers in continental Europe which would in turn have been likely to bring down the price charged by the subsidiaries of BPI in the United Kingdom and Ireland. This case is supported by the expert evidence of Dr Hunter.
- Furthermore, it seems to me that, in circumstances where senior management of BPI attended cartel meetings as the Commission found at recitals  and , albeit in their role as operational managers of the continental subsidiaries, it is at least arguable that a reasonable inference to draw is that BPI was not going to allow its English subsidiaries to undercut the prices of the cartel, since by that means they might well destroy the cartel.
- In my judgment, despite Mr Lasok's submissions that the inferences which the claimants seek to draw were not reasonable or arguable, this case is one which is fully arguable and has a real prospect of success at trial. Whether or not the claimants can obtain further evidence from disclosure or elsewhere and establish their case at trial are not matters the court can or should consider on this application. Suffice it to say that the arguability test (whether under CPR 3.4 or CPR 24) is satisfied.
- However, Mr Lasok contended that this way of putting the case was unsustainable as a matter of law because, before the claimants could have a claim in respect of an allegedly inflated price in the United Kingdom and Ireland, there had to be an agreement or concerted practice in that market. He gave the example of A, B and C who form a cartel fixing prices in France and A then offers a price to someone in Ireland. The buyer in Ireland cannot rely upon the cartel in France to found a claim because A is not implementing the cartel in setting the price in Ireland because there is no agreement to fix prices in Ireland.
- It seems to me this submission overlooks the fact that the words of Article 101: "which have as their object or effect the prevention, restriction or distortion of competition within the internal market" are disjunctive not cumulative. In Mr Lasok's example, true it is that the object of the cartel may have been only to prevent, restrict or distort competition in France, not Ireland but if the effect of the cartel was wider than its object and in particular was to prevent, restrict or distort competition in the United Kingdom and Ireland, I do not see why the claimant would not have an arguable claim on the basis that the cartel in France had a distorting effect on the price in the United Kingdom and Ireland.
- That "object" and "effect" are disjunctive in Article 101 is also made clear by the European Court in Case C-8/08: T Mobile Netherlands BV and others  ECR 1-4529 at - to which Mr Beal drew my attention:
"28. As regards the distinction to be drawn between concerted practices having an anti-competitive object and those with anti-competitive effects, it must be borne in mind that an anti-competitive object and anti-competitive effects constitute not cumulative but alternative conditions in determining whether a practice falls within the prohibition in Article 81(1) EC. It has, since the judgment in Case 56/65 LTM  ECR 235, 249, been settled case-law that the alternative nature of that requirement, indicated by the conjunction 'or', means that it is necessary, first, to consider the precise purpose of the concerted practice, in the economic context in which it is to be pursued. Where, however, an analysis of the terms of the concerted practice does not reveal the effect on competition to be sufficiently deleterious, its consequences should then be considered and, for it to be caught by the prohibition, it is necessary to find that those factors are present which establish that competition has in fact been prevented or restricted or distorted to an appreciable extent (see, to that effect, Beef Industry Development Society and Barry Brothers, paragraph 15).
29. Moreover, in deciding whether a concerted practice is prohibited by Article 81(1) EC, there is no need to take account of its actual effects once it is apparent that its object is to prevent, restrict or distort competition within the common market (see, to that effect, Joined Cases 56/64 and 58/64 Consten and Grundig v Commission  ECR 299, 342; Case C-05/04 P Nederlandse Federatieve Vereniging voor de Groothandel op Elektrotechnisch Gebied v Commission  ECR I-8725, paragraph 125; and Beef Industry Development Society and Barry Brothers, paragraph 16). The distinction between 'infringements by object' and 'infringements by effect' arises from the fact that certain forms of collusion between undertakings can be regarded, by their very nature, as being injurious to the proper functioning of normal competition (Beef Industry Development Society and Barry Brothers, paragraph 17).
30. Accordingly, contrary to what the referring court claims, there is no need to consider the effects of a concerted practice where its anti-competitive object is established."
- Mr Lasok relies upon paragraph 20 of Etherton LJ's judgment in Toshiba Carrier:
"What is also clear, contrary to the appellants' case, is that acts of implementation alone are capable of amounting to concerted practices where they are carried out pursuant to an anti-competitive agreement made between others and with knowledge of that agreement. That is apparent not only from the passages in Anic Partecipazioni just cited but also from the following earlier passages in the judgment in that case:
"79 Secondly, the agreements and concerted practices referred to in Article 85(1) of the Treaty necessarily result from collaboration by several undertakings, who are all co-perpetrators of the infringement but whose participation can take different forms according, in particular, to the characteristics of the market concerned and the position of each undertaking on that market, the aims pursued and the means of implementation chosen or envisaged.
80 However, the mere fact that each undertaking takes part in the infringement in ways particular to it does not suffice to exclude its responsibility for the entire infringement, including conduct put into effect by other participating undertakings but sharing the same anti-competitive object or effect.
81 Thirdly, it must be remembered that Article 85 of the Treaty prohibits agreements between undertakings and decisions by associations of undertakings, including conduct which constitutes the implementation of those agreements or decisions, and concerted practices when they may affect intra-Community trade and have an anti-competitive object or effect. It follows that infringement of that article may result not only from an isolated act but also from a series of acts or from continuous conduct. That interpretation cannot be challenged on the ground that one or several elements of that series of acts or continuous conduct could also constitute in themselves an infringement of Article 85 of the Treaty.
87 When, as in the present case, the infringement involves anti-competitive agreements and concerted practices, the Commission must, in particular, show that the undertaking intended to contribute by its own conduct to the common objectives pursued by all the participants and that it was aware of the actual conduct planned or put into effect by other undertakings in pursuit of the same objectives or that it could reasonably have foreseen it and that it was prepared to take the risk.""
- However, in my judgment, that citation does not begin to support the proposition for which Mr Lasok contends which is that a claimant cannot rely by way of breach of Article 101 upon the anti-competitive effect in a particular market of an agreement or concerted practice unless that agreement or concerted practice is taking place in that market. I consider that it is open to a claimant to seek to establish that, although a cartel has as its object the prevention, restriction or distortion of competition in a particular market, the infringement has an anti-competitive effect in a neighbouring market without it being necessary, for such a case to be sustainable as a matter of law, that the cartel actually operated or had an agreement or concerted practice in that neighbouring market.
- Even if I were wrong about that, the other aspect of the claimants' stand alone claim, that there was anti-competitive activity such as price fixing in the market in the United Kingdom and Ireland does involve the contention that there was an agreement between BPI and other members of the cartel which had as its object or effect price fixing in the united Kingdom and Ireland. The claimants place particular reliance in this regard on what they say can be legitimately inferred from the evidence of the bidding process in 1999. It is necessary to set out at least in summary the facts relied upon and what the claimants say can be inferred from them.
- For the first time in 1999 the claimants placed an advertisement in the European Journal for polythene bag suppliers and contacted major suppliers inviting them to bid. Prior to that, the claimants had simply purchased bags as required, without any competitive process. At the time of the bid, BPI was the incumbent supplier so would have known that other suppliers were going to bid. There is some indication that by this stage in 1999, the cartel was beginning to break apart. Specifically, the Commission found that one of the participants, Stempher, had stopped participating in October 1997. Stempher was invited to participate in the first round of the bidding process. The bid submitted by Stempher was only marginally below the current prices being charged by BPI. The claimants contend that since they had not informed bidders of the current prices, it can be inferred from this that Stempher as a newly departed cartel member was aware of the prices which BPI was charging the claimants which provides some evidence of collusion.
- Nyborg Plast, which was a cartel member in 1999, submitted a bid which was greatly in excess of the current prices of BPI, effectively being based on prices in its own price list. The claimants' expert Dr Hunter points out that this is consistent with the cartel practice described by the Commission of submitting "sham" bids. The number of bids actually received was very low, consisting only of bids from Stempher, Nyborg and BPI. In contrast, in later bidding processes, after the cartel had broken up, a significantly higher number of ex-cartel members were competing for the claimants' business.
- In his provisional report Dr Hunter referred to the fact that the claimants arranged for the lead negotiators from Stempher and BPI to see each other at the claimants' premises before the final round of negotiations. This was interpreted by Mr Lasok as meaning that they had attended a meeting together which he submitted would not only be unusual but inconsistent with any collusion going on without the knowledge of the claimants. In fact, as Mr Beal explained, what in fact happened is that representatives of Stempher and BPI were allowed to walk past each other in the corridor at the claimants' offices on the way to separate meetings, so each was aware of the other's involvement.
- In the final negotiations which then took place, BPI lowered its prices even further, submitting prices which were, on average, 16.5% lower than their then current prices. The claimants contend (and Dr Hunter in his provisional report is in agreement) that it is reasonable to infer (i) that the 16.5% reduction was the discount BPI anticipated it needed to offer to retain the claimants' business in the face of a competitor in the form of Stempher which was aware of the cartel's practices and (ii) that prior to that reduction, the claimants were being overcharged at least 16.5%. Dr Hunter says this is in line with the median overcharge for cartels of 20% derived from the academic literature.
- The claimants contend (and again Dr Hunter is in agreement) that the various features of the bidding process: (i) the remarkable proximity of Stempher's offer to BPI's current prices; (ii) the low number of bids submitted and (iii) the apparent submission of a sham bid, all support the reasonable inference that the cartel extended to and/or affected the markets in the United Kingdom and Ireland. Furthermore, as Mr Beal submitted, there is no evidence that the Commission was ever made aware either by BPI or anyone else of this 1999 bidding process, as had it been, it would inevitably have approached the claimants, which it did not.
- Mr Lasok sought to make a number of points about the bidding process in an effort to demonstrate that it was not reasonable to infer that it was evidence of collusive activity in the United Kingdom and Ireland or of the spill over effect of the cartel on the market in the United Kingdom and Ireland. In particular he placed great emphasis on the fact that, by the time of the bid, Stempher had not been a member of the cartel for two years, so how could it be said, he submitted that they were colluding in 1999 with BPI? With respect, that misses the point. The inference which the claimants say can reasonably be drawn is that Stempher knew BPI's price which can only have come about because of collusion in the past and continued access to current price information. Mr Lasok submitted that Stempher may have found out about BPI's prices from some other source. That may be so, although as I see it unlikely, but that is exactly the sort of minute factual enquiry in which the court should not engage on this application.
- Mr Lasok also pooh-poohed the suggestion that Nyborg putting in standard list prices could be regarded as a sham bid. Again that may be so, but given that the claimants were purchasers of millions of pounds or euros worth of bags every year, I agree with Mr Beal that it is surprising that Nyborg should put forward the same "internet" price as for someone buying two rolls of bags and that it is at least arguable that this is evidence of a sham bid.
- Overall, I am satisfied that the material upon which the claimants rely in relation to the 1999 bidding process gives rise to an arguable case that (i) there was collusive activity whereby the other members of the cartel had left the United Kingdom and Ireland to BPI and its subsidiaries without seeking to compete in those territories and (ii) as a consequence, the claimants were paying more than they would have done in the absence of such collusion. In a very real sense, the more Mr Lasok tried to deconstruct the evidence about the 1999 bidding process, the more convinced I became that this was a case which could and should only be determined at trial after full disclosure by BPI and Combipac.
Conclusion on BPI's application
- For all the reasons given above I consider that the three claims summarised by Mr Beal in his Note are all arguable and have a real as opposed to a fanciful prospect of success at trial. With the exception of the assertions made that the Decision of the Commission was that the relevant market was the European Union, I do not consider that any of the claimant's pleaded case is contrary to the Decision so that, save to that limited extent, Article 16 of the Modernisation Regulation is not engaged.
- It is certainly true that, as Mr Beal really candidly accepted at the end of his oral submissions, in the light of his detailed written and oral submissions it may be that some of the pleaded case could be better put, but I agree with Mr Beal that BPI clearly know the case they have to meet. To that extent the requirement that "a defendant faced with … a [competition] claim is entitled to know what specific conduct or agreement is complained of and how that is alleged to violate the law" referred to by Roth J in Sel-Imperial approved by the Chancellor in Humber Oil Terminals v Associated British Ports is satisfied. I also have in mind the principle that, prior to disclosure, the courts will adopt a lenient approach to the claimant's pleadings since the anti-competitive activity is largely within the exclusive knowledge of the defendant and until the defendant has provided full and proper disclosure, the claimant is not in a position to plead its case in more detail.
- In all those circumstances, whether put as a strike out application or as a "reverse" summary judgment application, BPI's application fails and is dismissed.
The Combipac application
- Jurisdiction was established before this court against Combipac, a Dutch company on two bases, Article 6(1) of the Judgments Regulation 44/2001 and Article 5(3) of the same Regulation both of which arise by way of exception to the general rule in Article 2 of the Regulation that defendants must be sued in the jurisdiction of their domicile. Combipac applies to set aside service of the claim form upon it on the grounds that the English courts have no jurisdiction over it.
- Article 6(1) provides that a person:
"may also be sued where he is one of a number of defendants in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings."
- This application is parasitic upon the success of BPI's application, in the sense that it is recognised by Mr Lasok, that, subject to one point, if BPI's application fails which I have held it does, there will be jurisdiction under Article 6(1) on the basis that BPI is an "anchor defendant" domiciled in England against whom there is a serious issue to be tried. The one point which was raised, albeit faintly, by Mr Lasok was that, even if there was a sustainable claim against BPI that claim was limited to the period 1997 to 2001 so that any claim against Combipac should be similarly limited to that period rather than, as claimed in the Particulars of Claim, for the whole period 1982 to 2001. It seems to me that point is unmeritorious, because whatever temporal limitation there might be on the claim against BPI the two claims are clearly so closely connected that it is expedient to hear and determine them together. On that ground alone, the Combipac claim fails and is dismissed so that it is not necessary to look in any detail at what the position would be if the BPI application had been successful. Nonetheless, since the points on Article 6(1) and Article 5 (3) were fully argued, I will deal with them, albeit briefly.
- Mr Beal submitted that, even if the BPI application were successful, because at the time of issue of the claim form, the claims against BPI and Combipac were properly brought and were sufficiently closely connected that it was expedient that they be heard and determined together, the question of jurisdiction against Combipac under Article 6(1) should be decided at the time of issue of the claim form and not be dependent on the outcome of steps taken in interlocutory proceedings before the domestic courts. He relies upon the decision of the European Court in Case C-103/05 Reisch Montage  ECR 1-6827.
- Before considering that decision, it seems to me there are two obvious objections to this argument. First, there are a number of decisions of the English courts to the effect that in order to invoke the jurisdiction under Article 6(1) the claimant must show a sustainable claim against the anchor defendant, in the sense of a serious issue to be tried or a real prospect of that claim succeeding: see for example per Tuckey LJ in FKI Engineering Ltd v De Wind Holdings Ltd  EWCA Civ 316 at . It is difficult to see how that requirement can be satisfied if the court has decided that the claim against the anchor defendant should be struck out, as on the hypothesis that the BPI application had succeeded would be the position here. Second, since the proviso to Article 6(1) clearly postulates that it is expedient to hear and determine the claims together to avoid the risk of irreconcilable judgments, it is difficult to see how that proviso can ever be satisfied if the claim against the anchor defendant has been struck out. A fortiori, if one claim has been struck out, the two claims will never be heard whether together or separately and there is no risk of irreconcilable judgments.
- The question therefore is whether those two obvious objections are somehow overridden by the decision of the European Court in Reisch Montage. That was a case where the claimant brought a claim in Austria against an Austrian individual anchor defendant and against a German company which had stood surety for him, founding jurisdiction against the company under Article 6(1). The proceedings against the individual defendant were held to be inadmissible against him at the time they were commenced because he was subject to bankruptcy proceedings which gave rise to a procedural bar. Nonetheless, the European Court ruled that the proceedings could continue against the German company under Article 6(1).
- The reasoning of the relevant part of the Court's decision was as follows:
"28 …..the question referred seeks to determine whether a national rule introducing an objection of lack of jurisdiction may stand in the way of the application of Article 6(1) of Regulation No 44/2001.
29 It is settled case-law that the provisions of the regulation must be interpreted independently, by reference to its scheme and purpose (see, in relation to the Brussels Convention, Case C-433/01 Blijdenstein  ECR I-981, paragraph 24 and the case-law cited).
30 Consequently, since it is not one of the provisions, such as Article 59 of Regulation No 44/2001, for example, which provide expressly for the application of domestic rules and thus serve as a legal basis therefor, Article 6(1) of the Regulation cannot be interpreted in such a way as to make its application dependent on the effects of domestic rules.
31 In those circumstances, Article 6(1) of Regulation No 44/2001 may be relied on in the context of an action brought in a Member State against a defendant domiciled in that State and a co-defendant domiciled in another Member State even when that action is regarded under a national provision as inadmissible from the time it is brought in relation to the first defendant."
- Whilst it is not appropriate for this court to determine that a judgment of the European Court has been wrongly decided, I have to say that I find it difficult to reconcile that reasoning with the two obvious objections to which I have referred. Although Tuckey LJ in FKI Engineering is equally careful not to say that Reisch Montage was wrongly decided, it seems to me that he had misgivings about it, as is apparent from , where he says:
"First [Mr Samek] says that a claim for the purposes of Article 6(1) must be one which can properly be brought in the domestic court. As a general proposition, I would accept this, although Mr Samek referred us to a recent decision of the ECJ in Reisch Montage AG v Kiesel Baumaschinen Handels GMbH (Case C-103/05), which casts some doubt upon this proposition. In that case proceedings had been brought by the creditor of a bankrupt in the court of his domicile and, relying on Article 6(1), his guarantor domiciled in another member state. The claim against the bankrupt was time-barred but the ECJ held that nevertheless the claim against the guarantor could proceed under Article 6 (1) which was not affected by a procedural bar contained in a national provision."
- If the issue had arisen directly (which it does not because I have concluded the claimants have a fully arguable case against BPI, the anchor defendant) I would have decided that Reisch Montage was distinguishable because it was only purporting to determine the position where an otherwise sustainable claim against the anchor defendant was precluded for some procedural reason under the national law. It was not purporting to decide that, if the claim against the anchor defendant was unsustainable because substantively, as opposed to procedurally, it had no real prospect of success (which on the hypothesis upon which I am proceeding would be the present case), the requirements of Article 6(1) were nonetheless satisfied. Accordingly, if contrary to my decision on BPI's application, I had concluded that the claim against BPI was not arguable, I would have concluded that jurisdiction under Article 6(1) could not be maintained.
- Turning to Article 5(3), that provides:
"[A] person domiciled in a Member State may, in another Member State, be sued in matters relating to tort, delict or quasi delict, in the courts for the place where the harmful event occurred or may occur."
- Useful guidance on the interpretation of "harmful event" in the context of a single, continuous infringement of Article 101 is provided by Teare J in Cooper Tyre v Shell Chemicals  EWHC 2609 (Comm) at :
"The Dow Defendants also relied upon Article 5(3) of the Judgments Regulation to establish jurisdiction. In view of my decision on Article 6(1) it is strictly unnecessary to lengthen this judgment yet further with a discussion of all the arguments. I will simply express my conclusions as shortly as possible. Article 5(3) provides for special jurisdiction "in the courts for the place where the harmful event occurred." That expression means "both the place where the damage occurred and the place of the event giving rise to it, so that the defendant may be sued, at the option of the plaintiff, in the courts for either of those places"; see Reunion Europeenne SA v Spliethoff's Bevrachtingskantoor BV Case C-51/97  ECR I-6511 at paragraph 28. However, where the place where the event giving rise to the damage occurred is difficult or indeed impossible to determine the plaintiff must sue in the place where the damage occurred; see paragraph 33. In the present case the act complained of is a "complex single and continuous infringement" of Article 81 of the Treaty by agreeing price targets, sharing customers by non-aggression agreements and exchanging sensitive commercial information relating to prices, competitors and customers. The meetings which gave rise to it took place in a number of locations including Milan, Vienna, Amsterdam, Brussels, Richmond-on-Thames, Frankfurt, Grosse Leder, and Prague. The cartel was ended at a meeting in London. I consider that this is a case where it is, at the very least, difficult to say where the event which gave rise to the damage occurred. It was suggested that the cartel was set in motion in England over the period 28-30 August 1995 and that that is sufficient to show that the place where the harmful event occurred was in England; see Sandisk Corporation v Koninklijke Philips Electronics NV  EWHC 332 (Ch) at paragraphs 25 and 41. I have, I confess, a sense of unease, in concluding, in the context of a Europe-wide cartel orchestrated at meetings in several countries, that the place where the harmful event occurred is England because that is where the first meeting took place. That seems to me to be unrealistic. In truth the harmful events occurred in several countries. In these circumstances I consider that the Claimants can only rely on the place where the damage occurred. It is common ground that some damage occurred in England because some BR and ESBR was sold here. However, it is also common ground that if jurisdiction is established on that basis it is only established in respect of the damage which occurred in England. That is, I understand, a very small part of the whole."
- The claimants sought to contend that the event which gave rise to the damage occurred in England because at least from 1997 to 2001, Combipac was effectively managed and overseen by BPI from England, as decided by the Commission. However, like Teare J, I have misgivings about reaching that conclusion and it seems to me that, in a case where Combipac was in the Netherlands and Valveplast meetings took place in various locations on the continent, this is one of those cases where it is difficult to say where the event which gave rise to the damage occurred. Accordingly I consider that for the entire period of the cartel 1982 to 2001, the claimants can only rely upon the place where the damage occurred.
- Mr Beal submitted that in a case such as this where the damage is financial loss, the damage is suffered where the overcharge under the various contracts entered into with the subsidiaries of BPI was inflicted which was in the United Kingdom when the purchases were made here. Mr Lasok submitted that the loss was actually suffered in Ireland so that was where the damage occurred. Alternatively, he submitted that since the majority of the BPI subsidiaries were actually based in Scotland, so the purchases were made in Scotland and the overcharge inflicted in Scotland, any claim the claimants had against Combipac should be brought in Scotland.
- In support of that submission, Mr Lasok relied upon the decision of the European Court in Case C-386/05: Color Drack v Lexx International  ECR 1-3699. That was a case of contracts for sale of goods where delivery took place in various locations in Austria, which is a federation with different courts in for each location. The European Court decided that Article 5(1)(b) of the Judgments Regulation conferred jurisdiction on the particular court in Austria within whose jurisdiction the principal place of delivery was located. Mr Lasok submits that by parity of reasoning, the same analysis should apply to Article 5(3) in which case, any claim should be brought before the Scottish courts.
- Mr Beal sought to submit that Color Drack did not compel this answer, because the European Court had studiously avoided ruling which particular court in Austria should be seized of the dispute, which was a matter he submitted would fall to be determined by this court not pursuant to the Judgments Regulation but the Civil Jurisdiction and Judgments Act 1982 as amended. However the defendants had not made any application under that Act so this court had not been asked to permissibly decline jurisdiction in favour of the Scottish courts.
- I have to say that I was not over impressed by those somewhat technical points. The European Court in Color Drack may not have dictated which court in Austria should hear the dispute but it set out the criteria by reference to which that question should be determined, albeit by the national courts. Equally it is correct that the application by Combipac does not refer to the 1982 Act but if it were necessary I would permit amendment. My very firm preliminary view is that if it were a choice between the English courts and the Scottish courts, I consider the Scottish courts should prevail.
- To the extent that the claimants sought to rely in the alternative upon the decision of the European Court in Joined Cases 509/09 and 161/10: eDate Advertising  ECR 1-0000 in support of a submission that the centre of gravity of their claim was England and Wales because the purchases were made here, I agree with Mr Lasok that the relevant question is where the claimants have their centre of interests which the European Court decided at  generally corresponds with their habitual place of residence, which is of course Ireland.
- It follows that if the only basis for jurisdiction against Combipac were Article 5(3) I very much doubt whether there would be any grounds for successfully contending that this court had jurisdiction. However, the point does not arise because, since I have concluded that BPI's application fails, the court clearly has jurisdiction over Combipac pursuant to Article 6(1) of the Judgments Regulation. Combipac's application fails and is dismissed.
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