Private Actions in Competition Law: Developments in Disclosure and Timing of Defence in Litigation Proceedings

June.06.2013

​This note highlights some of the most recent procedural developments in antitrust litigation in England, in particular in relation to the effectiveness of foreign blocking statutes on disclosure of documents by foreign nationals and whether proceedings (including service of defence) should be stayed pending an appeal of an EU cartel decision to the Court of Justice of the European Union (CJEU).

The Effectiveness of Foreign Blocking Statutes on Disclosure of Documents by Foreign Nationals in English Proceedings

The judgment in National Grid Electricity Transmission plc v ABB and others [2013] EWHC 822 (Ch) clarifies that unless there is a real risk of criminal prosecution for breach of a blocking statute in another jurisdiction, an English court will not be discouraged by that statute from ordering disclosure by foreign nationals in English proceedings.

The question of disclosure arose in the context of a private damages action by National Grid Electricity Transmission plc against members of the international gas-insulated switchgear cartel. A number of French defendants (including Areva and Alstom) resisted the claimant’s application for specific disclosure on the basis that providing such disclosure would put them at real risk of prosecution under the French so-called blocking statute. The French defendants also argued that instead of being required to produce documents directly in response to an English court order, the French court should assist in taking the evidence required (under the so-called “court-to-court route”). This was despite the fact that the French Ministry of Justice had previously refused a request to assist under the EU Evidence Regulation (Regulation) [1].   

In granting the claimant’s order, the High Court noted that disclosure is a question of procedure and as such it is determined in accordance with the law of the jurisdiction in which the action is brought. Indeed, the parties accepted that the English court has discretion to order disclosure from a foreign party, even where compliance might violate foreign law. The judge assumed (without deciding) that disclosure would in fact breach the French blocking statute. The critical question, however, was the likelihood of any prosecution taking place. In concluding that the risk of prosecution was very low and therefore disclosure should be ordered, the High Court noted that:

  • French companies frequently give disclosure in English legal proceedings, and it seems they are not prosecuted. Indeed, there is only one example of a successful prosecution under the French blocking statute and the case is on exceptional facts;
  • the French blocking statute was introduced because of a particular concern about abusive disclosure requests being made of French companies facing litigation, especially in the US. Even when French companies do comply with US disclosure orders, it appears they are not prosecuted; and
  • it was “virtually inconceivable” that, in circumstances where, as here, the English court is exercising jurisdiction over the French defendants under an EU regulation in relation to violations of EU antitrust rules, the public authorities of a Member State would exercise their discretion to prosecute a company for complying with a disclosure order of a court of another Member State. 

The High Court also dismissed the request that the French court should assist by using the court-to-court route under the Regulation. The judge noted that the Regulation is aimed at simplifying the process of taking evidence in a cross-border context rather than the provision of disclosure between parties to litigation and it does not in any event preclude national courts from using more effective national law procedures.

The judgment is available here.

Stay of Proceedings / Service of Defence Pending Appeal to the CJEU

The judgment in Wm Morrison Supermarkets Plc and others v MasterCard Inc and others [2013] EWHC 1071 (Comm) reinforces previous decisions of the English courts indicating that proceedings should not necessarily be stayed but should instead progress at least to a certain extent, while appeals against the underlying infringement decision are still ongoing.  

Wm Morrison Supermarkets plc and other high-street retailers (Morrison) brought a damages claim against MasterCard [2] in relation to losses allegedly caused by MasterCard’s anti-competitive intra-EEA and intra-UK multi-lateral interchange fees (MIFs) [3]. The arrangements for setting the MIFs have been the subject of various regulatory investigations and proceedings over many years. In December 2007, the European Commission made an infringement decision against MasterCard in relation to the intra-EEA MIFs. MasterCard’s appeal of the General Court’s decision upholding the Commission 2007 decision is still pending before the CJEU and a ruling is expected no earlier than 2014. As the actions in relation to the intra-EEA MIFs follow on from the Commission 2007 infringement decision, a number of defendants within the MasterCard group submitted that there was such a close relationship between the intra-EEA and intra-UK claims, that annulment of the Commission 2007 decision would determine all the claims, and on that basis it applied for an immediate stay of the actions to avoid the wasted time and expense of pleading a defence and preparing for a case management conference.

In dismissing MasterCard’s application, the High Court held that whilst it is common ground that the claims cannot be finally determined until resolution of the appeal before the CJEU [4], that in itself did not justify a stay. The action should proceed some way towards trial before it was stayed pending the CJEU’s judgment [5].  In the circumstances of this case, the balance was against an immediate stay and in favour of the action continuing to a case management conference and MasterCard serving their defence, because:

  • in the overall scheme of this litigation, the costs of doing so are relatively modest;
  • the anti-competitive behaviour complained of began as long as 1992 and hence “there is a pressing need to get on with this litigation”;
  • even if the appeal to the CJEU results in an annulment of the Commission 2007 decision, there is a real chance that the claim concerning the intra-UK MIFs will continue, so that the risk that  MasterCard “might incur wasted costs and expend wasted time for which they are not fully compensated is not compellingly high”; and
  • if there is an immediate stay and the appeal to the CJEU is dismissed, Morrison will suffer the prejudice of a considerable delay in the determination of their claim, for which they may well not be fully compensated by an award of interest.

The judgment illustrates an unwillingness by English courts to stay proceedings without carefully considering whether the circumstances warrant it. It suggests that an appeal of an underlying infringement decision in itself is unlikely to be sufficient to warrant a stay and that the court will asses where the balance of risk of prejudice lies between the parties. It should be noted, however, that the claimant opposed the application for a stay in this case. Had both parties agreed to a stay, it is at least possible that it would have been granted.

The judgment is available here.

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[1] Council Regulation (EC) No. 1206/2001

[2]  MasterCard Incorporated, MasterCard International Incorporated, MasterCard Europe SPRL, MasterCard UK Members Forum Limited (in members voluntary liquidation), and MasterCard/Europay UK Limited.

[3] Interchange fees are fees paid on payment card transactions by merchant banks (acquiring banks) to cardholder’s banks (issuing banks). Multi-lateral interchange fees are those fees, which apply by default between the issuers and acquirers in the absence of a bilateral agreement.

[4] Masterfoods v HB Ice Cream Ltd [2000] ECR I – 11369

[5] In reaching this decision, the High Court referred to the principles established in the case of National Grid Electricity Transmission plc v ABB Limited and others [2009] EWHC 1326 (Ch). In particular, although the court has a general discretion, it needs to avoid any decisions running counter to the European Commission or the CJEU and must have regard to the overriding objective to deal with the claim justly.