Partner Article

Private Enforcement of Competition Law

With Watson Burton LLPBritish Airways and other airlines are being investigated by the UK and US regulators for the alleged price fixing of fuel surcharges on long haul flights to the US. The potential consequence of an infringement of UK and/or European competition law is severe. In the UK, the Office of Fair Trading (OFT) has extensive investigative powers and may levy fines of up to 10% of worldwide turnover on any undertaking that it finds to be in breach. In addition to public enforcement of competition law, there is the potential for private enforcement through the courts. Whereas private enforcement is by no means as developed as public enforcement, recent developments at national and European level have sought to encourage private actions for damages as a means of enforcing competition law. In the UK, 2004 was the main turning point for private enforcement actions as the first award for damages was granted to a claimant by the Court of Appeal in Crehan v Inntrepreneur [2004] ECWA 637. Whilst the House of Lords has recently overturned the Court of Appeal’s decision in favour of the defendant on other grounds, the Court of Appeal’s decision is still authority for the principle that damages could be awarded to a claimant who has suffered as a result of an infringement of competition law and that the level of damages would be calculated on the basis of a claimant’s loss of profits. It is noteworthy that this position differs substantially from the position in the US where it is possible for a party affected by an infringement to sue for three times the value of its losses. Private enforcement in the UK has also been assisted by the availability to claimants of the specialist Competition Appeal Tribunal (CAT). The CAT will be bound by a previous infringement decision of the OFT or the European Commission. Whereas it would be advisable for claimants to await the outcome of any investigation by the OFT or European Commission before making a claim such a decision may not always be forthcoming. Empirical evidence has shown that the OFT do not have the resources to fully investigate all matters referred to it and the purpose of recent EC legislative developments has been to ensure that the European Commission only investigates those cases with significant public interest component. On the basis that enforcement at an international or national level will not always be forthcoming, it will be interesting to see if individuals and companies seek to follow the trend set in the US where private enforcement is common. Whilst Crehan suggests that damages would not be as high as in the US, litigants in the UK will have the benefit of the wide discovery rules and a specialist tribunal with expertise in competition law. If you have any queries in relation to this article or any other competition law matter, please contact Tristan Meears-White at Watson Burton LLP, telephone 0191 244 4363 or e-mail tristan.meears-white@watsonburton.com

This was posted in Bdaily's Members' News section by Ruth Mitchell .