English Welsh & Scottish Railway Ltd v Enron Coal Services Ltd

A follow-on damages claim under section 47A of the Competition Act 1998 must rest on a clearly identifiable regulatory determination that the conduct relied upon infringed a relevant prohibition. Findings of fact from which an infringement might arguably be inferred are insufficient.

Where a strike-out application turns solely on interpreting the regulator’s completed decision, a trial adds nothing. The tribunal must decide whether the decision contains the necessary infringement finding, rather than preserve the claim merely because the claimant’s interpretation is arguable.

The Office of Rail Regulation found that a dominant rail-freight operator had discriminated against a coal intermediary through prices offered between May and November 2000. The discrimination placed the intermediary at a competitive disadvantage when negotiating future supply contracts with electricity generators.

The intermediary brought a follow-on damages claim under section 47A of the Competition Act 1998, including claims that prices charged under earlier haulage contracts were excessive. The Competition Appeal Tribunal, in [2009] CAT 7, struck out the overcharge claim concerning one generator but permitted the corresponding claim concerning another to continue.

The central issues were whether the Court of Appeal had jurisdiction over the refusal to strike out and whether the regulator had determined that the earlier contractual charges constituted an infringement.

1. Appeal allowed; cross-appeal dismissed. The Court granted both parties permission to appeal. It allowed the operator’s appeal against the refusal to strike out the remaining overcharge claim and dismissed the intermediary’s cross-appeal concerning the claim already struck out. Jacob and Carnwath LJJ agreed with Patten LJ.

2. Section 49(1) of the Competition Act 1998 conferred jurisdiction. A decision refusing to strike out a section 47A damages claim was a decision “as to the award of damages or other sum”. That expression described the type of relief in issue and encompassed interlocutory decisions both for and against striking out.

3. Rule 40 of the Competition Appeal Tribunal Rules 2003 adopted the same language and test as CPR 3.4(2): a claim may be struck out when the Tribunal is certain that it is bound to fail. This includes a legally defective claim even if its pleaded facts are assumed to be true. Where the question is solely one of interpreting a completed regulatory decision, nothing material can change at trial. The Tribunal must decide that question rather than allow the claim to proceed merely because one interpretation is arguable.

4. A section 47A follow-on claim requires an actual and definitive regulatory determination that the particular conduct constituted an infringement. Factual findings which could arguably support such a conclusion do not suffice. The infringement decision both establishes and limits the claim and the Tribunal’s jurisdiction. The Tribunal is bound by that decision and cannot make its own infringement determination while addressing causation and quantum.

5. The regulator had found discriminatory pricing which disadvantaged the intermediary in negotiations for future contracts between May and November 2000. It had not determined that prices agreed under the earlier contracts were themselves discriminatory or that they had to be reduced retrospectively or during their performance. Those earlier prices were used as comparators for assessing later quotations. An overcharge trial would therefore require fresh consideration of discrimination and objective justification outside the regulator’s findings and beyond section 47A.

1. Court of Appeal (Civil Division): In [2009] EWCA Civ 647, granted permission for the appeal and cross-appeal, allowed the operator’s appeal, and dismissed the intermediary’s cross-appeal.

2. Competition Appeal Tribunal: In [2009] CAT 7, struck out the overcharge claim concerning the EME flows but refused to strike out the corresponding claim concerning the BE flows. It refused permission to appeal.