Enron Coal Services Ltd (In Liquidation) v English Welsh & Scottish Railway Ltd

In a follow-on competition damages claim, the Competition Appeal Tribunal is bound by clearly identifiable findings of fact made by the regulator, unless it expressly directs otherwise under section 58 of the Competition Act 1998. A finding cannot be assembled by inference from isolated or general passages in the regulatory decision.

A binding finding of infringement does not establish that the infringement caused the claimant loss. Discriminatory conduct may constitute an abuse because it tends to distort competition, without proof of actual, quantifiable deterioration in an individual competitor’s position. Causation and loss therefore remain for the claimant to prove on the evidence.

The Office of Rail Regulation found that a dominant rail-freight operator had infringed article 82 of the EC Treaty and the Chapter II prohibition of the Competition Act 1998 by offering discriminatory coal-haulage prices. Enron Coal Services Ltd brought a follow-on claim before the Competition Appeal Tribunal, alleging that the infringement deprived it of a real or substantial chance of securing profitable coal-supply business.

The Tribunal dismissed the claim in [2009] CAT 36. It found that Enron had not proved either that it would have pursued the alleged end-to-end supply arrangement in the counterfactual world or that the customer presented a real or substantial chance of awarding that business.

The appeal concerned whether section 58 applied to Tribunal proceedings and whether the Tribunal’s causation findings were inconsistent with binding factual findings or the infringement decision of the regulator.

1. Appeal dismissed. Section 58 of the Competition Act 1998 applies to follow-on proceedings before the Competition Appeal Tribunal. In this context, “court” includes the Tribunal when it acts judicially in Part I proceedings. A contrary construction would create an irrational disparity between claims begun in court and those begun in, or transferred to, the Tribunal. The Tribunal was therefore bound by the regulator’s findings of fact unless it directed otherwise: per Lloyd LJ, with whom Patten and Jacob LJJ agreed.

2. A party invoking section 58 must identify a clear and definitive regulatory finding of fact. It is insufficient to collect passing words, summaries or general observations from which the suggested finding might arguably be inferred. The location and context of the passage within the regulatory decision are material to determining whether it records a finding.

3. The regulator had found that discriminatory haulage prices placed the claimant at a competitive disadvantage when tendering for coal-haulage services. It had not found that the claimant tendered for an end-to-end coal-supply contract, had a real or substantial prospect of obtaining such a contract, or suffered actual loss. Passing descriptions of the tender as being on an end-to-end basis did not amount to clearly identifiable findings under section 58.

4. Sections 47A(9) and 58A make the infringement decision conclusive. That conclusiveness carries with it the basic factual findings necessary to establish the infringement. Section 58 has a wider but qualified operation: other regulatory findings of fact are binding unless the court or Tribunal disapplies that effect.

5. An infringement does not necessarily prove damage to an individual competitor. Conduct intended or tending to distort competition may constitute abuse even if its intended result is not achieved and no actual quantifiable deterioration in an individual trading partner’s position is proved. The Tribunal was consequently entitled to determine causation and loss from the evidence before it and to conclude that the claimant had not discharged its burden.

6. Obiter, a direction disapplying section 58 should be express, should identify the affected findings and should give reasons, even if briefly. A claimant relying on regulatory findings should also identify those findings and their supporting passages clearly in its statement of case.

1. Court of Appeal (Civil Division): By [2011] EWCA Civ 2, unanimously dismissed the appeal, while differing from the Tribunal on the applicability of section 58 of the Competition Act 1998.
2. Competition Appeal Tribunal: By [2009] CAT 36, dismissed the damages claim because causation had not been proved.