Toshiba Carrier UK Ltd & Ors v KME Yorkshire Ltd & Ors

A claim for damages for breach of competition law may proceed against a subsidiary alleged to form part of the same economic undertaking as an infringing parent or group company. Allegations that the subsidiary participated in, knew of, or implemented the cartel may constitute a reasonable ground for bringing the claim and may give it a real prospect of success. Implementation may be arguable even where the subsidiary acted as agent for a disclosed principal, because contractual liability and implementation of an illegal cartel are distinct concepts. A Commission decision is binding against its addressees and, in a stand-alone action, is at least admissible evidence on the infringement issues. All applications were dismissed.

The claimants sought damages arising from the European Commission’s decision that price-fixing and market-sharing arrangements in the industrial tubes sector infringed Article 81 EC, later Article 101 TFEU. They sued both companies named in the Commission decision and English subsidiaries or group companies not named in its operative articles.

The English defendants applied to strike out the claims under CPR Rule 3.4(2)(a), or for summary judgment under CPR Rule 24.2(a)(i). The non-domiciled defendants challenged jurisdiction under CPR Part 11. The central issues were whether the pleadings sufficiently alleged knowledge, participation or implementation by the English defendants, and whether the claims against the non-domiciled defendants could proceed under Article 6(1) of Council Regulation (EC) No 44/2001.

1. The amended particulars of claim alleged that the English defendants formed part of the relevant economic undertakings, engaged in the same economic activity, and implemented the unlawful arrangements. Subsequent correspondence sufficiently supplied the allegation that they knew of the agreements and concerted practices. The absence of a formal re-amendment did not justify strike-out.
2. The Chancellor was bound to follow decisions of judges of co-ordinate jurisdiction unless convinced that they were wrong. In light of the Court of Appeal’s treatment of the issue in Cooper Tire and Rubber Co v Shell Chemicals UK Ltd, the reasoning in Provimi v Roche Products Ltd and the first-instance decision in Cooper Tire and Rubber Co v Shell Chemicals UK Ltd could not be regarded as plainly wrong. No reference to the Court of Justice was appropriate before the facts had been found.
3. Article 16 of Council Regulation (EC) No 1/2003 required the national court to avoid a decision contrary to the Commission’s decision. That obligation was not confined to follow-on claims. In a stand-alone claim, if the court found that a company formed part of the same undertaking and was involved in the same practices, it could not conclude that the undertaking had not infringed Article 101. The Commission decision was, at the least, admissible evidence and could satisfy the summary-judgment test on the infringement issues.
4. KME Yorkshire’s alleged role as agent for a disclosed principal did not necessarily absolve it. Selling the products as agent could arguably amount to implementation, even without contractual liability. The evidence concerning Nemco and WW(UK) did not justify a mini-trial, and disclosure might materially affect the assessment of their alleged knowledge and implementation.
5. The applications of all defendants were dismissed. Since the claims against the English defendants remained, the claimants could rely on Article 6(1) against the non-domiciled defendants. The alternative Article 5(3) arguments did not arise.