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

Implementation of an anti-competitive agreement made by others can itself amount to a concerted practice contrary to Article 101 where the undertaking acts with knowledge of the agreement and intends to contribute to its objectives. Participation need not take the form of joining the original agreement.

A claim alleging knowledgeable implementation, including exchanges of confidential information designed to promote cartel arrangements, therefore discloses a cause of action. Since cartels operate secretly, the evidential strength of such a claim may be difficult to assess before disclosure.

Common ownership alone does not permit the knowledge, intention or conduct of one group company to be attributed to another. Attribution requires the companies to form a single economic unit through the exercise of decisive influence.

The respondents bought industrial copper tubes or products containing them. They claimed damages for participation in price-fixing and market-sharing arrangements identified in a European Commission decision. The first appellant, KME Yorkshire Ltd, was a UK subsidiary but was neither named nor fined in that decision.

The Chancellor, in (2011) EWHC 2665 (Ch), refused to strike out the claim or grant summary judgment. He also dismissed jurisdictional challenges by the foreign appellants. Jurisdiction over those appellants was accepted to depend upon the survival of the claim against the UK company.

The principal questions were whether knowledgeable implementation of a cartel agreement made by others could infringe Article 101, whether such conduct had been sufficiently pleaded, and whether the paucity of evidence before disclosure justified summary dismissal.

1. Appeal dismissed unanimously. The pleaded stand-alone claim against the UK subsidiary disclosed an arguable infringement of Article 101. The Chancellor was entitled to refuse strike-out and summary judgment, and the consequent jurisdictional challenges by the foreign appellants failed.

2. A concerted practice does not require a completed agreement. It encompasses coordination by which undertakings knowingly substitute practical cooperation for the risks of competition. Even indirect or isolated contact may suffice where its object is to create artificial conditions of competition.

3. Acts implementing an anti-competitive agreement made by others may themselves constitute a concerted practice. Liability requires the implementing undertaking to know of the agreement and to intend through its own conduct to contribute to the participants’ common objectives. A participant may be responsible although its particular form of participation differs from that of others.

4. The claim form and amended particulars, read with the solicitors’ correspondence forming part of the statements of case, alleged that the UK subsidiary knowingly promoted the cartel. The allegations included withholding competitive supplies and exchanging confidential information to monitor and support the arrangements. Although the drafting lacked clarity, those allegations sufficiently pleaded knowledgeable participation and implementation.

5. The court could not fairly assess the strength of the claim before disclosure. Cartel arrangements are characteristically concealed. The subsidiary’s involvement in supplying relevant goods and an agency agreement provided some consistency with the pleaded case. The Chancellor therefore acted within his discretion in declining to conduct what would effectively have been a premature trial.

6. Etherton LJ added, obiter, that knowledge, intention or unlawful conduct cannot ordinarily be imputed between group companies. Attribution is possible where decisive influence means that the companies form a single economic entity. A rebuttable presumption applies between a parent and its wholly owned subsidiary, but common ownership alone is insufficient. Tomlinson and Ward LJJ agreed with Etherton LJ’s judgment.

1. Court of Appeal (Civil Division): The appeal was dismissed unanimously. The refusal of strike-out, summary judgment and the foreign defendants’ jurisdictional applications was upheld: [2012] EWCA Civ 1190.
2. High Court, Chancery Division: The Chancellor dismissed the UK defendants’ applications under the Civil Procedure Rules 1998 and the foreign defendants’ jurisdictional challenges: (2011) EWHC 2665 (Ch).