Emerson Electric Co & Ors v Mersen UK Portslade Ltd & Anor

Follow-on damages claims under the Competition Act 1998 must be founded on a Commission infringement decision binding on the Competition Appeal Tribunal. Where the operative part clearly names the addressee undertaking, liability cannot be extended to a separate subsidiary omitted from it merely because EU law may treat parent and subsidiary companies as one economic unit. Recitals may assist in interpreting an ambiguous operative part, but cannot create an unmade finding or add an omitted addressee. The Tribunal’s jurisdiction is confined to causation and quantum. It cannot determine infringement liability or amend the Commission’s decision. An Article 15 request cannot be used to discover whom the Commission found liable. The appeal was dismissed.

Emerson brought follow-on damages claims before the Competition Appeal Tribunal under the Competition Act 1998, relying on the Commission’s Decision 2004/420/EC concerning a cartel in electrical and mechanical carbon and graphite products. The Decision was addressed to named undertakings, including Carbone SA, the parent of Carbone GB, but not to Carbone GB itself.

The Tribunal joined Carbone GB as a defendant and then struck out the claims against it under Rule 40 of the Competition Appeal Tribunal Rules 2003, holding that there was no relevant Commission infringement decision against it and no reasonable grounds for the claims: [2011] CAT 4. The central issue was whether a non-addressee subsidiary could be sued in follow-on proceedings because it allegedly formed part of the same undertaking as the named parent, and whether the Commission could clarify that position under Article 15 of Regulation 1/2003.

Lord Justice Mummery gave the leading judgment. Lord Justice Moore-Bick and Lady Justice Black agreed. The appeal was dismissed and the Tribunal’s strike-out order was upheld.

1. Follow-on proceedings under the Competition Act 1998 must be based on a Commission decision establishing the relevant infringement. The decision is binding on the Tribunal on infringement issues. The Tribunal’s jurisdiction is limited to causation and quantum and does not extend to making its own finding of infringement liability or reaching a conclusion contrary to the Commission’s decision.
2. The court accepted that “undertaking” is an autonomous EU-law concept. It may encompass a parent and subsidiary companies forming one economic unit. That concept does not, however, determine which separate legal entity is liable under a particular Commission decision.
3. The operative part of the Decision clearly identified the undertakings to which it was addressed and against which infringement findings were made. The recitals could be consulted only if the operative part were ambiguous. Here the Decision was addressed to Carbone SA, not to the group generally or to Carbone GB. Even if Carbone GB formed part of the same undertaking, it was not thereby identified as a separate infringing party liable in follow-on proceedings.
4. The Tribunal could not evaluate the evidential material in the recitals and make its own finding against Carbone GB, nor could it add Carbone GB to the Commission’s list of addressees. An Article 15 request under Regulation 1/2003 was unavailable and inappropriate for asking the Commission what it had decided or which entities were bound by the Decision.
5. The result was consistent with legal certainty and did not offend the principle of effectiveness. Since no relevant Commission decision founded the claims against Carbone GB, there were no reasonable grounds for making them and Rule 40 justified striking them out. The court expressed no view on the availability of ordinary civil proceedings.

• Court of Appeal (Civil Division) — Appeal dismissed. The Tribunal was not wrong in law to strike out Carbone GB as a defendant.
• Competition Appeal Tribunal — By order dated 7 April 2011, the Tribunal struck out the claims against Carbone GB under Rule 40 of the Competition Appeal Tribunal Rules 2003, holding that there was no relevant Commission decision founding the claims: [2011] CAT 4. Permission to appeal was granted by Etherton LJ on 21 October 2011.