WH Newson Holding Ltd & Ors v IMI Plc & Ors

A follow-on damages claim under section 47A of the Competition Act 1998 is not confined to breach of statutory duty. It may employ any cause of action, including unlawful means conspiracy, provided that every ingredient of that cause of action is established by the infringement findings in the relevant regulator’s decision.

The tribunal may determine causation and quantum, but may not infer or find an additional ingredient of liability. Unlawful means conspiracy requires an intention to injure the claimant. An intention to obtain commercial gain permits an inference of such intention only where the defendant’s gain and the claimant’s loss are inseparably linked. A cartel finding that undertakings intended to restrict competition and increase prices does not, without more, establish an intention to injure purchasers who might pass on the increase.

The European Commission found that members of the IMI group had participated in a cartel concerning copper plumbing tubes. Companies in the Newson group, which had purchased tubes from IMI, commenced follow-on proceedings in the Competition Appeal Tribunal. They alleged breach of statutory duty and unlawful means conspiracy under section 47A of the Competition Act 1998.

The Tribunal transferred IMI’s strike-out application to the High Court. Roth J, in [2012] EWHC 3690 (Ch), held that section 47A could encompass conspiracy. He permitted one conspiracy claim to proceed because he considered that an intention to injure could be inferred from the cartelists’ pursuit of economic gain. He struck out a second conspiracy claim because it was not substantiated by the Commission’s infringement findings; the claimants did not appeal that ruling.

The central questions were whether section 47A permitted a conspiracy claim and whether the Commission’s findings established the intention to injure required for unlawful means conspiracy.

1. Appeal allowed. Section 47A of the Competition Act 1998 was capable of encompassing a claim in unlawful means conspiracy, but the pleaded claim could not proceed because the Commission’s infringement findings did not establish an intention to injure the claimants. Patten and Beatson LJJ agreed with Arden LJ.

2. The expression “any claim for damages” in section 47A(1) imposed no restriction by reference to the form of cause of action. Read in its statutory context, it permitted causes of action other than breach of statutory duty. Parliament was unlikely to have intended to prescribe a single civil wrong, particularly since claims governed by foreign law might not take that form.

3. Nevertheless, every ingredient of the selected cause of action had to be grounded in express infringement findings in the regulator’s decision. Following Enron Coal Services Ltd v English Welsh and Scottish Railway Ltd [2009] EWCA Civ 647 and [2011] EWCA Civ 2, the Competition Appeal Tribunal could identify the findings of infringement and determine causation and quantum. It could not draw further inferences or make additional findings concerning infringement or another ingredient of liability. Facts merely consistent with the Commission’s findings were insufficient.

4. Unlawful means conspiracy required a combination involving unlawful action, an intention to cause damage to the claimant, and the intended damage. Injury need not be the conspirators’ predominant purpose, but it must form part of their intentions. Mere foresight that unlawful conduct might or probably would cause damage did not suffice.

5. An intention to injure may be inferred where injury to the claimant is the necessary means by which the defendant obtains its intended gain. That reasoning applies only where gain and loss are inseparably linked and the proved facts exclude every other inference. Here purchasers might have passed the increased prices to their customers or otherwise avoided loss. The Commission’s finding that the cartelists intended to restrict competition and promote their own interests therefore did not establish an intention to injure the claimants or any sufficiently identified class.

6. The Commission’s findings could establish the necessary agreement or combination because they went beyond mere participation in a concerted practice and included arrangements about matters such as market-share allocation. The fatal omission remained the absence of any finding of an intention to injure. Although a conspiracy claim could in principle fall within section 47A, this was likely to occur only rarely.

1. Court of Appeal (Civil Division): In [2013] EWCA Civ 1377, allowed IMI’s appeal. It upheld the conclusion that section 47A could encompass conspiracy but held that the Commission’s findings did not establish the required intention to injure.

2. High Court, Chancery Division: Roth J, in [2012] EWHC 3690 (Ch), held that section 47A could encompass conspiracy. He refused to strike out one conspiracy claim but struck out another which was not substantiated by the infringement findings.

3. Competition Appeal Tribunal: The claimants commenced follow-on proceedings in the Tribunal. With the parties’ consent, the Tribunal transferred IMI’s strike-out application to the High Court.