The Office of Fair Trading v Somerfield Stores Ltd & Anor

Under rule 8(2) of the Competition Appeal Tribunal Rules 2003, the threshold of exceptional circumstances is strictly construed. The first question is why the appellant did not appeal in time, although the provision is not confined to circumstances existing on the deadline. In multi-party competition proceedings, later success by other addressees, or the subsequent failure of the regulator’s theory of harm, will not normally justify an extension where the applicant had a full opportunity to assess the decision and voluntarily chose not to appeal. Finality and legal certainty remain important even where the result is unattractive. An early resolution agreement does not ordinarily imply a promise that the regulator will preserve or successfully prove a particular theory of harm, nor does it create a formal legitimate expectation on that basis.

The OFT investigated alleged tobacco-market infringements and entered early resolution agreements with Somerfield and Gallaher. Its April 2010 Decision relied on the paragraph 40 theory of harm. Other addressees appealed in Tobacco I; after the OFT abandoned that theory and sought to advance the paragraph 2 theory, the CAT quashed the Decision as against those appellants.

Somerfield and Gallaher had not appealed within time. The CAT nevertheless granted extensions under rule 8(2) on the basis of exceptional circumstances, relying principally on a disjunction between their admissions and the later litigation. The OFT appealed. The central questions were whether the agreements, later third-party appeals, alleged misleading conduct, evidential assumptions, withdrawal of the Decision, or follow-on claims under section 47A of the Competition Act 1998 justified reopening the time limit.

1. Disposition. Vos LJ, with whom Patten and Laws LJJ agreed, allowed the OFT’s appeal, refused extensions of time for Somerfield and Gallaher, and dismissed both Respondents’ Notices.
2. Exceptional circumstances. Rule 8(2) of the Competition Appeal Tribunal Rules 2003 must be strictly construed. The first question is why the appeal was not lodged in time. The wording is not confined to circumstances existing at the deadline, but the circumstances must be truly exceptional. The analogy with article 45 of the Protocol (No. 3) on the Statute of the Court of Justice of the European Union supports strictness. The appeal was not subject to a double irrationality test: an appeal from the CAT may raise any point of law.
3. Early resolution agreements. The formal doctrine of legitimate expectation was inappropriate. The alleged representations arose only by implication and lacked the necessary clear, unambiguous and unqualified character. The agreements permitted the OFT to amend its theory after considering representations. They did not promise that a particular theory would be preserved or successfully proved. The respondents had an informed opportunity to assess the Decision and appeal.
4. Finality and later appeals. The subsequent success of third-party addressees did not normally constitute exceptional circumstances for parties who had chosen not to appeal. The respondents’ admissions and the later outcome did not create a legally relevant disjunction. Finality and legal certainty may produce an uncomfortable result in multi-party proceedings, but the respondents made voluntary commercial decisions with their eyes open.
5. Alternative arguments. Gallaher was not misled and was not entitled to assume that the OFT would later possess a proper evidential basis for its theory of harm. Such an implied term would be too uncertain, unnecessary and inappropriate. Napp and Mastercard required withdrawal only where the OFT wished to advance a wholly new case, which it did not do here.
6. Follow-on claims. Broad admissions under the agreements remained binding. Section 47A of the Competition Act 1998 did not create inconsistency merely because one constituent theory was abandoned against other addressees.

• Competition Appeal Tribunal: on 27 March 2013, granted Somerfield and Gallaher extensions of time under rule 8(2) of the Competition Appeal Tribunal Rules 2003.
• Court of Appeal (Civil Division): allowed the OFT’s appeal, refused the extensions, and dismissed both Respondents’ Notices.