Preventx Ltd v Royal Mail Group Ltd

A dominant undertaking’s price increase does not, without more, establish abuse by limiting the market under competition legislation. The statutory concept of unfair trading conditions may nevertheless extend to coercive reliance on contractual rights, particularly where the undertaking has long acquiesced in an arrangement and seeks to impose a short transition period or threatens damaging consequences for continued use.

At the interim stage, the court asks whether there is a serious question to be tried and which course is likely to cause the least irremediable prejudice. Damages are inadequate where returned medical samples may be destroyed or where changes to confidential returns arrangements may seriously damage users’ confidence and the claimant’s reputation.

Preventx provided remote sexually transmitted infection testing services using kits returned through Royal Mail’s Freepost Standard service. Royal Mail proposed requiring all such returns to use a more expensive tracked parcel service, threatening to surcharge or dispose of items continuing to use the existing service.

Preventx sought an interim injunction, alleging abuse of dominance under Competition Act 1998, breach of contract and estoppel. The central issues were whether the allegations raised a serious question to be tried and whether damages would be an adequate remedy.

1. Interim injunction. The applicable principles were those in American Cyanamid Co v Ethicon Ltd [1975] AC 396. The court should not finally resolve difficult questions of law at this stage. It should ask whether the claim is not frivolous or vexatious and, if necessary, which course is likely to cause the least irremediable prejudice. The distinction between mandatory and prohibitory relief was immaterial.
2. Limitation of markets. The allegation that the increased price of the tracked service would reduce demand did not raise a serious question under s 18(2)(b). That provision concerns exclusionary conduct with a foreclosure effect, and could not be used to circumvent the established approach to excessive pricing.
3. Unfair trading conditions. The allegation under s 18(2)(a) was arguable. Competition law was not a general law of fair dealing, but the breadth of the provision meant that unfair reliance on contractual rights could potentially constitute abuse. In particular, it was arguable that threatening to destroy or refuse to process returns, relying on cl 3.22, and requiring migration within 30 days, relying on cl 16.1, were unfair in circumstances where Royal Mail had knowingly accepted the service for many years.
4. Royal Mail could change the service it offered, and could impose a surcharge after a reasonable notice period. On an interim application, the renewed annual licence commencing in April 2020 indicated that a substantially longer period than 30 days was arguable.
5. Contract and estoppel. Royal Mail could not be estopped from complying with mandatory packaging requirements. However, it was arguable that it could be estopped from relying on its termination clause where the only reason was the use of Freepost Standard for STI samples. Any estoppel would generally have suspensory effect and could be ended by reasonable notice.
6. Remedy. Damages were inadequate if samples were destroyed or not delivered, or if the proposed labelling seriously damaged confidence in the anonymity of the service. Damages were adequate for additional handling charges and other purely financial loss.
7. An injunction was granted until trial or further order, subject to Preventx using its best endeavours to introduce compliant packaging and Royal Mail not requiring the sender’s name and address unless legally required. Royal Mail was restrained from refusing Freepost Standard returns or refusing to process and deliver them, although it could impose an additional charge.