Royal Mail Group Limited v DAF Trucks Limited & Ors

Where a claimant in a follow‑on competition damages claim proves breach and actionable harm on the balance of probabilities, quantification proceeds by a "broad axe" approach rather than requiring precision; by contrast, a defendant pleading supply pass‑on must prove a direct and proximate causal link between the upstream overcharge and any discrete downstream price increases, having regard to factors such as knowledge, size, relation of inputs to downstream products and identifiability of downstream claimants.

The appeals arise from the Competition Appeal Tribunal’s February 2023 awards of follow‑on damages to purchasers (Royal Mail and BT) after the European Commission’s 2016 Settlement Decision finding a long‑running truck manufacturers’ cartel. DAF appealed, challenging (1) the CAT’s quantum assessment and use of a "broad axe" approach, (2) the CAT’s rejection of a supply pass‑on defence, (3) the CAT’s inclusion of truck bodies within the scope of the infringement, and (4) the CAT’s assessment of financing losses. The Court of Appeal reviewed the CAT’s factual and expert evaluations, the applicable legal tests (including the Supreme Court’s guidance on pass‑on and quantification), and the CAT’s exercise of evaluative judgment. The Court dismissed the appeals, upholding the CAT’s legal tests and its quantified Overcharge (5%) and approach to financing losses.

1. Disposition. Appeal dismissed in its entirety. The Court of Appeal upheld the CAT’s findings, including a 5% Overcharge for both claimants, rejection of supply pass‑on, inclusion of truck bodies within the scope of the infringement, and the CAT’s approach to financing losses.
2. Burden and quantification. The court confirmed: (a) the claimant must prove breach and actionable harm on the balance of probabilities before quantification; (b) once that threshold is met, damages are to be quantified using the broad‑axe approach where precise measurement is inherently difficult; (c) the CAT lawfully applied the broad‑axe to select an Overcharge figure (5%) after evaluating rival econometric models and factual context, including adverse inferences from DAF’s failure to adduce evidence about cartel operations.
3. Evidence and expert evaluation. The CAT’s detailed critique of expert evidence (identification problems, exchange‑rate treatment, global financial crisis treatment, emissions premia and expert independence) was a permissible evaluative exercise. The Court emphasised appellate restraint in overturning such assessments absent irrationality.
4. Supply pass‑on (SPO) legal test and application. The Court endorsed the CAT’s synthesis of the law: a defendant bears the legal burden of raising pass‑on and must prove a direct and proximate causal link between the overcharge and specific downstream price increases. Relevant factors include claimant knowledge of the overcharge, relative size of the overcharge, the relationship between the input and downstream products, and identifiability of downstream purchasers. Where none of these factors are present, stronger factual proof of causation is required. Applying that test, the CAT legitimately found DAF had not proved factual or legal causation for SPO.
5. Scope of the EC Settlement Decision — truck bodies. The Court accepted the CAT’s conclusion that bodies fitted and invoiced by DAF formed part of the relevant trucks and fell within the Settlement Decision’s scope (factory‑fitted options/available options). In the absence of evidence from DAF showing otherwise, the CAT permissibly treated bodies like other extras.
6. Financing losses and compound interest. The CAT properly applied principles permitting inferences about how a claimant would have used money in the counterfactual and preferred a two‑period, business‑centric weighting (short‑term investments pre‑2008; debt post‑2008) for Royal Mail’s financing loss rate. The CAT’s choice between expert methodologies was rational and within its fact‑finding province.
7. Remedy / orders. The CAT’s awards and Orders (including an Overcharge of 5% and its approach to interest) stand. Appeal dismissed; costs and consequential orders not separately altered by this judgment.

• Competition Appeal Tribunal: Judgment on quantum and liability (majority and minority reasons) and Orders dated 7 February 2023; Orders of the Chair dated 3 March 2023; Permission to appeal ruling dated 16 May 2023 (permission limited on some grounds) (referred to in the judgment).
• Court of Appeal (Civil Division): Appeal heard 19–21 December 2023; judgment delivered 27 February 2024 ([2024] EWCA Civ 181) — appeal dismissed.