Deutsche Bahn AG & Ors v Morgan Advanced Materials Plc [2014] UKSC 24

Deutsche Bahn and others brought follow-on damages claims against Morgan, a whistle-blowing cartel member who did not appeal the Commission's infringement decision. The Supreme Court held the claims time-barred, ruling that appeals by other addressees did not affect the limitation period against a non-appealing addressee.

Facts

Morgan Advanced Materials plc (formerly Morgan Crucible Co plc) participated in an illegal cartel in the electrical and mechanical carbon and graphite products sector. As whistle-blower, Morgan disclosed the cartel to the European Commission, which issued a Decision on 3 December 2003 finding infringement of article 81(1) TEC. Morgan received no fine; other cartel members were heavily fined. Most other members appealed to the General Court, which dismissed their appeals on 8 October 2008. Time for further appeal to the Court of Justice against the finding of infringement expired on 18 December 2008. Morgan itself did not appeal, so time for it to appeal expired on 13 February 2004.

On 15 December 2010, Deutsche Bahn AG and others filed follow-on damages claims in the Competition Appeal Tribunal under section 47A of the Competition Act 1998, relying on the Commission’s Decision. Rule 31 of the Competition Appeal Tribunal Rules 2003 imposes a two-year limitation period beginning on the later of the end of the appeal period under section 47A(8) or the accrual of the cause of action.

The Tribunal struck out the claims as time-barred; the Court of Appeal restored them. Morgan appealed to the Supreme Court.

Issues

The central question was whether, for a non-appealing addressee of a Commission Decision finding a cartel, the relevant “decision” under section 47A(5) and (8) of the Competition Act 1998 is:

• the Commission Decision as it operates against that particular non-appealing addressee (making time run from expiry of its own appeal period); or
• the Commission Decision viewed collectively, so that time runs only from the exhaustion of appeals brought by any other addressee.

Arguments

Appellant (Morgan)

Morgan contended that time began to run on 13 February 2004, when the period for its own appeal expired, so that the December 2010 claims were out of time. It relied on European authority establishing that a Commission Decision comprises a series of individual decisions addressed to each addressee.

Respondents (Deutsche Bahn and others)

The respondents argued that the Commission Decision constituted a single “base” decision on the existence of the cartel, and that time only began to run when all appeals to the European Court concerning that infringement finding were exhausted (18 December 2008), making the claims in time. They also argued that practical considerations, including the need to resolve causation, quantum and contribution together, favoured this construction.

Judgment

Lord Mance (with whom Lord Neuberger, Lord Sumption, Lord Toulson and Lord Hodge agreed) allowed the appeal, restoring the Tribunal’s decision striking out the claims.

Nature of a Commission Decision under European law

Although section 47A is a domestic provision, it cross-refers to a decision taken under European law, whose nature must be understood by reference to European law. Relying on AssiDomän Kraft Products AB v Commission (Case C-310/97 P) and Galp Energía España SA v European Commission (Case T-462/07), the Court held that a Commission Decision finding a cartel constitutes a bundle of individual decisions addressed separately to each addressee. As stated in Galp Energía:

a decision adopted in a competition matter with respect to several undertakings, although drafted and published in the form of a single decision, must be seen as a set of individual decisions finding that each of the addressees is guilty of the infringement or infringements of which they are accused and imposing on them, where appropriate, a fine. It can be annulled only with respect to those addressees which have successfully brought an action before the European Union judicature, and remains binding on those addressees which have not applied for its annulment

Accordingly, a successful appeal by one addressee has no effect on the validity of the Decision against a non-appealing addressee.

Application to section 47A

The Court rejected the Court of Appeal’s three main strands of reasoning:

• The suggestion that European law was irrelevant to the nature of the section 47A decision was an error. The decision under section 47A is the very European law decision that binds the domestic court under section 47A(9) and under general European law principles.
• Section 47A cannot refer to a generalised “decision in the air” about an unspecified infringement; it must be the decision in the operative part identifying specified parties and periods, which is addressed separately to each addressee.
• Practical concerns about awaiting a “final decision” begged the question, since as against a non-appealing addressee the Commission Decision remains fully in force regardless of other addressees’ appeals. Contribution proceedings might in practice be adjourned, but this did not alter limitation.

Conclusion on limitation

The only relevant decision establishing infringement against Morgan was the Commission Decision of 3 December 2003, which became definitive against Morgan on 13 February 2004. The two-year period under section 47A(8) and rule 31 expired well before the claims were issued on 15 December 2010. The claims were therefore out of time.

Implications

Legal principles

The decision confirms that a Commission Decision finding infringement of article 101 TFEU (formerly article 81 TEC) operates in law as a series of individual decisions against each addressee. For the purposes of section 47A of the Competition Act 1998, time runs against each addressee from expiry of its own appeal period, independent of appeals brought by co-addressees.

Practical significance

The judgment has particular relevance for claimants pursuing follow-on damages actions. Where a defendant addressee does not itself appeal a Commission Decision, prospective claimants must issue proceedings within the two-year window running from expiry of that defendant’s own appeal period, rather than waiting for the outcome of appeals by other cartel members. Whistle-blowers who accept the Commission’s findings without appealing become vulnerable to civil claims earlier than their co-cartelists who appeal.

Limits and qualifications

The Court acknowledged an incongruity: a non-appealing addressee may theoretically bear full civil liability even if co-addressees successfully overturn the cartel finding on appeal, with limited recourse to contribution. However, the Court considered this hypothetical in most cases, particularly where (as here) the defendant was itself a whistle-blower. The judgment addresses the position under section 47A specifically and does not necessarily determine parallel questions arising under sections 32, 36, 46 or 58A of the 1998 Act in a purely domestic context.

Wider importance

The case is significant in aligning the domestic limitation regime for follow-on competition claims with the European law characterisation of Commission decisions. It reinforces legal certainty for defendants who choose not to appeal Commission decisions and clarifies the strategic timing considerations for claimants contemplating follow-on actions against multiple cartel members.

Verdict: Appeal allowed. The Court of Appeal’s judgment was set aside and the Competition Appeal Tribunal’s judgment of 25 May 2011 striking out the respondents’ follow-on damages claims as time-barred was restored.

Source: Deutsche Bahn AG & Ors v Morgan Advanced Materials Plc [2014] UKSC 24