The Danger of Waiting for a Finding of Anticompetitive Behaviour: Gemalto Sees its Claim Against the Smart Card Chips Cartel Time Barred

By Simon Yeung and Georgiana Stables

The secrecy of cartels—and victims’ consequent limited knowledge of them—has led the English courts to relax the requirement that claimants plead detailed statements of case at the outset of litigation. The flipside is that, under the “statement of claim” test, the limitation clock may start to run sooner than claimants think.

In January 2022, the question of whether a claim for damages arising from the Smart Card Chips cartel was time barred was heard as a preliminary issue in the English High Court case of Gemalto Holding BV and another v Infineon Technologies AG and others [2022] EWHC 156 (Ch).

Gemalto’s claim was based on the infringement decision of the European Commission dated 3 September 2014. Gemalto brought their claim on 19 July 2019—less than five years later—relying on s32(1)(b) of the Limitation Act, under which, in a case of deliberate concealment, the six-year limitation period does not start to run until the concealment either is discovered or could with reasonable diligence have been discovered. However, the court found that by the time the Commission had announced its Statement of Objections against the Defendants in April 2013, Gemalto did have sufficient material with which it could form a reasonable belief for a claim in damages. Gemalto was, therefore, three months out of time to bring its claim.

Gemalto brought its claim following the European Commission’s infringement decision in September 2014 that Infineon, Renesas and other smart card chip manufacturers had unlawfully coordinated their pricing behaviour from 2003 to 2005. Gemalto argued that its claim was brought well within the six-year limitation period because that time did not start to run until the Commission’s decision in September 2014. Infineon and Renesas argued that Gemalto had the relevant knowledge by no later than April 2013 due to then existing publicly available material, including the Commission’s press release in that month announcing it had issued a Statement of Objections, as well as two Requests for Information that Gemalto had received from the Commission as part of its investigation (the first on 3 July 2012 and the second on 25 September 2012).

Mrs. Justice Bacon applied the “statement of claim” test to the facts of the case. For Gemalto to bring a claim, it must have had knowledge of the following (Gemalto, §25):

• • the identity of the undertakings who had participated in the agreement;
  • that the agreement involved the coordination of market behaviour for smart card chips in breach of the EU competition rules;
  • that the geographic scope of the agreement extended to the EEA; and
  • the time period covered by the agreement.

The court determined that Gemalto knew, or with reasonable diligence could have known, these essential elements to plead its claim with sufficient certainty by the time the Commission announced its Statement of Objections in April 2013. This meant that Gemalto’s period to bring a claim for damages expired in April 2019.

This case suggests that it was the additional knowledge Gemalto had, in addition to the Statement of Objections, that satisfied the “statement of claim” test, which may provide some comfort to claimants who may not feel able to sign a statement of truth on a claim form and particulars of claim alleging a cartel only on the basis of the Commission’s Statement of Objections, which is not in itself a decision giving rise to a cause of action.

However, the judgment is a reminder to potential claimants not to wait unduly to issue a claim for damages. Not only does undue delay increase the risk of the limitation period expiring, but evidence becomes increasingly difficult to obtain as time passes.

Gemalto is appealing the decision.

Written by Simon Yeung and Georgiana Stables

Edited by Gary J. Malone