The Danger of Waiting for a Finding of Anticompetitive Behaviour, Part 2: UK Court of Appeal Agrees Gemalto’s Claim Against the Smart Card Chips Cartel is Time Barred
By Richard Pike, Simon Yeung, Emelyne Peticca
The limitations period for cartel damages cases in the United Kingdom has not finished evolving, as evidenced by two recent significant decisions.
In the first noteworthy decision, on 10 June 2022, the UK Court of Appeal handed down its judgment dismissing the appeal brought by Gemalto Holding BV. We analysed the first instance decision in a prior blog post.
Gemalto appealed the decision of Mrs. Justice Bacon, who found that Gemalto had sufficient information to bring a claim earlier, and that the period for bringing such claim had therefore expired.
The Court examined what test should be applied under section 32(1)(b) of the Limitation Act 1980 to determine whether a claim is barred by the statute of limitations. On this point, the Court of Appeal chose a test different from the one applied at first instance, applying the test from the Supreme Court decision in the case of Test Claimants in the Franked Investment Group Litigation v. HMRC  UKSC 47 ( “FII”).
The FII test treats time as starting to run from the point when the claimant knows, or with reasonable diligence could have known, that it has a worthwhile claim. In other words, “the claimant must know about the mistake (or in this case the concealment) with sufficient confidence to justify embarking on the preliminaries to the issue of proceedings.” (§3.) In choosing that test over the “statement of claim” test applied at first instance, the leading judgment (authored by Master of the Rolls, Sir Geoffrey Vos) stated that the FII test “must be intended to operate in all situations in which there has been a mistake, fraud or concealment, and to be consistent with the Limitation Act more generally.” (§47.)
However, applying the FII test to these facts made no difference to the outcome. Under the FII test, the Court of Appeal determined that the limitation period of Gemalto’s claim began to run once Gemalto knew “that there may have been a cartel and the identity of the participants in such organisation, without knowing all the facts, such as the exact period of the cartel.” (§65.) These conditions were satisfied by the end of April 2013, as Mrs. Justice Bacon determined under the statement of claim test. Sir Geoffrey emphasised, however, that there is no universally applicable rule, given that cases turn on their facts.
Lord Justice Green, who agreed with the leading judgment, nevertheless noted that in 2017, the Competition Act 1998 was amended to incorporate the Damages Directive (Directive 2014/104/EU) into national legislation. These amendments contain specific provisions regarding when time starts to run for the purposes of limitation in competition damages claims. These provisions will play an increasingly significant role in determining whether claims are brought out of time as new cases subject to these legislative changes come through the courts.
The second noteworthy decision came less than two weeks later, when—in what may yet lead to an interesting postscript—the Court of Justice of the European Union (“CJEU”) handed down judgment in Volvo AB (publ.) and DAF Trucks NV v RM, C-267/20, EU:C:2022:494, another cartel damages case raising limitation issues.
The CJEU held in Volvo that the European law principle of effectiveness required—even before the passage of the Damages Directive —that the limitation period for a damages claim cannot begin to run before the infringement has ceased and the injured party knows or can reasonably be expected to know the information necessary to bring his or her action for damages. This test for the knowledge required appears to be stricter than the test adopted by the Court of Appeal and to point towards the need for an infringement decision to be published before time can start running.
While it remains to be seen whether the Gemalto case will go to the UK Supreme Court and, if it does, whether the UK Supreme Court will be willing to adopt the reasoning of the CJEU in Volvo, it certainly raises a question mark about the application of the Gemalto decision for any other cartel damage cases where the Damages Directive amendments to the Competition Act do not apply.
Written by Richard Pike, Simon Yeung, Emelyne Peticca
Edited by Gary J. Malone