European Disputes
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Limitation can be a key area of contention in follow-on claims for competition damages. While English law ordinarily provides for a six-year period to bring these claims, the law recognises that cartels deliberately conceal their infringements, leaving the victims unaware that they have wrongfully suffered loss until a much later date. As such, the law recognises that, where “any fact relevant to” the claimant’s right of action “has been deliberately concealed from him by the defendant”, “the period of limitation shall not begin to run until the [claimant] has discovered the… concealment… or could with reasonable diligence have discovered it” (s.32(1)(b) Limitation Act 1980). This operates as an important exception to the usual six-year period, as recently confirmed by the Court of Appeal in Gemalto Holding BV and another v Infineon Technologies AG and others [2022] EWCA Civ 782.

Follow-on claims are claims for damages where the infringement of competition law has been established by a competition authority such as the Competition and Markets Authority or the European Commission. For limitation purposes, claimants will often argue that limitation should run from the date of the authority’s decision.

That argument was adopted in Gemalto. Gemalto’s claim was issued on 19 July 2019, following on from a September 2014 decision of the European Commission that Infineon, Renesas and other smart card chip suppliers had unlawfully coordinated their pricing behaviour between 2003 and 2005. Gemalto’s claim had been issued within six years of the European Commission’s decision. However, the defendant suppliers argued that any concealment was, or could reasonably have been, discovered by Gemalto more than six years earlier. In particular, the defendants noted that the European Commission had publicly published a “Statement of Objections” on 22 April 2013, stating that it considered the defendants may have participated in a cartel. The investigation had also started receiving publicity almost four years earlier, in 2009.

The High Court agreed, and found that the claim was time-barred. In reaching this verdict, the Court held that the “trigger” for knowledge purposes was the announcement of the European Commission’s Statement of Objections, more than six years before the issuance of Gemalto’s claim. However, in its decision, the High Court left open the question of what precisely a claimant must know to have “discovered the concealment” and therefore for time to start running. In particular, it left undecided whether it is sufficient that the claimant knows enough to: (i) recognise that it may have a worthwhile claim; or (ii) be able to plead out that claim. The High Court decided that, on either view, by the time the Statement of Objections was publicised in this case, the claimant knew enough for time to start running.

The Court of Appeal confirmed the High Court’s decision and unanimously dismissed Gemalto’s appeal.

In its decision, the Court provided helpful guidance on the correct approach to determining what knowledge is sufficient for time to start running in a case concerning the “concealment” exception to the standard six-year limitation period, that is, the first of the two approaches referred to above. This is a somewhat lower threshold test than the alternative, so will be helpful to defendants to cartel-related damages actions. The Court elaborated as follows:

“Time begins to run in a deliberate concealment case when the claimant recognises that it has a worthwhile claim. In the case of a deliberately concealed unlawful cartel, a worthwhile claim arises when a reasonable person could have a reasonable belief that there had been a cartel. The claimant can embark on the preliminaries to the issue of a writ (and therefore the limitation has begun) once it knows that there may have been a cartel and the identity of the participants, without knowing the details, including the precise period of the cartel. A claimant would not, however, know that it had a worthwhile claim if a claim pleaded on the basis of the details it knew would be struck out. The claimant can draw inferences from the public statement of the regulator announcing the issue of a Statement of Objections.”

In arriving at this conclusion, the Court of Appeal placed considerable weight on the inferences that can be drawn from the European Commission having issued a Statement of Objections, which it took to be evidence that the authority “believes, subject to defences, that there is prima facie case that certain persons have participated in an unlawful cartel”.

Clearly, each case will require a highly fact-specific analysis to determine when the claimant had the requisite knowledge. However, the Court of Appeal’s recent judgment should encourage defendants to similar claims to scrutinise the factual background of the case in order to ascertain whether the claimant has unduly delayed in filing its claim.