Let's talk antitrust - The interplay between leniency and damages litigation

Video | May 2018 | 00:06:17
Transcript

Mark Simpson: It’s good to see you again Richard. Today, I thought we might talk about the interaction between leniency programmes and competition litigation. Leniency of course, something we’ve seen a bit of phenomenal over the last twenty years, which has resulted in competition authorities being able to detect many more cartels and obviously prosecute many more cartels than in the past. Undoubtedly a success and serious gains to be made. It used to be a perceived wisdom that companies that uncovered some sort of anti-competitive conduct would look to apply for leniency and try and get as high up the queue as possible. Indeed, if you looked at the case work of the European Commission and other authorities you’d see that pretty much all of their cases year to year may have started from or have started from a leniency application. Do you think Richard that there may have been some sort of chilling recently in the last few years because of the rise of competition litigation in Europe? I ask this question because I’ve heard suggestions that applications being made to the European Commission in Brussels and potentially also the CMA have not been as high in the last few years.

Richard Whish: Well, I’ve heard the same myself anecdotally, I can’t point to any statistics that prove the case one way or the other, but I’ve certainly had lots of conversations with people who say that, shall I put it this way, it is not as easy to make the decision to blow the whistle as once it would have been. And obviously that’s because there has been a fundamental change in market conditions and you’re never going to get any significant cartel decision nowadays that doesn’t have a follow-on claim and possibly with an associated standalone claim sort of bolted on top of that. So, I can certainly see how in a case like trucks where the fines roughly speaking in trucks were about £4 billion, but I have heard an estimate that the economic harm caused by that cartel may have been in the region of £100 billion. I can well see that I might make a decision to be careful on blowing the whistle for the fine in circumstances where I may be jointly and severally liable for £100 billion.

Mark Simpson: What are some of the consequences of leniency statement that businesses need to consider when they have uncovered some sort of potentially anti-competitive conduct in terms of that litigation?

Richard Whish: Obviously, the important point is Article 11(6) of the Directive that makes absolutely clear now that the leniency application itself will not be disclosed as part of civil litigation for damages so that overcomes the anxiety. The uncertainty that was created by the Pfleiderer judgment, so that’s useful it would be ridiculous if a leniency applicant was actually in a worse position when it came to an action for damages than the people who didn’t blow the whistle. So, that’s a fairly clear legal point. There is also that provision in the Directive around joint and several liability that in certain circumstances there is not joint and several liability for the whistle blower, but obviously other than that you have admitted that you are in the cartel so you can be sued for damages.

Mark Simpson: Absolutely, no bar whatsoever and it’s often the case that the leniency applicant is named as the first defendant. Is there anything to prevent those cases being bought early? I don’t think the Damages Directive has changed that.

Richard Whish: No, theoretically, a court could proceed to judgment against the leniency applicant, theoretically that could happen. I think in practice it’s highly unlikely because I think that, for example, there are other members of the same cartel who are appealing to the General Court in Luxembourg. I think it’s relatively unlikely that a judge in this country would proceed to judgment against the leniency applicant while the others are still contesting there participation in the cartel. Never say never, however.

Mark Simpson: For the moment, then that perhaps leads us in to the subject which everyone likes to stray into these days about Brexit. Do you think Brexit has the potential to change that in terms of looking into the future around European Commission decisions?

Richard Whish: Well, obviously what we don’t know is what status a European Commission decision will have in the post-Brexit world. I think there are quite good arguments for saying that the Commission decision should be binding as to fact in post-Brexit litigation, but that’s a matter for the government and legislation obviously.

Mark Simpson: We’ll have to wait to see what happens there. But just to take a slight tangent for now think about settlement. Settlement is another procedure which authorities offer to allow businesses to potentially cut short the length of the investigation and streamline the process and perhaps get on with life. But does that also apply, or similar considerations apply, in terms of litigation risk?

Richard Whish: It seems to me that I’ve little doubt that one of the reasons sometimes that people settle is that the decision gets published by the Commission will be let’s say 26 pages as opposed to 126 pages. Of those 26 pages, very little will be said about the cartel, so there is nothing in there that actually assists, evidentially, the claimants case when it comes to proving harm etc, and of course it may be that settling has the consequence that the Commission identifies a cartel for the years 2005 to 2011 who knows if they had adopted a fully contested procedure they might have decided that it started earlier and ended later. Or perhaps they decide that the cartel wasn’t as geographically extensive as they might have done in a fully contested procedure, so this obviously can be a benefit for the settling parties.

Mark Simpson: Thanks very much Richard.

Contacts

Mark Simpson

Mark Simpson

London