Addleshaws and Burges Salmon each score points as CAT rules in Cardiff bus wars case

A judgment handed down by the Competition Appeal Tribunal (CAT) ruled on the first successful ‘follow-on’ damages award from a competition ruling.

While the CAT awarded 2 Travel damages in respect of lost profits, it rejected the company’s claims for loss of a capital asset, loss of a commercial opportunity, wasted staff and management time and liquidation costs.

Addleshaws competition and EU partner Adam Aldred was instructed by 2 Travel Group, which is now in liquidation, in its £50m damages claim against Cardiff Bus, with Michael Bowsher QC and Anneliese Blackwood of Monckton Chambers acting in the CAT hearing.

Burges Salmon partners Laura Claydon and Peter Morris led the defence on behalf of Cardiff Bus, instructing James Flynn QC and Colin West of Brick Court Chambers.

In 2004, Cardiff Bus operated a low-cost service in the city. In 2008 the Office of Fair Trading found that its “predatory conduct” towards 2 Travel had infringed the Competition Act, with the company abusing its dominant market position.

Sector experts said most damages claims as a result of competition infringements are settled between parties. The only ‘follow-on’ damages claim to go to trial to date was the Enron case – and that failed.

Many claimants also find it difficult to prove that they did not pass on the losses alleged by competition infringements to their own customers to protect their businesses.

This judgment is the first successful – albeit partial – case of its kind and the ruling has been watched closely by antitrust lawyers.

They said that although Burges Salmon had defended the case well and significantly reduced the damages award to £100,000, the decision showed that such competition litigation can be done.

2 Travel’s claim was that it has suffered £50m losses. This was under six headings of: loss of profits, loss of the business, loss of commercial opportunity, wasted staff and management time, liquidation costs and damages. It also claimed interest on the damages.

But after CAT judges Lord Carlile QC, Peter Freeman QC and Marcus Smith QC heard legal arguments,they only awarded lost profits of £33,818, plus interest, and exemplary damages of £60,000. They rejected all other claims.

A statement from Claydon and Morris, on behalf of defendants Cardiff Bus, said: “This was a very difficult case. We successfully maintained the position that Cardiff Bus had taken both before and throughout the proceedings and the tribunal endorsed our approach.

“Notably, this is only the second follow-on damages claim to reach trial and we’re pleased to see the Competition Appeal Tribunal uphold its application of the ‘but for’ test of causation from its previous decision in Enron.The decision will be scrutinised closely by practitioners in the field as the reasoning is likely to have a significant influence on the approach to future claims brought under Section 47A of the Competition Act.”

The landmark case will be followed by two more follow-on competition damages trials coming to the courts.

The CAT will rule on a claim for damages by Albion Water against Welsh Water on allegations that the latter abused its dominant market position to squeeze the margin of water charges.

Then in the High Court next spring, Cooper Tyre will claim losses caused by the overpriced synthetic rubber cartel EU Competition case. It will have to show that it suffered more losses from the price-fixing than the bottom-line customers.