5 September 2012 | By Sam Chadderton
6 January 2014
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Claims for competition cases are expected to rocket next year with litigators reporting an renewed interest in follow-on damages claims from corporate clients.
Synthetic rubber is hardly the juiciest of topics, but when the European Commission fined 10 companies more than €500m (£396m) for their part in a cartel operation which involved the proce fixing of rubber products it sparked the interest of their former clients.
One such client is Cooper Tire & Rubber Company, which is looking to secure damages from chemcials group Dow, which, it alleges, fixed the price of rubber used in car tyres. The company has instructed SJ Berwin partner Stephen Kon to lead its fight, with heavyweight Joe Smouha QC of Essex Court Chambers to lead Monckton Chambers’ Philip Woolfe as counsel.
Smouha will face One Essex Court’s Laurence Rabinowitz QC, another bar heavyweight, who has been instructed by Linklaters competition partner Michael Sanders.
The rubber cartel case is one of the biggest competition disputes of recent years, as is demonstrated by the calibre of the lawyers involved. It even has a Hollywood-esque back story, with the EC revealing a series of meetings between the companies over a six-year period from 1996 in locations as diverse as Richmond-on-Thames and Amsterdam.
Household names such as Shell, Dow, and Bayer had generals operating “on the fringes” of official European Synthetic Rubber Association meetings, as part of the cartel, the EC said.
Bayer was granted immunity as the whistleblower and, after an appeal, a case against Trade-Stomil was thrown out when Baker & McKenzie partners Bill Batchelor and Fiona Carlin found a parking stub that showed the company did not participate in a key price-fixing meeting.
According to Macfarlanes competition partner Marc Israel an EC ruling will boost a follow-on damages suit but claimants still have to establish the defendant’s liability by showing causation and loss. He added that follow-on claims are virtually untested in English courts.
Smouha will be asking if Cooper passed on any overcharge from the price fixing cartel to its customers – thereby avoiding a financial burden. The claimant will have to show that it suffered more losses from the price-fixing than the bottom-line customers.
Israel said: “As there have been so few follow-on damages cases that have reached court there are a number of unknowns as to how the courts will rule on certain points.They are still setting out boundaries and legal precedent on these sorts of claims.”
While several firms were fined for their part in the cartel only Dow is named on this claim. However, with a three-month trial set down for mid April, there is still time for this one to settle.
A follow-on claim that does look set to go all the way next month is Albion Water v Welsh Water. Albion Water alleged that Welsh Water was price-squeezing over the supply of water to a paper mill.
Shepherd & Wedderburn partner Guy Harvey is leading the case for Albion Water, instructing One Essex Court’s Thomas Sharpe QC and Mehdi Baiou. Hogan Lovells partner Suyong Kim is instructing Daniel Beard QC, to lead Meredith Pickford and Ligia Osepciu all of Monckton on behalf of Welsh Water.
Albion Water wants compensation, aggravated damages and exemplary damages from Welsh Water. It also wants them to pick up the legal bill.
Another follow-on behemoth could be the National Grid’s £300m damages claim in the UK High Court against 21 defendants, based on the EC’s infringment decision in the gas insulated switchgear (GIS) cartel. Berwin Leighton Paisner (BLP) partners Adrian Magnus and Ed Coulson are advising on the dispute, which is expected to be heard next year.
Elsewhere, Eversheds partner Richard Little is instructed for defendant Recolight, a producer compliance scheme, against claims that it unlawfully agreed to fix recycling charges for gas discharge lamps and abused its dominant market position. A team of 50 lawyers is working on the complex antitrust litigation, which is set down for a nine-week trial in early 2013 in the Chancery Division.
Earlier this year, the CAT awarded exemplary damages in a follow-on claim for the first time against Cardiff Bus for 2 Travel (30 July 2012). It was based on a 2008 OFT finding that Cardiff Bus had abused its dominant market position by launching a no-frills bus service.
Although the award was minimal, this landmark judgment raised the stakes in follow-on damages claims.
This area of law is still in its infancy. Compeition lawyers say this makes clients nervous because the outcome of cases is relatively uncertain, prompting many litigants to try and settle. This is probably why so few cases have got to court before, but with a few battle hardened clients in their pocket, the claimant compeition legal market is ready to try again.