Antitrust Alert: UK Court of Appeal Rejects Private Plaintiff Claim for Restitutionary Award for Cartel Offence

In a setback for private antitrust plaintiffs in the UK, today the Court of Appeal in London rejected a claim for restitutionary damages, limiting the Claimant to compensatory damages.

Last October, the High Court in London held that compensatory damages were the only damages available to cartel victims who, in reliance upon a European Commission decision, brought private claims for losses caused by cartel agreements. The Claimants had sought exemplary damages and restitutionary awards, which could have increased the amounts they would have won in the actions. These damage claims failed.

The Claimants had purchased vitamins directly or indirectly from companies found by the European Commission to have cartelised the vitamins market in the 1990s. One Claimant, who had purchased directly from the cartel members, appealed the Court’s decision that it was not entitled to a restitutionary award. A restitutionary award is measured by reference to the Defendant’s unlawful gains, rather than by reference to the Claimant’s loss, and requires disgorgement of those gains to the Claimant.

The Claimant had passed on to its own customers most if not all of the overcharge it had paid to the Defendants. Consequently, it had suffered little if any loss under a compensatory measure of damages. In an attempt to sidestep this issue, the Claimant sought a restitutionary award, to recover payment measured by the Defendants’ gains.

Today, the Court of Appeal decided unanimously that compensatory damages were an adequate remedy on the facts of the case. A restitutionary remedy would give the Claimant a windfall, as it had passed on the overcharge. The appeal was dismissed.

The case has wider implications for remedies law. In the leading judgment of Lady Justice Arden, she stated that recent case law indicated that there should be coherence in the law of remedies. As the House of Lords’ decision in Attorney General v. Blake had held that in exceptional circumstances a restitutionary award should be available for breach of contract, so it should be available in tort. The cartel offence is a tort. In the vitamins case, the Court of Appeal was prevented by its own previous decision in Stoke-on-Trent Council v. Wass from making a restitutionary award, as Wass held that such an award was only available for a tort involving a proprietary interest. It would require a decision from the House of Lords to overrule Wass in relation to a tort not involving a proprietary interest, and any Claimant would have to establish exceptional circumstances in order to obtain a restitutionary award.

Lord Justice Tuckey stated that he could see "no way" in which a Claimant could avoid taking the “pass on” into account in any compensatory claim for damages. This could be a material impediment to many would-be antitrust Claimants.

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Stephen Brown