The European Commission has published its recommendation to the UK Supreme Court on the interpretation of infringement decisions and the effect on time limits for bringing follow-on damages claims.

The Commission’s guidance and the Supreme Court’s ruling are significant in clarifying that claimants need to begin proceedings as soon as possible after those cartelists’ time for bringing an appeal has been exhausted, even if other cartelists’ appeals are still ongoing.

The Commission has the power to make such recommendations under Article 15(3) of Regulation 1/2003 where the Commission believes matters of community wide importance are at stake. This decision is important for both victims and perpetrators of anti-competitive behaviour as it affirms when time limits for bringing follow-on litigation claims expire.

The matter of importance in this case to the Commission was the danger of the UK adopting a position inconsistent with other member states by regarding the Commission’s decisions against companies in cartel cases as interwoven rather than as a series of individual decisions against each perpetrator. The relevance of this rather conceptual notion is with regard to the time limits for bringing follow-on actions for damages.

The issue at hand arose in connection with the carbon and graphite products cartel which was prosecuted by the Commission in 2003 and a subsequent follow-on action brought by certain claimants before the UK Competition Appeal Tribunal (CAT).

Under English law the time limitation period for bringing follow-on actions for damages is two years from either the later of the date on which the cause of action accrued, the date the appeal is determined or the date when the right to bring an appeal expires.

A company formerly known as Morgan Crucible never appealed the Commission’s 2003 Decision and sought leniency, admitting their liability. When in December 2010 certain claimants bought a claim for damages against Morgan Crucible amongst other cartel members who had appealed the Commission’s original decision, Morgan Crucible argued that theirs was a separate case and should not be treated alike. They argued to the CAT that the follow-on claim was out of time for them as they had never appealed the Commission’s decision and therefore the two year time limit for bringing follow-on actions for compensation had long ago expired.

Whilst the CAT agreed with this analysis, the claimants appealed the finding to the Court of Appeal who held against Morgan that a EU Commission decision was still live and ongoing until all avenues of appeal had been exhausted at EU or at a level where it could still be appealed. As some of the other claimant’s appeals had at last been rejected recently, the claimant’s were still within the two year window and permitted to bring a claim against Morgan.

When Morgan further appealed the Court of Appeal’s decision to the UK Supreme Court, the EU Commission made its recommendation which the Supreme Court in part followed. Both the Supreme Court and the Commission considered that a Commission Decision is addressed to each cartellist separately and that time limits ran in individual cases and did not bind together as one large collective decision against all the cartellists. The claim against Morgan was therefore well out of time. Although some would argue that Morgan escaped culpability against those to which it owed compensation, the larger principles of legal certainty and the fairness of treating cases individuality prevailed.

The lesson in future cases is for all companies who believe they are owed compensation to come forward against each claimant they believe owes compensation separately or at least bearing in mind that their cases will be treated separately. Claimants which ignore strict court time limits do so at their own peril.

The Commission recommendation can be found here: http://ec.europa.eu/competition/court/amicus_curiae_morgan_crucible_observations_en.pdf