On 7th April 2014, the UK Court of Appeal (“COA”) affirmed in The Office of Fair Trading v Somerfield Stores Ltd & Anor  the legal finality in admitting liability in respect of regulatory decisions. The decision of the COA further establishes the principle that once a right of appeal had been extinguished for a party against a regulatory decision and the party has admitted liability, exceptional circumstances to extend this time to appeal did not include the other parties to the decision successfully appealing their cases.
The facts concern fines of £225 million levied by the OFT in 2010 against 10 retailers and two tobacco manufacturers. Appeals were lodged by some of the parties whilst others reached early resolution agreements (“ERAs”) with the OFT. The retailer Somerfield and the tobacco company Gallaher were two of the parties who made ERA’s and who did not appeal the OFT’s fines.
Those parties who did appeal were vindicated when, in December 2011, the Competition Appeals Tribunal (“CAT”) allowed the appeals and found that the parties assertions that the OFT’s theory of harm on which its case was based were unsustainable. In light of this successful appeal by the others, Gallaher and Somerfield made applications for an extension of time to their right to appeal to the CAT. Extending the time limit may only be done under rule 8(2) of the CAT’s rules in exceptional circumstances. The CAT granted this extension on the basis that the OFT case had now been undermined by the successful appeals of the other parties.
The OFT, now facing another appeal against it’s original issue of fines, appealed against the CAT’s granting of the extension of time on the grounds of the other appellants’ successful appeal did not constitute an exceptional circumstance allowing the extension of the time of appeal and that legal finality to the OFT’s benefit should prevail.
The COA upheld the OFT’s appeal and quashed the CAT’s extension of time. It followed precedent in the previous case of RG Carter that successful appeals by other defendants did not constitute an exceptional circumstance and that Somerfield and Gallaher’s admissions in their ERA’s must be considered. Principally they considered that Gallaher and Somerfield had their chance to consider the OFT’s original case and appeal and took the decision not to appeal.
Although it seems unfair that other appeals were successful and the two parties were denied the chance to appeal against a case that was flawed, the COA felt their ERA’s with the OFT were too important to ignore. Their admission of liability and settlement with the OFT created a finality that the COA felt wise not to reverse. The fact that they made their original settlement with informed views was very compelling. The case is a lesson in finality for parties in regulatory litigation and shows that various parties to a regulatory decision will be treated separately and independently with regard to their admissions.
The case report can be found here.