When people talk of cartels, it might conjure up images of South America and an illicit drug trade. What is less likely to spring to mind is the notion of a Postman making his rounds through the Cumbria countryside!
This was, nonetheless, a picture that might have come to mind when the Court of Appeal recently considered the distinction between inherently anti-competitive agreements (‘by object’) and those that become so in certain circumstances (‘by effect’).
Background
In 2016, the European Commission (EC) found that five truck manufacturers had engaged in price fixing between 1997 and 2011.
Royal Mail and BT then issued proceedings against the manufacturers seeking damages, which were transferred to the Competition Appeal Tribunal (CAT) in 2018.
Last year, the CAT gave judgment for Royal Mail and BT, finding that they had been overcharged by 5% over the period, or £17.5m, to you and me. One of the manufacturers, DAF, appealed to the Court of Appeal.
Judgment
Although the pricing was not anti-competitive by object, the effect in the circumstances was anti-competitive. The Court of Appeal referenced the decision of the CAT:
“There is ample evidence before the court and considered by the experts as to what Royal Mail actually did at the time in terms of investment and debt finance. [There was reference] to Royal Mail having borrowed from the Government at a rate of 12% compound interest. …the court or tribunal draws “broad axe” inferences as to what the claimant would have done in the counterfactual with the money it had to use to pay the Overcharge.”
The Court of Appeal concluded that “[t]here is no error of law in the adoption of that approach.” The decision of the CAT was upheld. Appeal dismissed.
For more information about this article or any other aspect of commercial law, contact your Napthens Solicitors in Preston, Blackburn, Southport, and across the North West today.
