Judgment was handed down this week by the Court of Appeal in the latest turn of the 2019 Rail Franchising litigation. The Secretary of State appealed against the trial judge’s refusal to strike out elements of the Part 7 claims brought by four disqualified bidders in the recent franchise competitions.

The central issue was whether aspects of the claims were now time-barred, having been brought more than three months after the relevant bidding documentation had been issued. At first instance, Stuart-Smith J had held that the claimants’ Francovich damages claims were breaches of statutory duty to which a six-year limitation period applied; moreover, even if the three-month time limit did apply, he would need to hear all the evidence at trial in order to determine the point from which time had run; and finally that it was not necessarily an abuse of process to claim ‘cross-over’ relief in the form of a declaration or injunction in a Part 7 claim that engaged both public and private law rights.

On appeal, the Secretary of State argued that the underlying claim was a public law challenge and consequently a breach of the principle of procedural exclusivity.

Giving the leading judgment, Coulson LJ rejected the Secretary of State’s argument that a damages claim arising out of a public body’s decision should automatically be subject to a three-month time limit, and did not accept that the Part 7 claims were ‘public law challenges’. A claim for damages was not attempting to reverse or alter the public body’s decision, but only to receive compensation for a wrong suffered. As such, there was no condition precedent that a claimant should have brought judicial review proceedings first. Procedural exclusivity did not apply in a private law case when an individual sought to establish private law rights which could not be determined without an examination of the validity of a public law decision. Therefore, where claims for damages were inextricably mixed with public law issues, the judicial review limitation period would not apply. However, it might still be an abuse to seek an injunction aimed at reversing a public law decision where the claim was brought outside the three-month time limit. As to the point from which time ran in the present case for the purpose of the judicial review time limit, while it was possible for a cause of action to arise on the issue of tender documents, if the process was more fluid the claim might only crystallise at a later point, when the tender was rejected. As such, the judge had been correct not to strike out the claims on an interlocutory application. The appeal was accordingly dismissed.

Anneli Howard, Fiona Banks and Alfred Artley appeared for the Secretary of State (led by Rhodri Thompson QC and Fionnuala McCredie QC).

Philip Moser QC and Jack Williams appeared for Arriva (the first respondent).

Tim Ward QC and Daisy Mackersie appeared for the Stagecoach bidders (the second and fourth respondents).

The Competition Appeal Tribunal has today dismissed Royal Mail’s appeal against a finding by Ofcom that it abused its dominant position to exclude a competitor. The Tribunal’s judgment provides guidance as to the approach for deciding whether conduct is an abuse of dominance. In particular, the Tribunal considered the CJEU judgment in Intel and decided that it is not always necessary to carry out an ‘as efficient competitor’ test before finding pricing conduct to be abusive.

The Ofcom decision against which Royal Mail appealed was taken in August 2018. It concerned changes, notified by Royal Mail to its customers in January 2014, to its pricing scheme for delivering ‘access mail’, i.e. letters collected and sorted by its competitors but handed over to Royal Mail for delivery to final addresses.

The notification of the pricing changes occurred at a time when there was nascent competition in letter delivery from Whistl (then known as TNT Post). Whistl was rolling out its own letter delivery operation, in order to compete with Royal Mail in ‘end-to-end’ delivery. Since Whistl was rolling out letter delivery in only some areas of the UK, it would continue to need to rely on Royal Mail’s letter delivery service in relation to other areas. The pricing changes notified by Royal Mail included the charging of higher prices to customers of its letter delivery service whose ‘profile’, in terms of geographical distribution of mail across all areas of the UK, did not match Royal Mail’s own geographic mail distribution profile.

Whistl put its plans to roll out delivery operations on hold. It ultimately withdrew from end-to-end competition.

Ofcom decided that Royal Mail’s conduct was not competition on the merits, it was liable to impede competition, and thus constituted an abuse of dominance. Ofcom imposed on Royal Mail a fine of £50m.

Royal Mail, in its appeal, contended that the finding of abuse should not have been made, among other matters since Ofcom had not properly considered an ‘as efficient competitor’ test. In that regard, Royal Mail argued that pricing conduct by a dominant enterprise should not be found abusive unless the conduct is shown to be liable to have exclusionary effects on a competitor that is ‘as efficient’ as the dominant enterprise. Royal Mail also contended that its notification of its new pricing structure could not be abusive in circumstances where the pricing changes were suspended, meaning that the new prices were never actually charged or paid.

Whistl, whose complaint triggered the investigation, was permitted by the Tribunal to intervene in the appeal proceedings in support of Ofcom.

By its judgment today, the Tribunal has dismissed Royal Mail’s appeal. The Tribunal also upheld the amount of the fine: the highest fine ever imposed by Ofcom.

All parties to the proceedings – Royal Mail, Ofcom and Whistl – were represented by leading and junior counsel from Monckton Chambers.

Daniel Beard QC, Ligia Osepciu and Ciar McAndrew appeared for Royal Mail.

Josh Holmes QC, Julianne Kerr Morrison and Nikolaus Grubeck appeared for Ofcom.

Jon Turner QC, Alan Bates and Daisy Mackersie appeared for Whistl.

The case is attracting widespread media attention: BBC News; Financial Times; The Guardian.

Saracens v Premiership Rugby

An independent panel, chaired by Lord Dyson, has rejected a competition law challenge to Premiership Rugby’s salary cap, and imposed a points deduction of 35 league points and a fine of £5.3m on Saracens rugby club for breaching the salary cap regulations.

The rugby union salary cap is one of several cost control measures introduced in sports leagues in recent years, including the Financial Fair Play (FFP) rules that operate within the UEFA Champions League, the English Premier League and the EFL Championship. Tribunals have previously rejected competition law challenges to those rules brought by QPR and Galatasaray football clubs.

The lawfulness of sporting salary caps, present in a number of rugby and cricket leagues, is topical as the EFL Championship is reported to be considering replacing its FFP rules with a salary cap following the financial crises experienced by Bury and Bolton Wanderers. As well as promoting financial stability by preventing excessive spending on player wages, salary caps can promote a more balanced sporting competition by reducing inequalities in wage levels – and therefore player talent – between clubs.

Saracens, the current Premiership champions, was found to have failed to disclose payments and exceeded the salary cap ceiling in the 16/17, 17/18 and 18/19 seasons. The 35 league points deduction is set to be imposed in the current 19/20 season. Saracens has stated that it will appeal. Premiership Rugby’s press release is here, and BBC Sport coverage is here.

Julian Gregory successfully represented Premiership Rugby in respect of the competition law aspects of the case.

Simawi v (1) London Borough of Haringey (2) Secretary of State for Housing, Communities and Local Government [2019] EWCA 1770

The Court of Appeal has upheld the statutory rules governing the right to take over a social housing tenancy when the former tenant dies, in the face of a challenge under Article 14 of the European Convention on Human Rights (ECHR): Simawi v (1) London Borough of Haringey (2) Secretary of State for Housing, Communities and Local Government [2019] EWCA 1770.

The Appellant’s mother was the secure tenant of a property owned by the local authority. She had succeeded to the tenancy automatically upon the death of her husband in 2001 and, since she was therefore a “successor” for the purposes of the Housing Act 1985, the Appellant was unable to succeed to the tenancy when his mother died in 2013. The 1985 Act allows for only one statutory succession before the property reverts to the local authority for reallocation to others in need of accommodation. In certain circumstances, however, a tenancy can pass from one person to another without the one statutory succession being “used up”. An example is where it is assigned by the Court in divorce proceedings, the result being that the son of a secure tenant who had acquired the tenancy upon divorce could (unlike the Appellant) succeed to the tenancy when his mother died.

The Appellant had resisted a claim for possession brought by the local authority, arguing that the rules on succession discriminated unlawfully between the children of widows and the children of divorcees, such that they contravened Article 14 of the ECHR, in conjunction with Article 8. Since he sought a declaration of incompatibility under the Human Rights Act 1998, the Secretary of State was joined to the proceedings.

The High Court had rejected the Appellant’s case in 2018 and, in a judgment handed down on 31 October 2019, the Court of Appeal reached a similar conclusion. The Court accepted the Secretary of State’s case that (1) the treatment complained did not arise from a protected status under Art. 14; (2) there was no indirect discrimination against women; and (3) in any event, the statutory rules were objectively justified. In particular, since the rules ensured that the one succession rule did not act as a deterrent to divorce, including in cases of domestic abuse, they satisfied the relevant test for justification (i.e. they were not “manifestly without reasonable foundation”). As a result, the Appellant’s appeal was dismissed.

Ben Lask successfully represented the Secretary of State in both the High Court and Court of Appeal.

The judgment can be read here.

Ocean Outdoor v London Borough of Hammersmith & Fulham [2019] EWCA Civ 1642

The Court of Appeal has given judgment in Ocean Outdoor, the first case turning on the Concessions Contract Regulations 2016 (“the CCRs”). The lead judgment was given by Coulson LJ, formerly the presiding judge in the TCC which is the preferred jurisdiction for public procurement cases and from which this was an appeal. The judgment is remarkable in at least four principal respects: first, it delineates the ambit of the CCRs by providing a judicial definition of what constitutes a relevant ‘concession’ for these purposes; secondly, in a finding with significance for procurement cases across the board, it confirms O’Farrell J’s decision below that in order for there to be a public contract it must be one for the benefit of the contracting authority “in respect of its public obligations”; thirdly, the CofA ruled on the land transaction exemption, again for the first time in a case where it was directly in issue, giving it a fairly wide ambit, and finally the CofA gave important guidance on damages in public procurement cases, both as to the Francovich conditions (where mere breach of the Regulations, even the OJEU advertising requirement, will not suffice to render it a “sufficiently serious breach”) and on the applicability of the “loss of a chance principle” to procurement damages claims.

Read full judgment here.

Read case study by Alfred Artley.

Philip Moser QC and Ewan West appeared on behalf of the Appellant, Ocean Outdoor.

Utilita Energy Limited v Secretary of State for BEIS

Lewis J has dismissed an application for judicial review of three decisions dealing with the rollout of the Government’s smart metering programme. Since 2011, the Department for Business, Energy, Innovation and Skills (BEIS) has been progressing a flagship policy to ensure that every domestic home has a smart meter by the end of December 2020.

Smart meters are gas or electricity meters which enable two-way communication between the meter at the property where it is installed and the energy supplier. They bring significant benefits to customers and the environment by providing customers with greater transparency regarding their energy consumption in real time, facilitating switching onto cheaper tariffs and encouraging efficient energy use, with the aim of lowering carbon emissions and developing the “smart grid”.

First generation smart meters, or SMETS1 meters, can only communicate with the particular operating system used by the customer’s energy supplier. This means that when customers switch energy supplier, they may lose smart functionality. Second generation smart meters – SMETS2 – all communicate via a single operating system administered via DCC. The universal communications system means that’s SMETS2 meters will be interoperable meaning that customers can switch energy supplier without losing smart functionality and take advantage of innovative services provided by third parties.

It is a central part of BEIS’ smart meter programme to ensure a transition from SMETS1 to SMETS2 meters. Alternatively, SMETS1 meters may be “enrolled” so that they communicate via the DCC single operating system, thus functioning as if they were SMETS2.

Utilita, an energy supplier, challenged three decisions within the smart meter programme on number of grounds ranging from irrationality, breach of A1P1, and breaches of environmental impact assessment duties, the public equality duty and statutory obligations in the Electricity Act and Gas Act. The first decision was the licence obligation for energy suppliers to “enrol” their SMETS1 metres with the single operating system or else to replace them with SMETS2 meters by the end of 2020. The second decision was that any SMETS1 meters installed after 15 March 2019 would no longer count towards an energy supplier’s smart meter “roll-out” duty. The claim for judicial review of both decisions was dismissed on all grounds. Lewis J held that there was nothing irrational, illogical or otherwise unlawful in the Government’s approach, and the Secretary of State had complied with all applicable statutory obligations, including in relation to assessing environmental impact and the public sector equality duty.

Utilita sought permission to bring a third ground of challenge, relating to how BEIS performed its cost-benefit analysis when deciding that Utilita’s brand of SMETS1 meters ought to be enrolled in the DCC single operating system. Lewis J held that Utilita had “not begun to establish that the defendant had made any arguable public law error” so permission was refused.

Anneli Howard, Anneliese Blackwood and Imogen Proud acted for the Secretary of State.

To view the judgment, please click here.

Cases 1304 and 1305/7/7/19 – Gutmann v London & South Eastern Railway Limited and others

The Competition Appeal Tribunal has ordered a stay in the pending application for a Collective Proceedings Order in the “Boundary Fares” claims brought by Mr Justin Gutmann as the proposed representative of class of rail passengers against the operators of the South Eastern and Southwestern rail franchises.

In a ruling on 23 September 2019 the CAT concluded that this was sensible and practicable in light of the pending appeal to the Supreme Court in Merricks v Mastercard, which will consider various points, including the appropriate test for certification and whether or not it ought to be equivalent to that applicable in a strike-out application, as the Court of Appeal has held in Merricks.

The CAT did however agree with the parties that the issues in Gutmann concerning only the funding arrangements supporting the proposed class representative should continue to a one-day hearing on 7 November 2019. The Tribunal was satisfied that these issues were sufficiently distinct and would not be affected by the pending appeal in Merricks. This mirrors the approach taken by the Tribunal in the Trucks collective proceedings.

Philip Moser QC, Stefan Kuppen and Alexandra Littlewood of Monckton Chambers act for the proposed class representative Mr Gutmann.

Tim Ward QC and James Bourke of Monckton Chambers act for First MTR Southwestern Trains

Paul Harris QC, Laura Elizabeth John and Michael Armitage of Monckton Chambers act for London & South Eastern Railway

Members of Monckton Chambers are also involved in both the Trucks and Merricks cases.

HSBC vs European Commission

On a day of important judgements, the EU General Court delivered another one in the first of three appeals concerning the manipulation of the “Euribor” inter-bank lending rate. Back in 2007, HSBC had colluded with a number of other banks to fix the Euribor – a benchmark rate on which the prices of high-value financial products know as “Euro Interest Rate Derivatives” are based. The European Commission found that this scheme, together with a number of related exchanges of confidential information, constituted a breach of European competition law, and issued multi-million Euro fines against the banks concerned. Whilst a number of the banks settled with the Commission, HSBC and two others (Credit Agricole and JPMorgan) appealed to the General Court.

HSBC’s appeal was the first to be heard and, in an important judgment issued yesterday (24 September), the Court dismissed the appeal on liability. Upholding the Commission’s decision, the Court found that HSBC’s conduct had as its purpose the restriction of competition so as to constitute an “object” infringement of Article 101 of the Treaty. The Court also dismissed HSBC’s argument that the Commission had adopted an unfair procedure. Finally the Court found that, in imposing a fine of 34 million Euros of HSBC, the Commission had failed to provide a sufficient explanation of its calculations. It therefore annulled the fine for insufficient reasoning. It will now be for the Commission to decide whether to readopt the fine, having regard to the Court’s judgment.

Ben Lask acted for the European Commission before the General Court. A link to the judgment is here.

1298/5/7/18 Achilles Information Limited v Network Rail Infrastructure Limited

The Competition Appeal Tribunal has found that Network Rail had acted unlawfully in accepting only supplier assurance provided by the Rail Safety Standard Board’s RISQS scheme for the purposes of its Sentinel and On Track Plant Operating Schemes which govern physical access to its infrastructure by providers of infrastructure maintenance and construction services.

In a judgment handed down in July, the Tribunal found that relevant terms in the scheme rules constituted both an anticompetitive agreement and an abuse of Network Rail’s dominant position. As the trial had proceeded as a trial of liability as a preliminary issue, the latter finding was based on an assumption of dominance yet to established at a later hearing.

The Tribunal held that it was only legitimate for Network Rail to impose a requirement of a specific assurance provider in relation to suppliers it contracted with directly, not in relation to the wider supply chain of sub-contractors which equally required access to its infrastructure.

The Tribunal this week ordered that Network Rail cease to impose the offending requirement and put in place as soon as practicable arrangements for the acceptance of supplier assurance provided through alternative schemes, including that provided by Achilles. The Tribunal refused Network Rail’s application for permission to appeal, but suspended the effect of its order pending a renewal of that application to the Court of Appeal.

Proceedings in front of the Tribunal had been expedited following a successful application by Achilles, and the matter had proceeded to a trial of the preliminary issue of liability within 4 months from the application for expedition. A trial of the issue of dominance and of a claim for damages is to follow.

Read a case note about the judgment by Alfred Artley.

Philip Woolfe and Stefan Kuppen acted for Achilles Information Limited.

Google vs Commission nationale de l’informatique et des libertés (CNIL)

In a landmark judgment for freedom of expression and access to information, the Court of Justice of the European Union has today held that the ‘Right to be Forgotten’ under EU law does not require search engines to de-list search results on a global basis.

The case, C-507/17 Google Inc v Commission nationale de l’informatique et des libertes (CNIL), concerned a complaint brought by Google against CNIL, the French data protection regulator, in relation to a number of de-referencing requests made in the wake of the CJEU’s decision in Case C-131/12 Google Spain – the so-called ‘Right to be Forgotten’. CNIL had ordered Google to de-index links to news reports by reference to certain named individuals in order to protect their personal data, not only on the Google.fr domain name extension but also worldwide. Google challenged the scope of the de-referencing orders, following which the Conseil d’État made a preliminary reference to the CJEU.

In today’s judgment, the CJEU held that the Right to be Forgotten – now enshrined in article 17 of the GDPR – did not require a search engine to carry out a request for de-referencing on a global basis but only within the territory of the EU itself. Among other things, the Court observed that “the balance between the right to privacy and the protection of personal data, on the one hand, and the freedom of information of internet users, on the other, is likely to vary significantly around the world” (para 60) and that EU law did not provide any mechanism for balancing those interests outside its territory. The right to personal data, the Court held, was “not an absolute right, but must be considered in relation to its function in society and be balanced against other fundamental rights, in accordance with the principle of proportionality”.

Gerry Facenna QC, Eric Metcalfe and Guillaume Tapie of the French Bar acted for ARTICLE 19, Human Rights Watch, the Electronic Frontier Foundation, Derechos Digitales, the Centre for Democracy and Technology, the Clinique d’intérêt public et de politique d’Internet du Canada, Open Net Korea and Pen International – a coalition of 7 international digital rights organisations who were granted permission to intervene in the proceedings, arguing that global de-referencing orders were an inherently disproportionate interference with the rights to freedom of expression and access to information.

The CJEU judgment is available here and ARTICLE 19’s press release can be read here. The judgment has already received considerable media attention, including from the Wall Street Journal, the New York Times, the Los Angeles Times, the Daily Telegraph, the Financial Times, and the BBC.