The Technology and Construction Court has in its judgment delivered on 5 November 2014 re-iterated that the American Cyanamid principles applicable to applications to lift statutory suspensions in the field of procurement are compatible with the current Remedies Directive 2007/66/EC.

In the context of a challenge by the incumbent provider to the award of a contract for media services by Crown Commercial Services (on behalf of Cabinet Office) to Carat, and an application by the defendant to lift the statutory suspension imposed by virtue of Regulation 47G of the Public Contracts Regulations 2006, the claimant contended that the approach of first instance courts based on American Cyanamid principles was in conflict with the Remedies Directive. The claimant claimed that the Directive  provides simply for a balance of interests test and does not provide for a separate assessment of whether damages are an adequate remedy and does not require the provision of cross undertakings in damages. Examining in turn the provisions of Article 2 of the Directive by reference to the various steps involved in the Amercian Cyanamid tests, Mr Justice Akenhead rejected those arguments and concluded that the American Cyanamid approach is consistent with (or at worst nor inconsistent with) the relevant provisions of the Remedies Directive. Applying those principles the judge proceeded to lift the statutory suspension on the ground, inter alia, that there was no serious issue to be tried.

Please click to view the full Group M UK Limited v Cabinet Office judgment.

Michael Bowsher QC and Anneliese Blackwood (instructed by Freshfield Bruckhaus Deringer) for the Claimant

Philip Moser QC, Ewan West and Daisy Mackersie (instructed by The Treasury Solicitor) for the Defendant

Valentina Sloane (instructed by Slaughter and May) for an Interested Party (Carat)

ClientEarth, an environmental NGO, brought proceedings for an order that, with respect to sixteen zones and agglomerations (including London), the UK had failed to meet the limit values laid down in Directive 2008/50 on ambient air quality and cleaner air for Europe.  The defendant conceded that these limit values had not been met.  Where a deadline cannot be met with regard to a particular zone or agglomeration, Article 22 of the Directive allows Member States to postpone that deadline by five years, provided that they notify the Commission thereof.  If the Commission does not object within nine months, the conditions laid down in the Directive for postponing the deadline are deemed to be satisfied. However, the UK had not notified the postponement to the Commission.  In these circumstances, the Supreme Court granted the order sought but also referred four preliminary questions to the European Court of Justice.

On the substantive questions, the European Court held that a Member State could not postpone a deadline without notifying the Commission.  As to the appropriate remedy, the Court ruled that natural or legal persons directly concerned by the breach must be in a position to require the national authorities to put an end to that breach and that a national court is required to make an order to that effect or to take any other necessary measure.

Kassie Smith QC appeared for the Secretary of State.

Please click to view the full ClientEarth judgment.

The case has been featured in various media, including The Lawyer, The Independent, BBC, Financial Times and The Telegraph.

The First-tier Tribunal has dismissed an appeal by Goodrich relating to sales of military reconnaissance equipment to the US Government for onward sale to the Governments of Greece and Portugal under the umbrella of the Foreign Military Sales (“FMS”) programme of the US Government.

Goodrich argued that the sales were made under arrangements which amounted to an “international collaboration arrangement” for a “joint project of research, development or production”, which was therefore zero-rated under Schedule 8, Group 13, Item 2 and Note 1 VATA.

The Tribunal rejected this argument, upholding the submissions made by HMRC that, although the sales were to NATO members, NATO was not itself an “international collaboration arrangement” in relation to joint projects of research, development or production. Nor was the US Government’s FMS programme such a joint project, as it was a unilateral scheme established by the US Government as a framework for the sale of military equipment to friendly governments. Furthermore, the FMS programme involved no collaboration in a joint programme of research, development or production – it was simply a procurement programme – and it involved no provision for participating governments to relieve the cost of the project from taxation. On that basis, the supplies fell to be standard rated.

Please click to view the full Goodrich Corporation v HMRC judgment.

Raymond Hill represented HMRC

On Tuesday 11 November 2014, the Commercial Court refused a group of twelve high street retailers permission to appeal the summary judgment ruling, recently granted in Visa’s favour in the interchange fees litigation.  That judgment struck out over 30 years of potential damages, totalling over £500m (see earlier press release).

Mr. Justice Simon went on to order the retailers to pay Visa’s costs of the application on an indemnity basis, with an interim up-front payment of 70%. In his view, it ought to have been known that the claims brought in respect of the extended limitation period prior to 2007 were bound to fail. The claimants had tried their luck with a hopeless case and that unreasonable behaviour was a highly significant matter to be taken into account under CPR Part 44.4.

Anneli Howard (instructed by Linklaters LLP) acted for the successful Applicants, Visa Europe a.o., the Third to Fifth Defendants in the claims.

By Judgment dated 7^th November 2014, Mr. Justice Turner referred seven questions to the Court of Justice of the European Union (“CJEU”) concerning the validity of the Tobacco Products Directive 2014/40/EU (“TPD2”).  TPDU2 introduces a number of packaging and labelling requirements for tobacco products, including the controversial requirement that packets display combined text and graphic health warnings which must cover at least 65% of the external surface of the packaging.  The Directive also imposes a ban on the manufacture of menthol and flavoured tobacco products and also prohibits manufacturers from making statements on the packets that a particular product is less harmful or more environmentally friendly.

The reference arises in the context of two claims for judicial review brought by British American Tobacco UK Ltd (“BAT”) and Philip Morris Brands SARL (“Philip Morris”), which seek to challenge the obligation of the Secretary of State for Health to implement TPD2 by 20 May 2016.  The seven questions referred challenge the Directive on the basis that the EU legislature has used an inappropriate legal basis, namely Article 114 TFEU, in circumstances where TPD2 lacks any genuine internal market rationale and has the potential to distort competition by restricting the ability of manufacturers to differentiate their products.  The other grounds of challenge are that the provisions of TPD2 infringe the fundamental principles of proportionality and subsidiarity and delegate too much power to the European Commission.

In his Judgment, Turner J held that there was no dispute that questions regarding the validity of TPD2 should be referred to the CJEU for preliminary ruling pursuant to Article 267TFEU, since only the CJEU has jurisdiction to declare measures of European Union law invalid.

He then went on to assess the status of a number of interested parties who wish to intervene in the proceedings so that they could be classified as “parties” to the proceedings and gain full participation rights before the CJEU.  Those organisations included a manufacturer of specialist niche tobacco products (“Von Eicken”) and producers of cigarette papers as well as a producer of menthol tobacco capsules.

In a previous ruling regarding the intervention of the Polish National Association of Tobacco Growers (“KZPT”), handed down on 24 October 2014, Mr Justice Turner had refused permission to intervene but went on to express the obiter opinion that, even if they had been admitted as an Intervener in the domestic proceedings, they would not have been automatically entitled to participate as a “party” pursuant to the rules of procedure of the CJEU.  That ruling reversed previously accepted jurisprudence that a successful application under CPR 54.17 automatically conferred the status of party at EU level.

Turning to the position of the other four Interveners in this case, Mr Justice Turner made clear that that did not mean that a person heard under CPR 54.17 can never be characterised as a party.  In his view, the court should adopt a more flexible approach based on the substantive merits of their respective positions.  He was persuaded that each of the four interested parties had a sufficiently strong interest in the outcome of the preliminary reference that they should be categorised as parties to the proceedings.  This was because each of the organisations was able to demonstrate a firm relationship with the UK.  Although Von Eicken had a more limited connection to the UK than the others, it would be unfair to deny it the right to participate as it was a direct competitor to the main Claimants BAT and Philip Morris.  In such circumstances, it could not expect those Claimants to address its specific concerns of Von Eicken before the ECJ.  Each of the organisations were affected by the Directive from a different perspective and were therefore able to bring a higher level of experience and expertise to bear on the issues.

Please click to view the full Philip Morris Brands v Secretary of State for Health judgment.

Please click to view the previous ruling in British American Tobacco v Secretary of State for Health.

The Intervener Von Eicken was represented by Anneli Howard (appearing unled), instructed by Irwin Mitchell LLP.

The Polish National Association of Tobacco Growers (KZPT) was represented by Tim Ward QC.

A case in which 7 members of Monckton Chambers are acting has been featured as one of The Lawyer’s ‘cases to watch’.

AXA & Others v Competition & Markets Authority (CMA) received the following commentary:

This case constitutes the first substantive challenge to the newly formed Competition and Markets Authority’s (CMA) decision regarding the UK’s private healthcare market. 

The CMA decided the various players needed to divest assets to ensure fair competition. 

It follows a two-year investigation by a group of independent panel members at the Competition Commission (CC), which became part of the new CMA. 

Measures included a crackdown on benefits and incentive schemes provided to referring clinicians by private hospital operators and measures to increase the availability of information to patients on private fees and hospital performance.

The new regulator argued that many private hospitals faced little competition in local areas across the UK and there were high barriers to entry. 

It concluded this led to higher prices for self-pay patients in many local areas – and for both self-pay and insured patients in Central London, where HCA, a for-profit operator of healthcare facilities that owns more than half of the available overnight bed capacity, charges significantly higher prices to insured patients than its closest competitor. 

The case is listed for a two-week trial from 19th January.

Tim Wards QC, Kassie Smith QC, Josh Holmes, Ronit Kreisberger, Rob Williams, Anneli Howard and Ligia Osepciu are all acting in this case for various parties.

On 10 November 2014, the European Council formally approved the EU Directive on antitrust damages actions. This requires EU Member States to harmonise their procedural rules for antitrust damages actions, with the objective of making it easier for victims of competition law infringements to obtain compensation for losses suffered.

This was the final stage in the EU legislative approval process, and Member States will have until late 2016 to implement the required measures.

Please click here to view the full European Commission press release : http://europa.eu/rapid/press-release_IP-14-1580_en.htm

This matter will be discussed in depth at the Monckton ‘Competition Damages: Latest Developments’ seminar on 20th November.

The Administrative Court (Green J) has today handed down an important judgment concerning the right of third party suppliers to access exempt electricity distribution systems for the purpose of supplying customers under Schedule 2ZA of the Electricity Act 1989 (“the Act”), implementing Article 32 of Directive 2009/72/EC (“the Third Package Electricity Directive”).

The case concerns the licence exempt electricity distribution network at Heathrow Airport, a substantial proportion of which is leased (“the Leased Network”) by Heathrow Airport Limited (“HAL”) to UK Power Networks (Services) Contracting Limited (“UKPNS”). Pursuant to a Distribution Agreement, UKPNS is required to manage and operate the Leased Network in exchange for substantial annual payments from HAL. When a customer connected to the Leased Network sought to switch to a third party supplier, a dispute arose as to which of UKPNS and HAL is the “distribution exemption holder” or “DEH” owing Schedule 2ZA third party access obligations in respect of the Leased Network.

The dispute was determined by the Gas and Electricity Markets Authority (“the Authority”), which decided that UKPNS was the relevant DEH on the basis of its contractual obligation to operate the Leased Network and the fact that it had greater control over the Leased Network than HAL. UKPNS applied for judicial review of the Authority’s determination essentially on the grounds that:

1. Given the language used in paragraph 1(1)(b), Schedule 2ZA, the obligation to grant third party access applies only to a DEH that also sells electricity to the customer requesting a change of supplier – which UKPNS does not; and
2. It was unlawful and/or irrational for the Authority to place the Schedule 2ZA obligations on UKPNS in circumstances where the Distribution Agreement prevented it from discharging those obligations without assistance from HAL.

Green J rejected the first argument, vindicating the Authority’s view that a purposive construction of Schedule 2ZA, in light of Article 32 of the Third Package Electricity Directive, must allow all customers connected to licence exempt distribution networks to choose their electricity suppliers and all suppliers to access these customers. This purpose would not be achieved by limiting the Schedule 2ZA third party access obligations to circumstances in which the DEH for the relevant network was also selling electricity to the customer at the time of the access request. The language used in paragraph 1(1)(b), Schedule 2ZA – in particular, the word “supply” – needed to be interpreted to give effect to that purpose, notwithstanding that such interpretation would give “supply” a different meaning in that provision than its meaning in other parts of the Act or the Directive.

In relation to the second argument, Green J did not deem it appropriate to rule on UKPNS’ detailed factual claims – many of which had not been raised before the Authority. He considered, however, that the Authority’s determination had proceeded on the erroneous legal basis that the third party access obligations could only fall on a single DEH. Instead, those obligations would apply to “all those with any degree of responsibility for the conveyance of electricity between the supplier and the customer” (original emphasis). He, accordingly, quashed the Authority’s determination and remitted it to be considered on the correct legal basis – noting that if both UKPNS and HAL were determined to have some sort of obligation under Schedule 2ZA, UKPNS’s concerns about its ability to satisfy that obligation could well fall away.

The UKPNS v GEMA Approved Judgment is available here.

Daniel Beard QC, Gerry Facenna and Ligia Osepciu acted for HAL, the Interested Party supporting the Authority.

The Department for Culture Media and Sport has successfully defended an appeal brought by six GSM Gateway operators in the Court of Appeal. The claimants had brought Francovich damages claims for over £400million, alleging that the UK’s restriction on the commercial use of GSM Gateways was incompatible with, in particular, the EU Authorisation Directive. Mrs Justice Rose had found against the claimants in a decision that can be found here Recall Support Services v Secretary of State for Culture Media Sport. She held that DCMS was justified in relying on public security concerns in imposing and maintaining the restriction for multi-user commercial gateways (COMUGs), albeit not in relation to one minor issue on single-user commercial gateways (COSUGs). In relation to all GSM Gateways Rose J also found that there was either no or no sufficiently serious breach of EU law in any event and dismissed all claims.

The Claimants appealed on the basis that the High Court had erred in its interpretation of Article 5 of the Authorisation Directive which they contended did not permit the UK to maintain the commercial use restriction on grounds of public security. They further contended that the UK had not laid a proper basis in domestic law to entitle the UK to restrict the rights conferred on Gateway operators. Also, that such breach was sufficiently serious to justify damages.

Richards LJ, giving the leading decision of the Court of Appeal, rejected each of the grounds of appeal and upheld the judgment of Rose J in full. Thus, the Court of Appeal has held that the UK was permitted as a matter of EU law to maintain the commercial use restriction for COMUGs (and not COSUGs) and that this was properly provided for in domestic law. Accordingly the Court concluded that it could not be said that there was a manifest and grave disregard of EU law by the UK Government. Appeal dismissed.

Click here to read the full judgment of the Court of Appeal Recall Support Services v Secretary of State for Culture Media & Sport

Daniel Beard QC, Philip Moser QC and Brendan McGurk acted for the Respondent.

The Competition Appeal Tribunal (CAT) has allowed an application by BT to vary the terms of the interim relief in the long-running Pay TV dispute. The effect is to require Sky to wholesale its sports channels Sky Sports 1 and 2 to BT for distribution on BT’s ‘Cardinal’ and ‘YouView’ Pay TV platforms pending the final determination of the appeals.

In 2012 the CAT allowed Sky’s challenge to Ofcom’s 2010 Pay TV Statement, which had imposed conditions requiring Sky to offer its channels Sky Sports 1 and 2 to other pay TV providers on a wholesale basis, at a price fixed by Ofcom (‘the WMO remedy). In 2010, the CAT had suspended the effect of Ofcom’s decision on an interim basis, except in relation to BT, Virgin and Top-up TV (and subsequently Real Digital), who were permitted to benefit from the WMO remedy during the appeals subject to certain conditions and undertakings. The interim relief provided that the WMO remedy was to have effect in relation to certain ‘Qualifying Platforms’, which in BT’s case was defined to mean ‘digital terrestrial television’.

The CAT’s 2012 Order allowing Sky’s appeal was set aside by the Court of Appeal in February 2014 and the case was remitted to the CAT for further consideration. On 31 October 2014 the Supreme Court refused Sky’s application for permission to appeal. The appeals are therefore once again before the CAT.

By its judgment this week the CAT granted BT’s application to vary the terms of the original interim relief so as to require Sky to comply with the WMO remedy in respect of BT’s current Internet Protocol TV platforms, ‘Cardinal’ and ‘Youview’. The CAT President, Roth J., observed that the technical developments that had occurred over the ‘wholly exceptional time’ the appeals had taken meant that the original interim relief order was now largely ineffective as regards BT. He held that the interim relief should therefore be varied to cover BT’s current TV platforms, in particular having regard to the need to protect the public interest in achieving a competitive market, which the WMO remedy was designed to secure, and on the basis that BT has undertaken to continue to retail its own sports channels to Sky’s satellite customers while the interim relief remains in effect.

Jon Turner QC and Gerry Facenna are acting for BT, Josh Holmes acts for Ofcom, and Meredith Pickford acts for BSkyB. Ben Lask also acted for Ofcom in the original CAT appeal proceedings.

Pleas click here to view the CAT’s recent judgment in BSkyB v Ofcom, BT and others (interim relief) [2014] CAT 17