The first follow-on damages claim to reach judgment in a UK court has been handed down, with the ruling confirming that the owners of the British and Dutch electricity grids were overcharged by sellers of power cables previously found to have been operating a cartel.
However, the ruling in BritNed v ABB clarified that one member of the cartel, Swiss company ABB, did not purposefully use its position of power to overcharge. The €180m damages originally sought by the claimant were reduced to €13m.
Follow-on claims, introduced in the Consumer Rights Act 2015, occur where there has been an infringement decision from the European Commission or a national competition authority and parties subsequently claim they have suffered a loss.
The dispute revolves around an ‘interconnector’ submarine cable system connecting the UK’s National Grid and its Dutch counterpart TenneT. The operators are referred to collectively as BritNed. ABB supplied the cable element of the interconnector. In 2014, the European Commission ruled that a cartel, members of which included ABB, had sold capacity in the cables between 1999 and 2009.
BritNed brought a claim in which it submitted that the price it paid for the cable was higher than it otherwise would have been and demanded €180m in damages. The Honourable Mr Justice Smith said BritNed was overcharged by €13m (£11.3m). He found that the overcharge was not deliberate but that BritNed paid more than it would have done had the cartel not been in place.
Smith said that the general operation of the cartel allowed ABB to increase its margins. However, it did not do so on this project because of the pressure BritNed applied on ABB during negotiations.
Damages were quantified at €13m and BritNed’s claim for lost profits and interest was dismissed.
Mark Sansom, partner at magic circle firm Freshfields Bruckhaus Deringer, said the judgment should act as a warning that not every competition law breach leads to customers being deliberately overcharged, or provides good grounds for ’massive claims that are routinely asserted'. He added: ‘The judgment also provides useful guidance on the use of expert economic analysis in competition cases, including the importance of rooting economic evidence in the factual reality.’
BritNed was represented by Robert O’Donoghue QC and Hugo Leith, instructed by international firm Squire Patton Boggs; ABB was represented by Mark Hoskins QC, Sarah Ford QC, Jennifer MacLeod and Jon Lawrence, instructed by magic circle firm Freshfields.