Cartel damages: when does the clock start running to bring a claim?
Published on 11th Feb 2020
Judgment is awaited in a case that will have significant ramifications for cartel damages claims and for insolvency practitioners.
A recent trial, in which Osborne Clarke acted for the claimants, raises important time bar issues arising out of a computer components cartel. The case considers the question of whether the limitation period started to run when admissions of guilt were made in a US DRAM cartel investigation, which preceded the European Commission's investigation, or whether time runs from the date of the Commission's decision.
What is the case about?
On 19 May 2010, the European Commission published a decision detailing the settlement (involving fines of over EURO 300 million) which it had reached in a cartel case involving 10 producers of DRAM memory chips used in PCs and servers. The Commission found that the producers had engaged in an unlawful cartel from 1998 to 2002 in the DRAMs market. The producers had co-ordinated the prices that they charged to major PC manufacturers ("major OEMs").
Osborne Clarke is acting for the companies previously trading in the UK as "Time" and "Tiny" computers, which were not the specific target of the cartel but bought DRAM on the so-called "spot market" in the UK (the market for the sale of DRAM otherwise than under long-term contracts of supply). They seek damages from the cartelists in respect of the alleged price-increases resulting from the cartel.
Limitation Period Issue
The proceedings were commenced on 18 May 2016. Although this was more than six years from the date of the infringements by the defendants, the claimants seek to rely on section 32(1)(b) of the Limitation Act 1980. This delays the commencement of the limitation period until the date of discovery of the cause of action, where the right of action has been deliberately concealed by the defendant. For these purposes, the court is required to consider both the actual knowledge of the claimant and the knowledge that the claimant could have obtained applying "reasonable diligence".
The claimants maintain that they could only have discovered the existence of the cartel and been able to plead their claim when the European Commission published its decision. The defendants argue that the claim could with "reasonable diligence" have been pleaded before the publication of the Commission's decision, on the basis of internet publications relating to a US Department of Justice investigation into a price-fixing conspiracy between a small number of DRAM suppliers in the period from 1999 to 2002.
In essence, the defendants' case is that the claimants could have inferred from the available information that the US cartel extended to the European market and hence there was no need to rely on the European Commission's decision on the EEA cartel.
Interesting questions arise as to how to apply the "reasonable diligence" test in the unusual circumstances where the claimant could not be aware that it had suffered harm on the basis of its own internal information and could only infer such loss from awareness from public sources of the existence of a cartel.
A further noteworthy feature of the case is that the claimants ceased trading and went into liquidation (at different times between 2002 and 2005) and so the question of what information should have been discovered by the companies in liquidation arises.
Implications of decision
These points are likely to be of interest beyond just this case since it is common for cartel decisions of the European Commission to follow an investigation in the US, or elsewhere. Can claimants and practitioners assume that limitation runs from the date of the Commission decision or do they have to investigate in detail what may have happened previously in other investigations?
Judgment is currently awaited following the preliminary issue trial in the Commercial Court. The case is Granville (and others) v Infineon Technologies AG, Micron Europe Limited (and others). Slaughter and May and Allen & Overy act for the defendants.
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