Case Nos. 1517/11/7/22 (UM) Merchant Interchange Fee Umbrella Proceedings; 1266/7/7/16 Merricks v Mastercard Incorporated and others
Does a post-Brexit EU law judgment impose a requirement that a limitation period under English law can only begin to run once a competition infringement has ceased (“Cessation Requirement”)? On 26 July 2023, the UK’s Competition Appeal Tribunal (“CAT”) unanimously concluded that the Court of Justice of the European Union’s (“CJEU”) decision in AB Volvo and DAF Trucks NV v RM (the “Volvo Decision”) is not authority for the proposition that EU law requires national limitation rules to include a Cessation Requirement. In a rare positive consequence of Brexit, the CAT further observed that, even if the Volvo Decision did impose a Cessation Requirement, the CAT would not be obliged to follow it following Brexit and it would not have opted to follow it in any event.
The CAT’s judgment means that claimants to competition infringement proceedings in England and Wales will not be able to rely upon the Volvo Decision to extend the applicable limitation period beyond the statutory six years from accrual of the cause of action. It also means that claimants relying on the laws of EU Member States for their UK claims will need to show that the relevant foreign domestic law includes a Cessation Requirement if they are looking to extend the standard limitation period under that foreign domestic law.
We note that Linklaters acts for Visa in the Merchant Interchange Fee Umbrella Proceedings.
The CJEU’s Volvo Decision
The CAT’s judgment concerns the implications of the Volvo Decision, which arose out of a request for a preliminary ruling by a Spanish court regarding limitation. In short, the CJEU had to determine on what date the limitation period began to run in order to assess whether the relevant claim was time-barred. The basis on which the CJEU determined the start of the limitation period was the question before the CAT in these proceedings.
The Claimants submitted that the CJEU ruled that limitation periods applicable to actions for damages for infringements of competition law of EU Member States cannot begin to run until (i) the infringement has ceased (the Cessation Requirement); and (ii) the injured party knows, or can reasonably be expected to know, the fact it has suffered harm as a result of the infringement and the identity of the perpetrator (the “Knowledge Requirement”). Consequently, to the extent that English limitation rules are inconsistent with the Cessation Requirement articulated by the CJEU, they must give way to the law of the EU, despite the Volvo Decision post-dating the UK’s exit from the EU. If this interpretation were correct, the limitation periods applicable to the Claimants’ claims would not have begun to run and no part of their claims would be time-barred.
The legal issues before the CAT
The Volvo Decision is not authority for the proposition that, as a matter of EU law, the limitation period in competition claims can only begin to run from the time when the alleged infringement of competition law has ceased
Following Brexit, it fell to the CAT (rather than the CJEU) to interpret the Volvo Decision as a matter of EU law. The CAT held that the “operative” part of a CJEU judgment is distinct from its reasoning. The “operative” part, i.e. the CJEU’s ruling, is the final part of the judgment set out in bold type and prefaced with “On those grounds, the Court hereby rules”. This “operative” part is binding and is to be interpreted in light of the preceding sections of the judgment.
On this basis, the CAT determined that, while the Cessation Requirement was articulated briefly in the body of the Volvo Decision, it did not form part of the operative part of the judgment, nor the necessary foundation for the operative part. The CJEU’s binding ruling instead rested entirely on the Knowledge Requirement. The CAT concluded, “It follows that the CJEU’s expression of the Cessation Requirement, which is not reflected at all in the [operative part], is not binding. Therefore, even if the United Kingdom were still part of the EU, [the CAT] would not be required to follow it” (§28).
The question of whether, as a matter of EU law, the limitation period in competition claims can only begin to run from the time the claimant knows, or can reasonably be expected to know, the information necessary to bring the claim, “is a question for another day”
The CAT intentionally did not address whether, following the Volvo Decision, EU law requires national limitation rules to include a Knowledge Requirement. The CAT explained that submissions on the point were limited and were understood as being for the assistance of the Tribunal in understanding the Volvo Decision rather than any party contending that the Volvo Decision had expanded the EU law of limitation as regards the Knowledge Requirement. If the Merricks Claimants did wish to address this point, the CAT explained that it would be preferable to do so in the separate Merricks Proceedings, where it could be addressed in the relevant factual context (§31).
In any event, the CAT would not be bound to follow the Volvo Decision given Brexit
Given its conclusion in relation to the interpretation of the Volvo Decision, the CAT determined that the question of whether it is obliged to follow the Volvo Decision did not have to be answered. It nevertheless gave the point detailed consideration given it had been fulsomely argued by the parties.
The Umbrella Proceedings Claimants had contended that their claims constituted “accrued EU law rights”, i.e. EU law rights which accrued pre-IP completion day[1] and remained subject to EU law following Brexit, including CJEU decisions. The majority of the Tribunal[2] found that there was “no such thing” as accrued EU law rights (§69). On IP completion day, the “gateway” by which EU law applied in the UK (i.e. the European Communities Act 1972) was repealed and EU law at the time was translated into English law (as “retained EU law”), including existing EU rights. The CAT held that, even if the Volvo Decision did impose a Cessation Requirement, it would not be bound by the Volvo Decision following IP completion day as it does not form part of retained EU law (§§71-72).
The majority noted that pursuant to s.6(2) of the European Union (Withdrawal) Act 2018 (the “2018 Act”), it may “have regard” to the Volvo Decision’s obiter observation that the principle of effectiveness encompassed a Cessation Requirement, however, it chose not to follow that observation. Its reasons for doing so included the fact that it was bound by the Court of Appeal’s Arcadia decision[3] which found that English limitation rules, which do not include a Cessation Requirement, complied with the EU’s principle of effectiveness (§§28(4), 73).
The end of the Volvo limitation issue?
Following the CAT’s decision, subject to any appeal, claimants to UK proceedings seeking damages for infringements of competition law provisions will remain bound by the six-year limitation period under the Limitation Act 1980 (subject to any arguments under s32 Limitation Act 1980). It remains to be seen whether the Claimants will seek to appeal the judgment.
Outside the UK, the Volvo Decision’s impact on limitation rules is also being considered in various EU Member States. Most significantly, the CJEU’s decision in response to a request for preliminary ruling from the Czech Municipal Court regarding similar questions to those addressed in the Volvo Decision is pending following the hearing in March[4]. Member States are hopeful that the ruling will clarify how the Volvo Decision should be interpreted in EU law. However, this ruling will not be binding on UK courts.
For further information, please contact:
Sarina Williams, Partner, Linklaters
sarina.williams@linklaters.com
[1] “IP completion day” was 11pm on 31 December 2020, the point at which EU law no longer formed part of UK law without specific implementation.
[2] The Honourable Mr Justice Roth gave a concurring judgment on this point, reaching the same conclusion but on different reasoning.
[3] Arcadia Group Brands Ltd v Visa Inc. [2015] EWCA Civ 883.
[4] Heureka Group v Google LLC, Case C-605/21.
