High Court awards damages in first follow on cartel damages judgment

On 9 October 2018, the High Court handed down its judgment in the damages claim brought by BritNed Development Limited (BritNed) against ABB AB and ABB Ltd (together, ABB),  high voltage power cable supplier. This claim, arising from the European Commission’s Power Cables cartel decision dated 2 April 2014 (Decision) is the first follow on cartel damages claim to reach final judgment before the English courts.

BritNed is a joint venture between the National Grid and a Dutch power transmission operator. It was set up to operate the submarine electricity link between the UK and the Netherlands, commissioned in 2011. BritNed appointed ABB as the cable supplier for the electricity link.

In its Decision, the Commission found that from 1999 to 2009, ABB and ten other power cable providers participated in a cartel in the underground and submarine high voltage power cables market.

BritNed brought a damages claim against ABB, arising from the Decision, alleging that BritNed had suffered losses of over €180 million due to an overcharge applied to the cable supplied by ABB. The High Court held that ABB did not deliberately overcharge BritNed, but awarded BritNed damages of approximately €13 million for the following reasons:

• The existence of the cartel meant that ABB was appointed to supply BritNed with an inferior product compared to the product ABB would have had to offer to win the contract had the cartel not existed. None of the other cartel participants challenged ABB and therefore it was able to win the appointment with a less efficient cable design, and the inefficiency was passed on to BritNed.
• ABB was able to save costs more generally due to its involvement in the cartel.

The High Court dismissed BrItNed’s claims in relation to lost profits and compound interest. 

The key points arising from the High Court’s judgment include the following:

• The High Court did not apply the presumption of harm introduced by the EU Damages Directive, as the English regulations implementing the Directive had not entered into force at the time BritNed issued its claim.
• In accordance with the principles of EU law, the High Court held that not all the provisions of a Commission decision are binding. Rather, the High Court held that it was bound by the operative part of the Decision and the recitals which form the “essential basis” for the Decision. The other recitals were not considered to be binding.
• In assessing damages, the High Court favoured ABB’s more straight-forward approach based on actual data as opposed to BritNed’s more complicated regression analysis using economic proxies. Smith J held that actual data should be used if possible, unless there is a particular reason not to use it.