Case Nos: 2012 Folios 669-703 and 1305-1311
The Rolls Building
Fetter Lane
London EC4A 1NL
Date: 08/10/2013
Before :
MR JUSTICE FIELD
Between :
WM Morrison Supermarkets plc and others | Claimants |
- and - | |
(1) MasterCard Incorporated (2) MasterCard International Incorporated (3) MasterCard Europe SPRL (4) MasterCard UK Members Forum Limited (in members voluntary liquidation) MasterCard/Europay UK Limited | Defendants |
Fergus Randolf QC and Christopher Brown (instructed by Stewarts Law) for the Claimants
Thomas Sharpe QC and Matthew Cook (instructed by Jones Day) for the 1st, 2nd , 3rd & 5th Defendants
Mark Hoskins QC (instructed by Speechly Bircham) for the 4th Defendant
Hearing dates: 7th October 2013
Judgment
Mr Justice Field:
The first matter to be dealt with on this CMC is the Claimants' application for leave to amend their Particulars of Claim.
The background to the claim is rehearsed in a judgment delivered on 3 May 2013.
The existing claims advanced against the Defendants are founded on the decision of the European Commission issued on 19 December 2007. That decision concluded that: (a) the Defendants who were addressees of the decision (“the Commission Defendants”) were an association of undertakings and consequently their decisions were capable of falling within Article 81 of the EC Treaty, both before the MasterCard IPO and afterwards; (b) the MasterCard scheme could operate without a default interchange fee; (c) the cross border default interchange fees (the “intra-EEA MIFs”) restricted competition between acquiring banks by restricting the basis on which acquiring banks set charges for merchants, thereby setting a floor under which the MSCs that acquiring banks charged the merchant. The cross border interchange fees were a restriction of competition by object, because by their very nature they had the potential for restricted competition. Arguments that purported to show that the interchange fees had pro-competitive aims and effects were relevant only under Article 81(3) and not Article 81(1); (d) consequently the Commission Defendants were in breach of article 81(1) of the EC treaty by reason of the intra- EEA MIFs in place between 1992 and December 2007; (e) the Commission Defendants had failed to produce satisfactory evidence that those levels of cross border default interchange fees met the conditions for exemption under article 81(3) of the EC treaty.
On 6 September 2005 the OFT issued a decision holding that the arrangements for the setting by the fourth defendant of the MasterCard default credit card interchange fees within the UK (the “intra-UK MIFs”) in the period up to 18 November 2004 were contrary to the Chapter 1 Prohibition. That decision was set aside on appeal on procedural grounds. The Claimants contend that the decision of the Commission can be read across to found a claim in respect of the intra-UK MIF.
In paragraph 36 of the Particulars of Claim the Claimants plead:
F: Breach of competition rules
By setting and imposing a minimum price the Claimant had and remains bound to pay to its Acquiring Bank for accepting MasterCard and Maestro payment cards (in its retail premises in the UK) by means of the EEA MIF and the UK MIF, the Defendants acted contrary to Article 81(1) EC Treaty, subsequently Article 101(1) TFEU, Article 53 EEA Agreement and s.2 Competition Act 1998 as amended. By so acting, the Defendants acted in breach of statutory duty.
There are then pleaded particulars of: (1) the applicable legislation; (2) the alleged breach in relation to the intra EEA MIF; and (iii) the alleged breach in relation to the intra-UK MIF. As to the latter, the breach alleged is that the setting and imposition of the UK MIF was a decision by the defendants acting as an association of undertakings and the decision restricted competition in the manner found by the Commission.
The principal amendment for which leave is sought is found in the particulars of breach in relation to the UK MIF pleaded in paragraph 36 of the Particulars of Claim. It reads in principal part as follows:
Particulars of breach in relation to the UK MIF
(1) In relation to the setting and imposition of the UK MIF between 1 March 2000 (in the case of the Fourth Defendant, 12 June 2002) until the determination of this claim, the Defendants, jointly or severally acted and remain in breach of s.2 Competition Act 1998 as amended in that:
(a) the said setting and imposition constituted and remains a decision of an association of undertakings; and
(aa) further or alternatively, insofar as concerns the period from 18 November 2004 onwards, there existed one or more concerted practices between at least the First and/or Second and/or Third and Fourth Defendants in relation to the said setting and imposition. The Claimant shall rely inter alia on the following matters in this respect, all of which demonstrate the close cooperation among the Defendants in relation to the setting and imposition of the UK MIF as of 18 November 2004:
(i) The communication of information relevant to the said setting and imposition between at least the Third and Fourth Defendants as of the revocation of the Fourth Defendant’s authority itself to set and impose the UK MIF;
(ii) The close links between the First, Third and Fourth Defendants, notably:
1. The First Defendant’s representation on the Board of the Fourth Defendant in the period after 18 November 2004;
2. The Third Defendant’s representation on the Board, and participation in meetings, of the Fourth Defendant in the period after 18 November 2004;
3. The Fourth Defendant’s representation at all material times on the European Board of the Third Defendant;
(iii) the close links between the Fourth Defendant and its member banks, all of whom are also undertakings of which the First, Second and Third Defendant are each (and/or collectively) an association, and in particular the provision of information by the member banks to the Fourth Defendant for the purposes of the setting and imposition of the UK MIF;
(b) that decision (further or alternatively the said concerted practice(s)) restricted competition between acquiring banks by inflating the base on which acquiring banks set charges to inter alios the Claimant and thereby set a floor under the MSC. In the absence of the said MIF, the prices set by acquiring banks would have been lower to the benefit of inter alios the Claimant and subsequent purchasers; and
(c) the said MIF was not objectively necessary for the operation of an open payment card scheme such as that operated by the Defendants.
It is to be noted that 18 November 2004 was more than six years ago from today's date, the date that leave to amend is sought. It is further to be noted that the
Claim Form pleading the original claim was issued on 23 May 2012.
The Claimants say that the new proposed claim is part of the originally pleaded cause of action and thus dates back to at least 23 May 2012, the date the Claim Form was issued. In the alternative, they contend that the new claim relates back to 23 May 2012 by reason of s. 35(1) of the Limitation Act 1980.
The Defendants contend that what is proposed to be pleaded is a new cause of action which does not have the benefit of relation back as provided for in s. 35(1) of the Limitation Act 1980. Thus the claim can only be made from 8 October 2007 rather than from 23 May 2006. This is so, submitted Mr Sharpe QC for the Defendants, for the following reasons: (1) the new cause of action is excluded from the effect of s. 35(1) by virtue of s. 35(3) because the new claim is made at a time when the time limit under the Act has expired in respect of the period beginning with the date six years prior to the application for leave to amend, namely 8 October 2013; (2) the new claim does not satisfy condition (a) of s. 35(5) in that it does not arise out of the same facts or substantially the same facts as are already in issue.
Section 35(1), (2), (3), (4) and 5 of the Limitation Act 1980 provide as follows:
35 New claims in pending actions: rules of court.
(1) For the purposes of this Act, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced—
(a) in the case of a new claim made in or by way of third party proceedings, on the date on which those proceedings were commenced; and
(b) in the case of any other new claim, on the same date as the original action.
(2) In this section a new claim means any claim by way of set-off or counterclaim, and any claim involving either—
(a) the addition or substitution of a new cause of action; or
(b) the addition or substitution of a new party;
and “third party proceedings” means any proceedings brought in the course of any action by any party to the action against a person not previously a party to the action, other than proceedings brought by joining any such person as defendant to any claim already made in the original action by the party bringing the proceedings.
(3) Except as provided by section 33 of this Act or by rules of court, neither the High Court nor any county court shall allow a new claim within subsection (1) (b) above, other than an original set-off or counterclaim, to be made in the course of any action after the expiry of any time limit under this Act which would affect a new action to enforce that claim.
For the purposes of this subsection, a claim is an original set-off or an original counterclaim if it is a claim made by way of set-off or (as the case may be) by way of counterclaim by a party who has not previously made any claim in the action.
(4) Rules of court may provide for allowing a new claim to which subsection (3) above applies to be made as there mentioned, but only if the conditions specified in subsection (5) below are satisfied, and subject to any further restrictions the rules may impose.
(5) The conditions referred to in subsection (4) above are the following—
(a) in the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as are already in issue on any claim previously made in the original action; and
(b) in the case of a claim involving a new party, if the addition or substitution of the new party is necessary for the determination of the original action.
Mr Randolph QC for the Claimants submitted: (1) the proposed new claim was simply a different aspect of the originally pleaded cause of action, which was one of breach of statutory duty; (2) alternatively, the new amended claim had the benefit of relation back as provided for in s. 35(1) because: (a) the whole claim was not made after the limitation period but only after part thereof and therefore the entire claim did not fall foul of s. 35(3); and (b) the amended claim arose out of the same facts, or substantially the same facts as are already in issue.
Attractively as Mr Randolph's submissions were presented, I decline to accept them. As Auld LJ explained in Lloyds Bank PLC v Roger et al [1999] 3 EGLR 83, what makes a new claim as defined in s. 35(2) is not the newness of the claim but the newness of the cause of action; and as was held in Letang v Cooper [1965] 1 QB 232, a cause of action is simply a factual situation, the existence of which entitles one party to obtain from the court a remedy against another person.
Does the proposed new claim plead a new cause of action? In my judgment what is pleaded is not simply a further aspect of the original cause of action. The alleged concerted practice is a different breach of statutory duty than the one that is currently pleaded, the latter being a breach founded on there having been a decision taken by an association of undertakings.
Does the proposed amended claim qualify for the relation back consequence provided for in s. 35(1)? Again, the answer in my view is no. In my judgment, the effect of the words "after the expiry of any time limit under this Act which would affect a new action enforcing the claim" in s. 35 (3) is that, to the extent that a new claim for a continuing infringement of a right is made for a period outside the limitation period, it cannot be a claim that satisfies the requirements of section 35(3).
Mr Randolph suggested that support for his submission that it was sufficient for the purposes of s. 35 (3) if the whole claim was not brought outside the applicable time limit could be found in Hoechst UK Limited v IRC [2003] EWHC 1002. One of the questions there was whether the ACT which the claimant had paid in July 1995 by reference to a dividend from it to its German parent company earlier in 1995 had been made within the limitation period.
In paragraphs 16 and 17 of his judgment Park J said:
13 July 2001 was not a date on which any specific event occurred. It is, however, a significant date because if the limitation period for any claim by HUK by reference to the 1995 ACT was six years from the payment of the 1995 ACT, the period expired on 13 July 2001. By that date HUK had not commenced a separate action relating to the 1995 ACT nor had it applied to amend the pleadings in its existing action, so as specifically to claim relief by reference to the 1995 ACT."
An alternative formulation of the foregoing paragraph which occurs to me is that the limitation may have expired not all at once on 13 July 2001 but progressively over the period from that date until six years after the date when the 1995 Act was set off against the mainstream corporation tax. That date appears to have been 1 October 1996. If that is right this possible analysis of the limitation period makes no difference, because the period would have expired finally on 30 September 2002. HUK had not by then commenced a separate action relating to the 1995 ACT or applied to amend its existing action in a relevant way."
In my judgment, Park J there was assuming, without deciding, that the limitation period may have expired progressively. Even on this assumption, as Park J held, the entire claim was outside the limitation period. These dicta are therefore not authority which support the contention advanced by Mr Randolph.
My attention was also drawn to Welsh Development Agency v Redpath Dorman Long Limited [1994] 1 WLR 1409. There, the Court of Appeal held that the relevant date for considering whether a claim was made outside the limitation period for the purposes of s. 35(3) was the date the application for leave was heard and not the date that the application was issued. I do not think that this authority helps Mr Randolph. This was not a case which involved a continuing infringement of a legal right and it does not follow that because the limitation period had not expired at the time the application for leave was sought but had expired at the time that the application was heard, that a case such as the present for a continuing infringement of a legal right can be brought within s. 35 (3) for the whole period of the claim, even though the earlier part of that period occurred more than 6 years before the claim is made.
Mr Randolph also relied upon the Commentary at para 8-107 in Volume II of the White Book at page 2407 where it is said that the purpose of s.35 (3) is to bar new additional causes of action being litigated outside the period of limitation. In my judgment, if anything, these words support the construction I have put on s. 35(3). They do not support the proposition that where there is a continuing infringement of a right, then so as long as some part of the period of infringement is within the limitation period, a claim for the whole of the period of infringement can be related back more than six years to the date of a pre-existing claim within the action.
Finally, I am of the clear opinion that the new proposed cause of action does not arise out of the same facts or substantially the same facts as are already in issue. The new cause of action pleads concerted action. That is in its nature quite different from a decision taken by an association of undertakings. Accordingly, for these reasons, the amendment as drafted cannot be allowed to be brought into the Particulars of Claim so as to plead a claim that in its entirety relates back to 23 May 2006.
Mr Sharpe accepted that an amendment whose effect was limited to a six year limitation period could be brought by amendment of the Particulars of Claim. In my judgment that is a sensible approach; it would be a quite unnecessary waste of costs for a separate claim to have to be brought and then for that claim to be consolidated with the present claim.
Accordingly, I will give leave for an amendment to plead the new claim on the basis that its effect is not to achieve a relation back to the start of the limitation period of the pre-existing claim but merely relates back to six years from today's date, 8 October 2013.