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The Chancery Division of England's High Court has ruled that a competition damages claim against British Airways cannot proceed as a representative action

The Chancellor of the High Court, Sir Andrew Morritt, handed down his judgment today. The ruling follows a claim by two flower importers, Southern Glass House Produce and Emerald Supplies, that BA violated both British and European competition laws by conspiring to fix the price of fuel, customs and other surcharges with rival air freight suppliers.

The claimants filed the suit on behalf of "all other direct or indirect purchasers of air freight services, the prices for which were inflated by the agreements or concerted practices."

In 2007, BA agreed to plead guilty to cartel charges in the US and to pay a fine of US$300 million – evidence, the claimants say, of its participation in the alleged cartel. The European Commission is currently investigating an alleged cartel in the same sector, and has sent a statement of objections to BA, though it has yet to reach a decision.

Follow-on actions in the UK can only be brought following European or UK authority decisions, so Southern Glass House Produce and Emerald Supplies' claim is a standalone action.

The court ruled that the representative element of the damages claim should be struck out, because it is impossible to identify the members of the class until and unless the action is successful. Further, the court accepted BA's argument that "even if the criteria for inclusion in the class are sufficiently described the relief sought in the action is not equally beneficial for all members of the class," a necessary condition of a representative action.

That is because individual members of the class would need to prove they had been damaged by the conduct, which would depend where in the chain of distribution they came and whether companies had absorbed or passed on the inflated price. "Given the nature of the cause of action and the market in which the relevant transactions took place there is an inevitable conflict between the claims of different members of the class," the court said.

Luke Tolaini, partner at Clifford Chance LLP in London, says "It is a relatively predictable outcome, as the court was never likely to accept a claim of loss incurred by a large unidentified group." This is a standalone action, and the judgment shows that in those circumstances, it will be hard to establish a class under the current rules, he adds. "It's likely unless there is a change in the rules in the future that to make a claim, lawyers will have to identify specific claimants who have suffered loss," Tolaini says.

The claimants can seek leave to appeal against the ruling from the Court of Appeal.

Counsel to Southern Glass House Produce and Emerald Supplies:
20 Essex Street
Iain Milligan QC in London

Monckton Chambers
Ben Rayment in London

Hausfeld LLP
Partner Vincent Smith in London

Counsel to British Airways
One Essex Court
Kenneth MacLean QC in London

Brick Court Chambers
Robert O'Donoghue in London

Slaughter and May
Partner Richard Swallow in London
 

Practice Areas: Antitrust / Competition