Transport - Abuse of dominant position - Causation - Coal industry

Enron Coal Services Ltd (in liquidation) v English Welsh and Scottish Railway Ltd: CA (Civ Div) (Lords Justice Jacob, Lloyd, Patten): 19 January 2011

The appellant coal supplier (E) appealed against a decision ([2009] CAT 36) dismissing its ‘follow-on’ claim under section 47A of the Competition Act 1998 on the basis that causation had not been proved.

The regulator, the Office of Rail Regulation, had published a decision that the respondent rail freight company (R) was in breach of article 82 of the EC Treaty (Nice) and of the prohibition in section 18 of the Competition Act 1998 against abuse of a dominant position. In the decision the regulator found that R was in a dominant position in the market for coal haulage by rail; it set higher prices to E for coal haulage than it did to other customers without objective justification; that placed E at a competitive disadvantage in relation, in particular, to coal haulage supply to an electricity generator (M) at two power stations; that conduct was a breach of the prohibition. E brought a follow-on claim against R for damages, alleging that R’s conduct caused it to lose a real or substantial chance of gaining a profitable contract with M under which it would have been able to supply not only coal haulage but also coal, from the supply of which it would have made profits over a four-year period. The Competition Appeal Tribunal dismissed the claim because E failed to show that R’s conduct deprived it of a real or substantial chance of winning a contract for the supply of coal to one of M’s power stations for the relevant period. E contended that it followed from the regulator’s conclusion that R’s conduct had put E at a competitive disadvantage in its approach to M; that E had suffered loss as regards its attempt to get a contract with M which could have led to a profitable coal supply to M lasting over four years, whether by way of a single long-term contract or a series of shorter or open-ended contracts; the tribunal’s conclusions that E’s bid to M was for coal haulage, and that it was not very seriously interested in getting a coal supply contract with M, and that E had only a negligible chance of contracting with M on a long-term basis for coal supply were inconsistent with findings of the regulator which were binding under section 58.

Held: (1) By virtue of section 47A(9), the tribunal, in determining E’s claim, was bound by the decision of the regulator that the prohibition in question had been infringed. The regulator’s findings of fact were also binding by virtue of section 58, unless the tribunal otherwise directed. Section 58 applied to proceedings in the tribunal as well as in court. Section 47A proceedings were proceedings in respect of an alleged infringement within section 58 (see paragraphs 33-46 of judgment).

(2) A party seeking to rely on a finding had to be able to demonstrate that the regulator had made a clearly identifiable finding of fact to a given effect, and it was not enough to be able to point to passages in the decision from which a finding of fact might arguably be inferred, Enron Coal Services Ltd (In Liquidation) v English Welsh and Scottish Railway Ltd [2009] EWCA Civ 647, [2010] Bus LR 28 applied (paragraphs 56).

(3) It was not correct as a matter of law that unless a trading partner actually suffered a competitive disadvantage, there was no abuse of a dominant position. It was not necessary to establish how real the competitive threat posed by E to R was before finding that R’s conduct amounted to an abuse of its dominant position, United Brands Co v Commission of the European Communities (27/76) [1978] ECR 207 ECJ, Compagnie Maritime Belge Transports SA v Commission of the European Communities (T24/93) [1996] ECR II-1201 CFI (3rd Chamber) and British Airways Plc v Commission of the European Communities (C-95/04 P) [2007] ECR I-2331 ECJ (3rd Chamber) considered. The tribunal’s conclusion was not inconsistent with a decision by the regulator that E bid to M on an ‘end to end’ basis, because the regulator did not make a finding of fact to that effect, nor was such a finding part of its decision that there had been the infringement which it found (paragraphs 126-132).

(4) The regulator did not decide whether R’s conduct in fact caused loss to E and it did not need to make any such finding in order to conclude that R had abused its dominant position. The fact that it concluded that R had infringed did not show that it had found that the relevant conduct had caused actual loss to E. Nor did it make any finding of fact, even if unnecessarily, that such damage had been caused. The tribunal was correct in concluding that it needed to review the whole of the evidence placed before it in order to assess whether E had made out its case, and it was entitled to come to the conclusion that E had not succeeded in doing so (paragraphs 132, 133).

(5) The tribunal had not made any express direction under section 58 and it was not necessary to decide whether, if it had been bound by a relevant finding of fact, it had implicitly directed otherwise. If a court or tribunal was to direct that section 58 should not apply to a particular finding of fact, it should do so expressly and give reasons for doing so, even if briefly.

Appeal dismissed.

Paul Lasok QC, Daniel Beard (instructed by Orrick Herrington & Sutcliffe (Europe)) for the appellant; Mark Brealey QC, Maya Lester (instructed by Freshfields Bruckhaus Deringer) for the respondent.