Albion v Dŵr Cymru Implications for Damages Litigation

1. Albion v Dŵr CymruImplications for Damages Litigation Matthew Cook Barrister One Essex Court, Temple Meredith Pickford Barrister Monckton Chambers

2. Overview • Quantification of damages and evidence • Loss of a chance • Counterfactual in compensation claims • Interest in compensation claims • Exemplary damages

3. Quantification of Damages • See Commission Staff Working Document – Practical Guide on Quantifying Harm (11 June 2013) • Determination of the Effect of the Infringement i.e. how would the market have operated in the absence of the infringement. • May involve price effects or exclusionary effects. • For price case, have to determine what the level of prices would have been without the infringement and so extent of overcharge. • Consider Volume Effect • Has loss been passed-on

4. Options for Quantifying Overcharge • Comparator Based Method – looking at periods before/after infringement or markets unaffected by infringement • Economic Simulation Model – prediction of market behaviour through economic theory • Cost based – estimates prices that would have emerged based on cost plus reasonable profit • Finance method – estimates effect of infringement based on financial performance of the claimant or defendant.

5. Albion – Simple case of Overcharge • The infringement involved a breach of the Chapter II prohibition based on overcharging. • What could DC lawfully have charged? • What would DC have charged if it had acted lawfully?

6. Quantifying the Volume Effect • A rise in prices can lead to less demand. • Quantify any reduction in demand and consequent loss of profit. • Not relevant in Albion

7. Passing-On • What percentage of the loss has been passed on to customers. • In Albion, contract determined how reductions in price would be shared between Albion and its customer.

8. Evidence • Factual Evidence – what would relevant companies have done in hypothetical counterfactual. • Economic Evidence. • Accounting Evidence.

9. Loss of a Chance • Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602 • Where loss depends on the hypothetical actions of a third party which would have conferred a benefit on the Claimant, the Claimant has to show he had a “substantial chance rather than a speculative one” of obtaining that benefit. If so, the evaluation of the substantial chance is a question of quantification of damages. • Contract with third party (Corus) – reduction of 33%.

10. Counterfactual • The ‘but for’ world had the abuse not been committed • Livingstone v The Rawyards Coal Co (1880) 4 App Cas.25 at 39 – classical test in tort • Cited in Devenish v Sanofi[2009] 3 WLR 198 at [43] • Enron Coal v EWS [2009] CAT 36 at [90]

11. Counterfactual:Excessive pricing context • DC: Assume DC would have charged the highest price that able to establish at trial would have been lawful • Rejected by the Tribunal: • Practicability • Principle • Alternatives (BanqueBruxelles v Eagle Star [1997] AC 191)

12. Counterfactual:Interrelationship with Substantive Test • Damages – requires a counterfactual • National Grid v GEMA [2010] EWCA Civ 114 – no counterfactual required

13. Interest • Albion: sought compound or 8% simple. Basis for compound claim – Sempra Metals v IRC [2008] 1 AC 561 • Tribunal: 2% above base rate • Government: a matter for legislation

14. Exemplary Damages • Rookes v Barnard (No 1) [1964] AC 1129 • Outrageous and contumelious behaviour. Needed to show: • DC knew, or probably knew, that its conduct was unlawful • Nonetheless cynically calculated that the benefits from such conduct outweighed the likely damages that would be payable • Non bis in idem and related points

15. Questions?

16. Meredith Pickford • Monckton Chambers • mpickford@monckton.com • Matthew Cook • One Essex Court • mcc@oeclaw.co.uk