Let's Talk About Consumers: Competition Law Compensation for Indirect Purchasers' Losses-A United Kingdom Perspective

• Author: Barry J. Rodger
• Position: The Law School, University of Strathclyde, Glasgow
• Pages: 389-423

LET’S TALK ABOUT CONSUMERS: COMPETITION

LAW COMPENSATION FOR INDIRECT

PURCHASERS’ LOSSES—A UNITED

KINGDOM PERSPECTIVE

B

ARRY

J. R

ODGER

*

In competition cases, pass-on arises where the direct purchaser passes on all

or part of an unlawful overcharge to its own customers, the indirect purchas-

ers. It is common ground that, under the jurisprudence of the CJEU and the

common law, the cause of action for damages is then split between the direct

purchaser and, to the extent that the unlawful charge has in fact been passed

on, the indirect purchasers.

1

This article will assess and reflect on the availability of competition law

damages for indirect purchasers in the United Kingdom, considering the

statutory and legal context, including the relevant provisions of the EU Anti-

trust Damages Directive as implemented in the United Kingdom. The article

will also focus on aspects of the recent UK case law related to damages

awards, indirect purchasers and the passing-on defense, and consumer claims

generally.

There are multiple layers of complexity in an article seeking to clarify and

explain those legal rules, their application, and their rationale. First, indirect

purchaser litigation is merely a part of the wider context and debate on com-

petition law private enforcement, and the specific approach adopted to the

issue forms part of the broader development of the institutional and legal

framework for competition law damages litigation, which are still in their rel-

ative infancy in the United Kingdom (and European Union).

2

Second, the va-

rious strands of the discussion have several levels of interconnectedness,

* The Law School, University of Strathclyde, Glasgow. Many thanks to Prof. Miguel Sousa

Ferro, Dr. Sebastian Peyer, and Prof. Francisco Marcos for comments and suggestions, and to the

Editors for their invaluable insights and assistance in finalizing the article.

1

Sainsbury’s Supermkts. Ltd. v. Mastercard Inc. [2016] CAT 11, [320].

2

See, e.g., D

AVID

A

SHTON

, C

OMPETITION

L

AW

D

AMAGES

A

CTIONS IN THE

EU: L

AW AND

P

RACTICE

(2d ed. 2018).

389

390

A

NTITRUST

L

AW

J

OURNAL

[Vol. 84

which makes it impossible to isolate and focus on the question of indirect

purchaser standing without an understanding of these links: it is difficult to

disentangle competition law and private law as they coincide to determine the

legal playing field for indirect purchasers; it is difficult to disentangle the

treatment of indirect purchasers in the legal systems of the United Kingdom

from the wider development of EU law to facilitate the private enforcement of

EU competition law; it is difficult to disentangle the sub-category of indirect

purchasers from that of consumers and the underlying notion that consumers

are at the heart of competition law;

3

it is also difficult to disentangle indirect

purchasers’ right to a damages remedy from a broader understanding of how

we quantify and assess loss and damages and the rationale for awarding dam-

ages. Finally, it is difficult to disentangle the position of indirect purchasers

from the (non-) availability of the passing-on doctrine (in an offensive or de-

fensive capacity) and also from the related wider objective of achieving a

“global” compensation arrangement for competition law infringements.

4

Accordingly, this article will look at competition law private enforcement

for indirect purchasers from a UK perspective, focusing on the rights of con-

sumers qua indirect purchasers.

5

Of course, unlike the position with respect to

other collectivized consumer claims for mass torts where the direct victim

may be a consumer (for instance, in product liability/environmental damage

claims), in competition law claims with respect to cartelized products the

losses are often (though not always) mediated through intermediate parties in

the production or supply and distribution chain with final consumers various

steps away from the infringing party. The standard requirements in damages

actions to prove causation and quantification of damages can always be prob-

lematic,

6

but in competition law claims there are additional potential compli-

3

It should be stressed that indirect purchasers are not only consumers, and consumers are not

only indirect purchasers.

4

See, e.g., Mihail Danov, Global Competition Law Framework: A Private International Law

Solution Needed, 12 J. P

RIV

. I

NT

’

L

L. 77 (2016); Chris Noonan, Mediating Between Public and

Private Enforcement in Multi-Jurisdiction Settings, 37 U. Q

UEENSL

. L.J. 25 (2018).

5

In this article, we are unable to focus on the separate, crucial issue of litigation funding for a

successful private enforcement regime, although third-party funding has been utilized and con-

sidered in the two key cases under the Consumer Rights Act 2015, discussed below.

6

This is so despite the European Commission’s publication of both an official Commission

Communication as well as a “Practical Guide” on quantifying harm in antitrust damages. See

Communication from the Commission on Quantifying Harm in Actions for Damages Based on

Breaches of Article 101 or 102 of the Treaty, 2013 O.J. (C 167) 19; Eur. Comm’n, Practical

Guide Quantifying Harm in Actions for Damages Based on Breaches of Article 101 or 102 of

The Treaty on the Functioning of the European Union, SWD(2013) 205 (Nov. 6, 2013) (Com-

mission Staff Working Document), ec.europa.eu/competition/antitrust/actionsdamages/quantifica-

tion_guide_en.pdf; see also Niamh Dunne, The Role of Private Enforcement within EU

Competition Law, 16 C

AMBRIDGE

Y.B. E

UR

. L

EGAL

S

TUD

. 143, 165 (2014); Communication

from the Commission, Guidelines for National Courts on How to Estimate the Share of Over-

charge Which Was Passed on to the Indirect Purchaser, 2019 O.J. (C 267) [hereinafter

2022]

C

OMPETITION

L

AW

C

OMPENSATION

391

cations: how the calculation of losses suffered by parties at different levels of

the supply chain should take into account whether and to what extent

overcharges have been passed on by suppliers.

7

Accordingly, the flip side of

the right of indirect purchasers to sue is the availability of a passing-on de-

fense to defendant companies in damages claims brought by persons who

claim to have suffered losses due to the infringement of competition law.

Such a defense would operate on the basis that the alleged amount for which

the claimant was overcharged was actually passed-on to the claimant’s cus-

tomers. In effect, the defendant may assert that the claimant did not actually

suffer a loss.

8

As shall be discussed, the availability and scope of the two

related mechanisms in any legal system depends to a great extent on the value

attached to the respective goals of deterrence and compensation. As shall be

stressed in particular in Part IV infra, divergences in approach in this area

may reflect the comparative prioritization in the U.S. enforcement system of

deterrence whereas the EU/UK legal systems value and emphasize compensa-

tion as driving private enforcement policy and practice.

9

Nonetheless, it

should be stressed that any debate focusing on achieving effective consumer

redress should recognize that a viable, workable collective redress mechanism

is vital in ensuring that rules facilitating indirect purchaser rights benefit con-

sumers in practice.

10

This article is set out in the following four parts. Part I looks at the institu-

tions, rules, and processes—i.e., the private enforcement architecture for indi-

rect purchaser claims generally and consumer claims specifically at both the

EU and UK levels. Part II considers the case law developments in the UK

courts, exploring the issues of damages, standing, and collectivized consumer

competition law claims. Part III reflects on the contrasting rationale and aims

of private enforcement generally and the rules on indirect purchaser standing

specifically in the United States and the European Union (and United King-

dom), considering the primacy of the respective arguments based on deter-

Commission Overcharge Guidelines], eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:

52019XC0809(01).

7

See, e.g., Carlo Petrucci, The Issues of The Passing-On Defence and Indirect Purchasers’

Standing in European Competition Law, 29 E

UR

. C

OMPETITION

L. R

EV

. 33 (2008); see infra Part

I.A.2.

8

See Samet Caliskan, Private Enforcement of UK Competition Law: Enhanced Deterrence

for Whom?, 13 G

LOBAL

C

OMPETITION

L

ITIG

. R

EV

. 20 (2020); I

OANNIS

L

IANOS ET AL

., D

AMAGES

C

LAIMS FOR THE

I

NFRINGEMENT OF

EU C

OMPETITION

L

AW

(2015) (particularly ch. 6).

9

Particularly in light of the majority and dissenting opinions in the Supreme Court in Apple

v. Pepper, 139 S. Ct. 1514 (2019), the landscape in the United States is more complicated and

may be evolving. See Andrew Gavil, Consumer Welfare Without Consumers? Illinois Brick

after Apple v. Pepper, 7 J. A

NTITRUST

E

NFORCEMENT

447 (2019); see also Herbert Hovenkamp,

Apple v. Pepper: Rationalizing Antitrust’s Indirect Purchaser Rule, 120 C

OLUM

. L. R

EV

. F. 14

(2020).

10

See, e.g., Mastercard v. Merricks [2020] UKSC 51, [¶ 1] (Lord Briggs) (appeal taken from

CAT); id. ¶¶ 84–85 (Lords Sales and Leggatt) (discussed further infra).