Rare strike out of an abuse of dominance claim by the CAT
The Competition Appeal Tribunal handed down judgment in Forrest Fresh Foods Ltd v Coca-Cola European Partners Great Britain Ltd on 7 September 2021, striking out the claim. It is fairly unusual for the Tribunal to strike out claims, so the judgment serves as a helpful reminder of the relevant principles in competition claims.
Forrest Fresh Foods (FFF) is an independent wholesale supplier of soft drinks, confectionary and snacks. Coca-Cola European Partners Great Britain Ltd (CCEP) manufactures, markets and distributes beverages, and is a licensed bottler for products of The Coca-Cola Company. Since 2011, FFE had been a customer of CCEP. At various times, CCEP had also imported Coca-Cola products from importers.
Following pre-action correspondence, FFF filed a claim on 31 March 2021 alleging that CCEP had abused a dominant position in the relevant market in four respects. First, FFF claimed that CCEP had sold FFF products at a discounted price in exchange for FFF’s customer list. It was alleged that CCEP then sold its products directly to some of those customers. Second, FFF alleged that CCEP had sought its assistance with removing products imported from Ireland and Georgia from the UK market. Third, FFF alleged that CCEP instructed FFF to purchase stock from a third company to increase that company’s sales figures, while CCEP then reimbursed FFF for the difference in price. Finally, FFF alleged that CCEP had reimbursed some customers for sugar tax levies on its products but had refused to do so for FFF. FFF sought both compensatory and exemplary damages.
CCEP applied both to strike out the claim and for summary judgment dismissing the claim.
The Tribunal restated the well-established principles that apply to summary judgment applications. It noted that in this context the Tribunal must consider whether the claimant has a realistic rather than a fanciful prospect of success but must not conduct a mini trial in reaching its conclusion. While the Tribunal does not need to take all of the claimants’ statements at face value, it should take into account the evidence that can be reasonably expected to be available at trial. The Tribunal noted and the parties agreed that, in this case, there was no material difference between these principles and the test for strike out.
The Tribunal also emphasised the importance of proper pleading in competition law claims. It reiterated that a party’s statement of case must set out the facts, not the evidence, which the claimant relies upon and should allow the other side to know the case it has to meet. In competition law, particularising the claim was especially important because such cases involve serious allegations of breaches of quasi-public law.
The Tribunal noted that the claim was defectively pleaded in a number of respects. It found that the claim was based on an abuse of market dominance, but the claimants had not sufficiently particularised the relevant market. In some instances, the allegations did not establish a claim based on abuse of market dominance, or indeed, a breach of competition law at all. The Tribunal noted that FFF’s position was essentially that, with further particularisation, at least some aspects of its claim should proceed to trial. It described this as a “deeply unsatisfactory approach”, especially where no application to amend had been made, no draft further particulars had been filed with the Tribunal and counsel was unable to articulate what the further particulars could be during the hearing. The Tribunal was effectively invited to speculate on what the case might be if it were repleaded, which was not possible nor appropriate.
With respect to the claim for exemplary damages, the Tribunal held that the claimant needed to plead specific facts and matters alleging that the breach of competition law was intentional or reckless, so as to be regarded as sufficiently worthy of exemplary damages. FFF’s pleading that the alleged conduct was “calculated to make a profit” did not, in the Tribunal’s judgment, “remotely meet the standard or specificity”.
The Tribunal noted that Rules 41 and 43 of the CAT Rules provide that it “may” strike out or summarily dismiss a claim, rather than being under any obligation to do so. FFF had submitted that the Tribunal should exercise its discretion in FFF’s favour, because there was an imbalance between the parties. For example, it noted that FFF had only instructed a sole solicitor practitioner. The Tribunal considered that this did not explain or justify the manifest deficiencies in FFF’s pleading and FFF was, on its own account, a large business with significant turnover.
The judgment in this case serves as a reminder of the importance of properly formulating and pleading competition claims. That said, the facts in this case were reasonably unusual in meeting the strike out threshold. It is difficult to imagine any increased frequency of successful strike outs by future defendants, as applications of this kind are very difficult to win.
Importantly, while not a factor in this case, the Tribunal has in the past made it clear that claimants will be offered a degree of generosity when considering the adequacy of proceedings in claims based on secret cartels.