Competition damages actions are claims whereby individuals and companies can seek redress for losses suffered as a result of an infringement of competition law by a third party. For example, if a supplier took part in a cartel, the purchaser may be able to recover damages to compensate for the higher prices they had to pay for goods or services as a result of the cartel. Similarly, losses suffered as a consequence of a dominant company abusing its position may also be recoverable.

Our competition damages experts have extensive experience bringing and defending competition claims. The team very closely monitors the cartel, abuse of dominance and vertical restraints decisions as well as investigations of the European Commission and the UK’s Competition and Markets Authority (CMA). This allows them to identify the relevant cartels for a client based on their upstream and downstream product procurement, which is the first step towards competition litigation.

Funding the dispute?

There has been a remarkable increase in competition litigation in the past couple of years (especially in the UK) and there is increased vigour on the part of claimants who have suffered losses to bring damages claims against the cartelists. These private enforcement actions or damage claims are assets for any entity that is looking to recover their losses as a result of a cartel or a non-cartel anti-competitive practice.

In deciding whether to file a claim for a cartel breach, the starting point is to identify the relevant cartel and calculate the overcharge, i.e. the difference between the actual price paid for the cartelised goods or services and the price that would have been payable without the cartel. Depending on the quantities purchased by an entity, even parties that did not purchase directly from any of the cartelists – but instead purchased from a competitor of the cartelists – may be able to claim ‘umbrella damages’, on the basis that the prices they paid were higher as a result of the operation of the cartel. Claimants can also claim interest on damages, given that cartels and associated conduct often span many years. Interest on damages is often substantial and may sometimes exceed the level of the damages themselves.

These claims can be very complex and not every potential claimant can afford legal proceedings. Third party funding can be extremely handy as it allows any entity to pursue legal action without worrying about the costs.

Third-party funding would typically involve a commercial funder agreeing to pay some or all of a claimant’s legal costs in return for a share of damages or settlement sums. Funding is generally on a no win-no fee basis, i.e. it is typically non-recourse, so if the claimant is unsuccessful the funder loses its investment.

Third-party funding can be highly beneficial for entities that are reluctant to invest their own funds into a potentially time-consuming and costly, yet worthwhile, litigation, and also has the effect of taking the burden of these legal fees off the balance sheet.

Our services

Having successfully brought the first ever funded competition damages claim in the UK Competition Appeals Tribunal, Shepherd and Wedderburn has been working with funders to develop funding solutions for clients for many years. We have set up innovative solutions for a number of clients and work with funders across the funding market to find the right solution for clients who wish to bring claims without bearing legal costs upfront, and insurers who can protect you from having to pay adverse costs in the event you are unsuccessful.

We can defend you against claims for damages and advise in the recovery of damages caused by suppliers, customers or competitors. On the other hand, we are equally competent in advising and assisting clients in filing damage claims before the appropriate authorities. We can also help you fund these claims for damages (a specialist skill for which we are recognised – for more information please see our Funded Litigation page).

Experience

Representing Albion Water in its successful damages claim against Welsh Water regarding conduct consisting of margin squeeze and unfair pricing contrary to the Competition Act 1998. The breaches, which had previously been established by the Competition Appeal Tribunal, related to the refusal of the local water monopoly to provide objectively justifiable terms and conditions for the provision of bulk water supplies to Albion.
Representing the European Competitive Telecommunications Association AISBL (ECTA) in its intervention before the European Court of Justice in the appeal brought by Orange Polska SA against the decision by the European Commission finding that Orange had abused its dominant position in the Polish telecoms market at wholesale level, in breach of Article 102 TFEU, to protect its retail operations.
Representing Dahabsihil, one of Africa's largest money transfer companies, in its successful application in the High Court in London for an injunction to prevent Barclays withdrawing banking services provided to Dahabsihil and others. The court ruled that, while the question of whether Barclays was dominant in the market for provision of these services and whether its conduct amounted to abuse was still to be determined, the bank should be required to reinstate services pending trial.
Helping FTSE 100 and 250 clients create innovative funding models for portfolios of litigation assets including the first UK portfolio deal struck with a lender.