The House of Lords last week gave a landmark competition ruling ending 13 years of litigation. Overturning an earlier decision by the Court of Appeal, the Lords decided that an agreement tying Mr Crehan, a publican in Surrey, to beer supplier the Inntrepreneur Pub Company did not break European competition law rules contained in Article 81 of the EC Treaty. Mr Crehan had claimed that the 'tie-in' clause put him at a disadvantage compared to other free houses in the area and therefore forced him out of business.
Having decided that there was no Community interest in proceeding, the European Commission left it to the English courts to decide the case. Much of the Lords' judgement is concerned with the degree of deference owed by the national courts to the findings of the Commission's earlier investigation. Contrary to the view taken by the Court of Appeal, Lord Hoffmann felt that the national courts were free to disagree with the Commission's findings of fact regarding the beer distribution market in the UK.
The English courts were furthermore not obliged to follow previous European decisions on very similar facts. The decision in the Whitbread case, for instance, concerned another tie-in agreement in the same market, but the Lords decided that this judgement was not binding on the English courts unless either the same agreement or the same parties were at issue.
The case also has implications for the European Commission's private enforcement drive. The earlier decision by the Court of Appeal was hailed as a turning point for private enforcement actions and was the first instance where damages have been awarded to a person by the English courts for breach of competition law. One of the key aims stated in the Commission's Green paper on damages actions for breach of EC competition rules is to bring competition law closer to the citizen; this House of Lords ruling constitutes a setback for that objective. Also the fact that the Whitbread decision was not followed means that individuals will not be able to rely confidently on previous European decisions to support their case.
Thus whilst the Lords' ruling can be seen as an assertion of the independence of the national courts in principle, its outcome will be poorly received by individuals in a similar position to Mr Crehan. Those observing Mr Crehan's 13-year fight ending in defeat could well be discouraged from making a similar claim.