Retailers' claims against Visa time barred
29 December 2014
In Arcadia Group Brands Ltd & ors v Visa Inc & ors  EWHC 3561 (Comm) the Commercial Court has struck out a substantial damages claim for alleged breaches of competition law on the basis that it was time-barred, granting summary judgment in favour of the defendants. The claimants sought to rely on allegations of deliberate concealment of relevant facts in order to extend the limitation period. Simon J held that the relevant facts for the purposes of the Limitation Act 1980 are only those facts which are sufficient to plead a prima facie case. In this case, such facts were in the public domain prior to 2007.
The claimants, who included Arcadia Group Brands, Asda, Morrisons, Argos and other retailers, were alleging that a particular charge, the multilateral interchange fee (MIF), levied by Visa when a customer paid by credit or debit card, was inflated and amounted to a restriction of competition in breach of various competition laws. They sought damages in respect of this overcharge going back as far as 1977.
The defendants argued that the claims were time-barred, relying on s2 Limitation Act 1980 (Act) which provides a defence to tort claims brought after the expiration of six years from the date on which the cause of action accrued, or on s9, which applies to claims for sums recoverable by statute, on materially similar terms. Accordingly, they applied to strike out those parts of the claimants’ claims which alleged infringements occurring before certain relevant limitation dates in 2007. In response, the claimants sought to rely on s32(1)(b) Act pursuant to which a limitation period may be postponed where any facts relevant to a claimant’s right of action have been deliberately concealed from him by the defendant. In such circumstances the limitation period will only begin once the claimant has discovered the concealment, or could with reasonable diligence have discovered it.
The claimants argued that key facts relevant to the breaches of statutory duty had been concealed, including the manner and mechanisms by which the multilateral interchange fees were set, and indeed the actual levels that were applied. The claimants’ reliance on s32(1)(b) was based on the fact that these key facts were neither discovered nor discoverable with reasonable diligence at the time proceedings were commenced but were highly relevant to the issue of whether the multilateral interchange fees restricted competition.
When deciding whether the claimants could rely on s32(1)(b), Simon J emphasised that s32(1)(b) is a provision whose terms are to be construed narrowly rather than broadly. A distinction must be drawn between facts which found, or are essential to complete, the cause of action, and facts which merely improve or enhance a claimant’s prospect of success, but without which the claim can still be properly pleaded. If a claimant is in possession of facts which are sufficient to enable a cause of action to be pleaded, the limitation period will not be suspended. Section 32(1)(b) therefore cannot apply to new facts which might make a claimant’s case stronger. Similarly, facts which remain unknown and are not essential to complete the cause of action cannot amount to relevant facts for the purpose of s32(1)(b).
The claimants contended that as stand-alone competition cases require complex analysis of both legal and economic factors, they should be treated as a distinct and exceptional category of claim. They also argued that such claims fall within an area of law that is still developing and emphasised the repeated warnings about deciding cases in developing areas of law on a summary basis. Simon J rejected both of these arguments. While acknowledging that competition cases may be particularly complex, he did not consider that they fell within an exceptional category of claims that would require a different approach to the application of s32(1)(b). Also, while he recognised that caution should be exercised where the court is considering issues at the margins of the developed law, the applicable law in these circumstances was clear and well established.
In considering the extent of contemporaneous knowledge, Simon J held that, while there was no doubt that the full picture was not available, the claimants had failed to identify any concealed facts which had disabled them from pleading their cause of action. The allegedly concealed facts were deemed to be matters of detail rather than core issues, and further, could have been discovered with reasonable diligence. With reference to contemporaneous events, including investigations by the European Commission and the Office of Fair Trading, he found the defendants to have successfully demonstrated that the particulars of claim derived from material which was available before the relevant limitation dates.
This case is a helpful reminder of the rationale behind s32(1)(b) Act, namely that while there is an important public interest that claimants should not be prejudiced where they lack sufficient information to advance a claim, this must be balanced against the public interest in ensuring certainty and finality in litigation. Claimants need to carefully scrutinise whether the facts known to them, or discoverable by the exercise of reasonable diligence, are sufficient to plead a statement of claim which will establish a prima facie case.
The state of the law in respect of competition cases is expected to change with the recent adoption of Directive 2013/0185, Article 10 of which provides that limitation periods will not begin to run until the infringement of competition law has ceased and will only be triggered when the claimant knows or can reasonably be expected to know of the behaviour and the fact that it infringes competition law, the harm he has been caused, and the identity of the infringer. In this case, Simon J emphasised that this was not the present state of the law and so would not affect his reasoning. It therefore remains to be seen whether the Directive will pave the way for a more generous approach to claimants seeking to rely on postponed limitation periods in competition claims.