In a recent decision of the Competition Appeal Tribunal, the panel unanimously decided that three Defendant groups should not be given permission to instruct their own experts in the field of competition economics at trial and were instead given permission to instruct a single joint expert. Initially, the Claimants had not opposed the appointment of separate experts by each of the Defendant groups – the issue had been raised for consideration by the Tribunal itself. The decision is further evidence of the Competition Appeal Tribunal adopting a particularly active approach to case management.
Background
The Claimants are manufacturers of motor cars and form part of the Stellantis group. The Defendants are suppliers of occupant safety systems (namely, seat belts, airbags and steering wheels), together "OSS Products". While the claim is a stand-alone claim, it arises after two decisions of the European Commission from 2017 and 2019 regarding the supply of OSS products found to be in breach of Article 101 of the Treaty on the Functioning of the European Union and Article 53 of the Agreement on the European Economic Area. However, those decisions did not concern supplies to the Claimants.
Nevertheless, the Claimants have brought a standalone claim, alleging that during the period from 6 July 2004 to 30 March 2011:
- The three Defendant groups colluded to seek price increases
with respect to responses to requests for quotations
("RFQs"), as well as periodic amendments
to agreed prices.
- In the alternative, the effect of the infringement found by the Commission would have been to increase the prices charged by the three Defendant groups to the Claimants by tending to lessen the degree of competition in the market. This is commonly referred to as an "umbrella claim".
The Claimants intend to prove the existence of collusive arrangements between the three Defendant groups by reference to:
- Documentary disclosure of a cartel between the three Defendant
groups evidencing alleged communications between employees of the
Defendants in relation to RFQs and amendments to agreed
prices.
- In the alternative, or additionally, an econometric analysis which it is alleged will show differences in prices between the period of the alleged collusion and the subsequent "clean" period (i.e. after March 2011). An econometric analysis will also be used for the purposes of (i) arriving at a figure for the overcharge; and (ii) establishing any alternative "umbrella claim".
Importantly, as regards (2) immediately above, the Claimants will not seek to distinguish between the activities of the Defendant groups.
Following the second CMC in March this year, the Tribunal declined to give consent to each of the three Defendant groups to have their own expert, notwithstanding that the Claimants had not objected to this. A pro tem order for a single joint expert for the Defendants was made and the Defendants were given permission to apply for additional experts. After the matter was raised by the Tribunal, the Claimants subsequently adopted the proposed approach of the Defendants using a single joint expert. Two of the three Defendant groups made submissions opposing the use of a single joint expert.
The Defendants' submissions and the Tribunal's decision
The following arguments were considered (and rejected) by the Tribunal as reasons for allowing each Defendant group to appoint its own expert in this case:
- Ordering the Defendants to use one single Joint Expert would
breach Article 48 of the Charter of Fundamental Rights of the
European Union which states: "Respect for the rights of
the defence of anyone who has been charged shall be
guaranteed". The Tribunal queried whether Article 48 was
engaged in the context of a private action for damages. In any
event, the Tribunal was of the view that Article 48 does not give
rise to a presumption that each Defendant should be entitled to its
own expert in competition proceedings.
- The consistent practice of the Tribunal and the Courts in
cartel cases has been to permit defendants to rely on the evidence
of their own experts in relation to economic issues. As regards
this submission, the Tribunal noted that few cartel cases have gone
to trial and there is only really one reasoned decision on this
point, namely, UK Trucks Claim Limited v Stellantis NV &
Ors [2023] EWCA Civ 875 ("UK
Trucks").1 On this basis it concluded that the
practice could not be determinative. Instead, it focused on
fundamental principles of how justice should be administered. In
the instant case, if the Tribunal were to receive three different
expert opinions on the same topic from each of the three Defendant
groups, the Tribunal would need to reconcile or combine those
opinions. Accordingly, ordering the three Defendant groups to share
one single expert would help streamline the expert process. While
the Tribunal acknowledged that there may be advantages in creating
separate models for each of the Defendant group's datasets, the
Tribunal will ultimately need to reach conclusions based on the
totality of the evidence – this is not an exercise that would
be assisted by having three separate experts for each Defendant
group opining on the conclusions that can be drawn from different
subsets of data. Further, an expert with an overview of the data
from each of the Defendant groups will be best placed to assist the
Tribunal in understanding the defects (if any) in the
Claimants' econometric analysis.
- Appointing a single joint expert could potentially give rise to a conflict of interest between the Defendant groups. The Tribunal was of the view that it was necessary to consider whether or not there is a risk of a conflict of interest in relation to the matters which the expert evidence is directed (as was the case in UK Trucks), and should be assessed by reference to the claim and defence as they are understood at the time when permission for expert evidence is ordered. If unforeseen conflicts emerge, the need for additional separate experts can be revisited at that time. Three specific arguments raised in relation to the issue of conflicts were rejected:
- Contribution and apportionment: The Tribunal
acknowledged that if questions of apportionment of damages arose
then there may be a conflict between the rival positions of the
Defendant groups. However, no contribution notices had been filed
and the Defendant groups had not sought to rely upon the activities
of the other Defendant groups in defence of all or part of their
respective claims (such that this would not be an issue at
trial).
- The Claimant's "unparticularised
alternative case" that there had been an infringement
involving only two of the three Defendant groups: Again,
the Tribunal acknowledged that there would be a conflict if the
expert evidence was relevant to determining whether two out of the
three Defendant groups were involved in an infringement (and not
the third). However, pending particularisation of this alternative
case, it was not proposed that the Claimants' economic evidence
would seek to distinguish between the positions of the Defendant
groups. The Claimants were ordered to properly particularise this
alternative case by 22 December 2023, so that any potential
conflicts of interest (which could impact the economic evidence)
could be assessed by the parties and the Tribunal.
- Different Defendant groups could be responsible for different umbrella effects (on the basis that the Commission Decision found distinct infringements relating to different Defendant groups): The Tribunal found that while it was theoretically possible that different Defendant groups could be responsible for different umbrella effects, this was not something that was capable of being addressed by the econometric analysis. The Claimants were proposing simply to compare prices between the "clean" period and the period during which the infringements, as found by the Commission, were in operation.
The Tribunal intends to manage any potential conflicts by the sequential exchange of expert reports with the Claimants serving their expert evidence first, which means that the Tribunal and the parties can consider how to address any unanticipated conflicts before the Defendants finalise their evidence.
In reaching its decision, the Tribunal also referred to its wide-ranging powers as set out in Rule 53 of the CAT Rules and paragraph 7.65 of the CAT Guide in relation to the admission of expert evidence in the Tribunal, including the need to limit expert evidence to that which is reasonably required to resolve the proceedings and to ensure that proceedings are dealt with justly and at proportionate cost (the latter being the same language used in Rule 4 of the CAT Rules which sets out the governing principles of the Tribunal).
Key take-aways
At a principled level, the decision suggests that a defendant does not have an unqualified right to instruct an expert of its own choosing for the purposes of advancing its defence alone. Relevant context to this is that the touchstone of the expert framework in English proceedings is independence, and the expert's duty to the Tribunal is paramount (and overrides any duty to the party instructing the expert).
In some respects, the decision may be viewed as a welcome development for Claimants as it suggests that the Defendant's approach to the analysis of the economic data may be hamstrung (to some extent) by what the Claimant's expert proposes to do. In the instant case, the Claimants' intention to not distinguish between the activities of the Defendant groups was one of the (key) reasons why the Tribunal ordered the Defendants to instruct a single joint expert.From a defendant's perspective, in practical terms, the decision raises a number of concerns:
- In circumstances where the single joint expert does not share
the views of the expert the Defendant had intended to appoint, the
defendant may effectively be precluded from advancing the economic
analysis its preferred expert had proposed to adduce.
- There may be a "practical" conflict between the Defendants, particularly if the relevant deadlines are tight, as each defendant will want the single joint expert to focus on its part of the case.
The decision also suggests that in seeking their own individual experts, defendants might not want to rely on the fact that a defendant-specific assessment is required in order to account for differences in datasets (for example, certain control variables may be unique to a specific defendant). As the Tribunal noted, whether separate models are required in order to account for the differences in the datasets is a matter for the experts, however this does not mean that each defendant should have its own expert. While, at present, the Tribunal did not consider there to be any relevant conflicts as between the defendants, as and when the time comes to conduct the modelling, it is not difficult to envisage a situation where conflicts do emerge, not least because certain modelling choices applied to any consolidated dataset may have different impacts for different defendants - some modelling choices may benefit some defendants while others may put them at a (relative) disadvantage. It is clear that the Tribunal intends to take things in stages and to keep the issue of potential conflicts under review, including, once the Defendants are in receipt of the Claimants' expert report.
On the issue of proportionality, perhaps surprisingly, the Tribunal were not able to form a view as to the relative costs of employing one single joint expert instead of three separate experts – although there will only be one report, it will still need to be reviewed by three different solicitor and counsel teams. Depending on the point at which the Tribunal orders the use of a single joint expert, it may result in a delay to the trial date as the new jointly instructed expert will need sufficient time in order to familiarise themselves with multiple datasets, most likely with the assistance of the existing expert advisers (adding time and costs). The existing expert advisers may also need to remain involved in the proceedings for the purposes of assisting with any specific disclosure applications, as they are likely to have a better understanding of the relevant data, at least during the period while the single joint expert "gets up to speed".
Overall, the decision reflects the Tribunal's increasing concern about the scale of proceedings in the context of multi-party litigation, in particular, the implications this has for the expert process and how this can best be managed (in light of what the Tribunal has learned from previous cases). It is clear that the Tribunal is keen to avoid a situation where the parties' respective experts are "ships in the night". This is an issue which the Tribunal has been conscious of for many years, and has often taken active steps to avoid.2 However, it is not clear that appointing a single joint expert is the best tool for managing this risk. For example, it would have been open to the Tribunal to receive submissions from the parties regarding their proposed methodologies for the purposes of considering whether a non-defendant specific analysis reflects the "optimal" approach, and the relative advantages/disadvantages associated with a defendant-specific analysis. This type of exercise has been conducted in other cases, and it is possible that in this case it might have helped flush out, at an early stage, the areas of dispute between the experts insofar as they relate to the crucial building blocks of the expert analysis.3 Certainly it is an option which defendants will in other cases be considering keenly in light of this judgment.
The existence of three separate experts for each of the Defendant groups would not have necessarily meant that one of those experts would not have (or could not have) considered the evidence in its totality (as each of the Defendant group's experts would have access to the other Defendant groups' data) – to some extent, each of the Defendant group's experts would have needed to consider the totality of the evidence in order to respond to the Claimants' report.
Finally, while the Tribunal intend to keep the issue of conflicts under review, to the extent these are identified later down the line, including following the receipt of the Claimants' expert report (and the instruction of a single joint expert), the need to deal with those conflicts may significantly prejudice any trial timetable, and generate further costs.
We understand that certain of the parties may have sought permission to appeal from the Court of Appeal
Footnotes
1. In that case, the Court of Appeal identified a conflict of interest between the purchasers of new trucks and purchasers of used trucks in relation to resale pass-on and that, in these circumstances, a direction for separate experts would be appropriate for different categories within the Claimant class.
2. Prompted amongst other things by the Court of Appeal's decision in MOL v McLaren [2022] EWCA Civ 1701. See also, for example, the recent pass-on judgment in the Merchant Interchange Fee Umbrella proceedings: [2023] CAT 60 and the case management ruling in Kent v Apple Inc [2023] CAT 22 where the Tribunal ordered the parties to identify the issues they propose to ask their experts to address, which "should be shared and discussed between the parties (if necessary, including direct interaction between the experts themselves) in order to ensure that everyone is on the same page" (see paragraph 45).
3. See the remarks of Mrs Justice Bacon, speaking extra-judicially at the MLex Competition Law Conference on 22 September 2023.
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