Commencement of Limitation and Notice of a Potential Cartel Damages Claim Under English Law
The recent judgment of the High Court in London, Granville Technology Group Limited (In Liquidation) & Ors v. Infineon Technologies AG & Micron Europe Limited,  EWHC (Comm) 415, which was cited soon after with approval by the Court of Appeal in DSG and Dixons v. Mastercard,  EWCA (Civ) 671, has provided long-awaited guidance on limitation in follow-on cartel damages claims under English law.
The claimants, three companies in liquidation, brought a follow-on cartel damages claim against two major suppliers of direct random access memory and Rambus DRAM (together, “DRAM”) who were found guilty of a price-fixing cartel from 1998 and 2002 by the European Commission (“EC”), in a decision dated 19 May 2010 (the “Decision”). The claimants, who were direct purchasers, and who had all entered liquidation at different times, issued their claim in the High Court on 18 May 2016, a day short of the six year anniversary of the date of publication of the Decision.
Prior to Granville, doubt remained as to whether time could start to run in a follow-on cartel damages claim (brought on the back of an EC decision), prior to publication of the underlying decision. In Granville, however, the defendants argued that the claim was time barred as more than six years had passed since the claimants’ cause of action had accrued, long before the publication of the Decision. The claimants, in turn, sought to rely on § 32(1)(b) of the Limitation Act 1980, which postpones the running of time where “any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant” “until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.”
When is a Concealment “Discovered” for the Purposes of English Law?
Under English law, “the facts which have been concealed must be those which are essential for a claimant to prove in order to establish a prima facie case.” The Court clarified that the claimant need not have knowledge of the essential facts, which may be subject to proof at trial, but must be in possession of facts sufficient to plead a viable case, taking account of the “generous approach” afforded to claimants when pleading a cartel damages claim pre-discovery. Thus the Granville claimants, as the party with the burden of proof on establishing the claim was brought within the limitation period, had to prove that they could only have “discovered” the necessary elements to plead a cause of action when the Decision was published on 19 May 2010.
The test of whether the claimant could, with reasonable diligence, have discovered the concealed facts, is a part objective, part subjective test. Clarifying some ambiguity in earlier authority, the Granville Court further confirmed that a claimant is subject to the duty to exercise reasonable diligence where there is first a “trigger” event which objectively puts the claimant “on notice” to pursue enquiries. The Court must then assess how a person “carrying on a business of the relevant kind would act if he had adequate but not unlimited staff and resources.”
Discovery of Relevant Concealed Facts in the Present Case
In Granville, the defendants relied on substantial press coverage from 14 years prior to publication of the Decision, including: (i) a 2002 U.S. Department of Justice’s (“DOJ”) DRAM investigation into Micron for “anti-competitive practices,” which contained no suggestion that the practices were limited to the United States; (ii) a 2003 plea agreement between a Micron employee and the DOJ in respect of the worldwide DRAM market; (iii) a 2004 plea agreement by Infineon, in which the DOJ referred to participation in a conspiracy “in the United States and elsewhere;” and (iv) the EC’s 2004 investigation into the DRAM market. They also relied on Infineon’s corresponding provision in its 2004 accounts for a potential fine, and two class actions filed in the United States in 2005 in relation to the DRAM cartel. The claimants, Granville and VMT, had received a copy of the draft complaint in respect of the first class action from plaintiff lawyers seeking to expand the claim to purchasers outside the United States, and the second claim included several plaintiffs who had purchased DRAM from outside the United States.
Based on this evidence, the Court found that, with reasonable diligence, Granville and VMT could have discovered not simply the US developments (which those claimants admitted they had constructive knowledge of), but also the existence and progress of the EC investigation, as well as Infineon’s provision for a fine resulting from that investigation. Taken together, the Court found that these facts would have been sufficient to satisfy the statement-of-claim test and that their claim was therefore time barred.
OTC, by contrast, was found to have not been reasonably put on notice of a potential claim. Unlike Granville and VMT, OTC had gone into liquidation in January 2002, prior to reports emerging in the United States of the existence of a cartel in the DRAM market. The Court considered it “wholly unreal” for an administrator of a computer company to religiously scan “cover-to-cover on a daily basis […] for headlines of potential interest for years after the company had stopped trading and sold its assets.” Therefore, OTC’s claim was not time-barred.
The ruling in Granville provides important clarification on the commencement of the limitation period in follow-on cartel damages claims, making it clear that time will not necessarily start to run from publication of the EC infringement decision. It also illustrates that while claimants benefit from a “generous approach” to pleading a cartel damages claim, there are likely to be fewer “facts relevant to [its] right of action” (to borrow the language of § 32 of the Limitation Act) to establish before the clock starts running for limitation purposes. This is especially important in cases involving a global cartel subject to investigations, fines, plea agreements, and damages claims in other jurisdictions.
Of note, while the ruling will provide important guidance for years to come, it will not apply in future follow-on cartel damages cases governed by the European Damages Directive, which the UK implemented in 2017 (with no present indication of repeal post- the current Brexit transition). For those cases (i.e. where harm is suffered by infringements starting after 8 March, 2017), the limitation period will be suspended – pending a regulatory investigation – until one year after publication of a regulatory decision of the EC, CMA and/or other sectoral regulators. In the meantime, claimants before the English courts will need to carefully assess past reports of regulatory investigations and decisions in other jurisdictions that could have put the claimant on notice of the claim well before a relevant EC is published.