“The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply; (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.” (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply; (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.”
“25. As regards the possibility of seeking compensation for loss caused by a contract or by conduct liable to restrict or distort competition, it should be remembered from the outset that, in accordance with settled case-law, the national courts whose task it is to apply the provisions of Community law in areas within their jurisdiction must ensure that those rules take full effect and must protect the rights which they confer on individuals… 26. The full effectiveness of [Article 101] of the Treaty and, in particular, the practical effect of the prohibition laid down in [Article 101(1)] would be put at risk if it were not open to any individual to claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition. 27. Indeed, the existence of such a right strengthens the working of the Community competition rules and discourages agreements or practices, which are frequently covert, which are liable to restrict or distort competition. From that point of view, actions for damages before the national courts can make a significant contribution to the maintenance of effective competition in the Community.”
“It follows that any individual can claim compensation for the harm suffered where there is a causal relationship between that harm and an agreement or practice prohibited under [Article 101].”
“The full effectiveness of Article 101 TFEU and, in particular, the practical effect of the prohibition laid down in paragraph 1 of that provision would be put at risk if it were not open to any individual to claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition…”
“Devenish also alleges that the effect of the breaches of article 81EC has been to inhibit the development of its business so as to make it unable to compete with members of the cartel. This has been referred to as “the margin squeeze” claim… In theory, the situation might not be far removed from the position of the Crown in Blake’s case if the defendants, in carrying on the cartels, have destroyed or made it in practice impossible to find the evidence which would show the effect or extent of the cartels. However, that is not the way the case appears to be put. What appears to be said on this aspect of the case is that there are considerable difficulties of proof… The court is accustomed to dealing with those difficulties “by the exercise of a sound imagination and the practice of the broad axe”: see Watson Laidlaw & Co Limited v Pott Cassels & Williamson 31 RPC 104, pp 117-118, per Lord Shaw. Accordingly, the fact that damages will be very difficult to prove is not in my judgment enough to justify a gains-based remedy, and the margin squeeze claim, which was not developed in oral argument in any great detail, cannot therefore lead to such a remedy.”
“In the case of damages in general, there is one principle which does underlie the assessment. It is what may be called that of restoration. The idea is to restore the person who has sustained injury and loss to the condition in which he would have been had he not so sustained it. In the cases of financial loss, injury to trade, and the like, caused either by breach of contract or by tort, the loss is capable of correct appreciation in stated figures. In a second class of cases, restoration being in point of fact difficult – as in the case of loss of reputation – or impossible – as in the case of loss of life, faculty, or limb – the task of restoration under the name of compensation calls into play inference, conjecture, and the like. And this is necessarily accompanied with those deficiencies which attach to the conversion into money of certain elements which are very real, which go to make up the happiness and usefulness of life, but which were never so converted or measured. The restoration by way of compensation is therefore accomplished to a large extent by the exercise of a sound imagination and the practice of the broad axe. It is in such cases, whether the result has been attained by the verdict of a jury or the finding of a single judge, that the greatest weight attaches to the decision of the court of first instance. The reasons for this are not far to seek… In all these cases, however, the attempt which justice makes is to get back to the status quo ante in fact, or to reach imaginatively by the process of compensation a result in which the same principle is followed.”
“Even so, it is clear that the remedy under national law need be no more that “adequate in relation to the damage sustained” … It is also clear from cases such as Manfredi’s case [2007] Bus LR 188 that purely compensatory damages are sufficient for the purposes of safeguarding the rights of private persons under article 81 EC. The doctrine of effectiveness is therefore directed to ensuring sufficient remedies rather than the fullest possible remedies. An action for compensatory damages fulfils the requirements of sufficiency.”
“6. The Defendants’ unlawful conduct and infringement of Article 101 TFEU and Article 53 of the EEA Agreement constitutes an actionable breach of statutory duty which is directly enforceable in the UK, pursuant to Article 16 of Regulation 1/2003. 7. As a result of the activities carried out by the Defendants through their participation in the Cartel from1 April 2000 to17 October 2008 , the Claimant: (a) paid a price under the Agreement that was unlawfully inflated above the price which would have prevailed had there been no Cartel; …”
“(6) During this quantification exercise, English law moves away from the balance of probabilities. An assessment or quantification of damages involves the taking into account of all manner of risks and possibilities. Of course, “loss of a chance” analysis may be appropriate when quantifying a claimant’s loss, but that is by no means the only tool or even the most useful tool that is available to the court. Fundamentally, the process is evidence driven, and it is difficult to be very prescriptive. As Popplewell J noted in Asda Stores Limited v Mastercard Inc,[2017] EWHC 93 (Comm) at [306], “the court takes a pragmatic approach”. (7) The Asda decision helpfully sets out the approach that courts take to questions of quantification. It was suggested by BritNed that this articulation of the law did not apply in the present case, on grounds that Asda was an “effects” case, and this case is not. It was suggested that – because of the information asymmetry that existed between BritNed and ABB, some other approach should be taken. I do not accept this contention. I consider that Asda is doing no more than articulate principles relevant to the quantification of loss generally, albeit with an emphasis on the quantification of loss in competition cases. Indeed, it will be noted that Popplewell J’s articulation of the relevant principles emphasises that a lack of information should not prevent a quantification. In short, I consider Popplewell J’s articulation of the principles a helpful one for the purposes of this case.”
“(8)… (a) Only as much certainty and particularity is insisted on in proof of damage as is reasonable, having regard to the circumstances and to the nature of the acts by which the damage is done. (b) The fact that it is not possible for a claimant to prove the exact sum of its loss is not a bar to recovery. In this case, the assessment of damages will involve an element of estimation and assumption. Restoration by way of compensatory damages is often accomplished by “sound imagination” and a “broad axe” or a “broad brush”
“… where the court is compelled to use a broad brush in the absence of precision in the evidence of the harm suffered by a claimant, it should err on the side of under-compensation so as (a) to reflect the uncertainty as to the loss actually suffered and (b) to give the defendant the benefit of any doubts in the calculation”
“The counterfactual scenario which must, therefore, be considered, is one where ABB was not “allocated” the BritNed project [pursuant to the cartel]. That obviously implies competitive tenders from others, which (i) might render ABB more competitive, but which (ii) might result in a competitor putting forward a more competitive price than ABB and thereby winning the contract.”
“It is true that both parties have focused on ABB’s costs and how – in a competitive market – ABB’s price might have changed. That I consider to be a reflection of the evidence available to the parties, rather than a consequence of BritNed’s pleading. ABB has provided, on disclosure, a great deal of evidence regarding the other projects it was involved in and the costs associated with these projects. This has been considered – as I described – by the experts. There has been no corresponding disclosure from ABB’s competitors, and none could reasonably have been expected by either party. Inevitably, the experts and the parties have done what they can on the evidence available to them; but that does not mean that the counterfactual inquiry is limited to a consideration of what price ABB would have offered. Such an approach is tantamount to treating the Cartel as if it still operated, at least to the extent of preventing competitive bids from suppliers other than ABB.”
“Accordingly, the overcharge that I am seeking to assess is the difference between (i)the price agreed between ABB and BritNedand (ii)the price that would have been agreed – whether with ABB or by another provider – had the Cartel not operated.”
“That said, for the reasons given in paragraph 17(4) above, the sort of price that a third-party provider would offer is extremely difficult to determine, given the (lack of) evidence. Inevitably, that has a bearing on my approach to the assessment of the overcharge.”
“For the purposes of competition proceedings, it is to be presumed, unless the contrary is proved, that a cartel causes loss or damage.”
“Obviously, I take the point about informational gaps, and the potential asymmetry in information that will exist between a cartel member and an outsider. This issue, however, is fully factored into the approach English courts take to the quantification of loss and damage. I fail to see how a bare presumption of harm – particularly one, which does not involve a presumed quantification of harm – takes matters any further at all.”
“Article 101 TFEU must be interpreted as meaning that, in a case such as that in the main proceedings, in which all the shares in the companies which participated in a cartel prohibited by that article were acquired by other companies which have dissolved the former companies and continued their commercial activities, the acquiring companies may be held liable for the damage caused by the cartel in question.”
“43. As stated in paragraph 25 of this judgment, the right to claim compensation for damage caused by an agreement or conduct prohibited by Article 101 TFEU ensures the full effectiveness of that article and, in particular, the effectiveness of the prohibition laid down in paragraph 1 thereof. 44. That right strengthens the working of the EU competition rules, since it discourages agreements or practices, frequently covert, which are liable to restrict or distort competition, thereby making a significant contribution to the maintenance of effective competition in the European Union… 45. As the Advocate General stated essentially, in point 80 of his Opinion, actions for damages for infringement of EU competition rules are an integral part of the system for enforcement of those rules, which are intended to punish anticompetitive behaviour on the part of undertakings and to deter them from engaging in such conduct. 46. Therefore, if the undertakings responsible for damage caused by an infringement of the EU competition rules could escape penalties by simply changing their identity through restructurings, sales or other legal or organisational changes, the objective of suppressing conduct that infringes the competition rules and preventing its occurrence by means of deterrent penalties would be jeopardised (see, by analogy, judgment of11 December 2007 , ETI and Others, C-280/06,EU:C:2007:775, paragraph41and the case-law cited). 47. It follows that the concept of “undertaking”, within the meaning of Article 101 TFEU, which constitutes an autonomous concept of EU law, cannot have a different scope with regard to the imposition of fines by the Commission under Article 23(2) of Regulation No 1/2003 as compared with actions for damages for infringement of EU competition rules.”
“Considering that public and private enforcement are complementary and constitute composite parts of a whole, a solution whereby the interpretation of “undertaking” would be different depending on the mechanism employed to enforce EU competition law would simply be untenable.”
“In the final analysis, therefore, the compensatory function of an action for damages for an infringement of competition law remains in my view subordinate to that of its deterrent function.”
“A major difficulty encountered by courts, tribunals and parties in damages actions is how to quantify the harm suffered. Quantification is based on comparing the actual position of claimants with the position they would find themselves in had the infringement not occurred. In any hypothetical assessment of how market conditions and the interactions of market participants would have evolved without the infringement, complex and specific economic and competition law issues often arise. Courts and parties are increasingly confronted with these matters and with considering the methods and techniques available to address them.” “A major difficulty encountered by courts, tribunals and parties in damages actions is how to quantify the harm suffered. Quantification is based on comparing the actual position of claimants with the position they would find themselves in had the infringement not occurred. In any hypothetical assessment of how market conditions and the interactions of market participants would have evolved without the infringement, complex and specific economic and competition law issues often arise. Courts and parties are increasingly confronted with these matters and with considering the methods and techniques available to address them.”
“8. On the question of quantifying harm, to the extent that such exercise is not governed by EU law, the legal rules of the Member States determine the appropriate standard of proof and the required degree of precision in showing the amount of harm suffered. National rules will also assign the burden of proof and of the respective responsibilities of the parties to make factual submissions to the court. National law may provide for the burden of proof to shift once the claimant has proved a certain set of factors, and may provide for simplified rules of calculation and presumptions of a rebuttable or irrefutable nature. National law further determines to what extent and how courts are empowered to quantify the harm suffered on the basis of approximate best estimates or to make use of equitable considerations. All these national rules and procedures governing the quantification of harm should be laid down and applied in individual cases in a way that allows parties injured by competition law infringements to obtain full compensation for the harm suffered without any disproportionate difficulties; in no circumstances may they be less effective than in similar actions based on domestic law. 9. One consequence of the principle of effectiveness is that applicable legal rules and their interpretation should reflect the difficulties and limits inherent to quantifying harm in competition cases. The quantification of such harm requires comparing the actual position of the injured party with the position this party would have been in without the infringement. This is something that cannot be observed in reality; it is impossible to know with certainty how market conditions and the interactions between market participants would have evolved in the absence of the infringements. All that is possible is an estimate of the scenario likely to have existed without the infringement. Quantification of harm in competition cases has always, by its very nature, been characterised by considerable limits to the degree of certainty and precision that can be expected. Sometimes only approximate estimates are possible.”
“…where the court is compelled to use a broad brush in the absence of precision in the evidence of the harm suffered by a claimant, it should err on the side of under-compensation so as (a) to reflect the uncertainty as to the loss actually suffered and (b) to give the defendant the benefit of any doubts in the calculation”
“I do not take this dictum to mean that every calculation made in the course of assessment of damages must be reduced to avoid the risk of over-compensation.”
“I can see no reason why I cannot and should not assess [compensation] by reference to a notional royalty payable under a notional licence agreement. The evidence leaves me short of information enabling me to make a precise calculation, and I can inevitably only adopt a somewhat rough and ready one. That may work to SPE’sdisadvantage, since I also consider that I should err on the side of under-compensation. But inadequate compensation is better than none. In the circumstances of this case, I propose to take a broad axe and assess a sum of damages by reference to a notional royalty which will (a) reflect the uncertainty of the extent of the use of the infringing machines made by PPC, and (b) will also give the PPC the benefit of any doubts in the calculation.”
“Compensation by reference to a notional fee for the unauthorised use would, in my view, ordinarily be regarded as a fair and proper basis on which to provide compensation. For the court to refuse any compensation at all simply because there was no evidence that machines of that sort had ever been licensed out for a royalty would appear to me to involve a denial of justice.”
“(2) The Judge failed to consider the best evidence of the extent of ABB’s lack of competitiveness (and BritNed’s consequent loss) based on his mistaken finding that such evidence was not before him. (3) The Judge wrongly accepted ABB’s economic analysis by not considering whether its factual assumptions were correct and by making findings that were unsupported by evidence and at odds with the parties’ common position.”
“81. The Cartel had its genesis in a perceived excess of capacity amongst cable suppliers. Although there were calls to reduce existing excess capacity, the Cartel sought to deal with this problem by maintaining price levels and allocating bids. 82. Essentially, the Cartel operated on a territorial basis, using a “home territory” principle. Thus, Japanese and Korean producers would not compete for power cable projects in the European home territory and Europeans would not compete for power cable projects in the Japanese and Korean home territories. 83. Within these territories, there was further territorial allocation. The Baltic and North Sea area was allocated to ABB and (to some extent) Nexans. The Mediterranean area was divided between Prysmian and Nexans. But there were ad hoc exceptions to this territorial approach and friction was generated when multiple parties sought the same contract. … 85. The Cartel had, within its allocations, “compensation” mechanisms to ensure “fairness”
“259. I consider that the direct costs recorded in the [product pricing models] represent an honestly and competently compiled statement of those costs, and that they were not inflated by the direct influence of Mr Jönsson or (for that matter) anyone else within ABB. I reach this conclusion essentially because I considered Mr Larsson-Hoffstein to be not only a transparently honest witness, but also an extremely competent compiler of the costs of the Cable element of the ABB tender. I do not consider that he would have allowed that process to be distorted and if he had been required to include within the Cable element of the tender a cost that he did not consider to be justified, he would have told the court. Mr Larsson-Hoffstein was not crossexamined, in any detail, on exactly how he had compiled the BritNed tender. The bulk of his evidence was given in response to questions from me, set out in paragraph 132 above. 260. I find that Mr Larsson-Hoffstein’s pricing of the direct costs of the BritNed Interconnector Cable bid were unaffected by the Cartel. They were properly calculated, competitive, costs. I also consider that any margin added by Mr Larsson-Hoffstein to represent risks relating to the project specifically (i.e. to the direct costs being underestimates or to contingencies regarding direct costs) were properly added and were not inflated.”
“This, in addition to Nexans’ non-compliant tender submission, was a significant disappointment, given that it removed any competition for the cable element of the Project from the very outset and inevitably limited our scope for manoeuvre thereafter, in particular the ability to maintain any competitive pressure on ABB.”
“Knowing what they did, those on BritNed’s side of the negotiations obviously regarded this as an inexplicable error on the part of ABB. But, of course, ABB did not or did not necessarily know what BritNed knew. Instead of a mistake, the reduction in the Lot 2 price might reflect a concern on the part of ABB that is was not guaranteed to win even Lot 2. This was a decision made not by Mr Jönsson, but by Mr Leupp.”
“321. Mr Biro used what he called three complementary methodological approaches to assess what the price of the BritNed project would have been, but for the Cartel: (1) A price comparison analysis controlling for ABB’s actual costs of supply. (2) An econometric analysis of the relationship between prices and ABB’s actual costs of supply. (3) A price comparison analysis which does not directly control for ABB’s actual costs of supply, but instead uses proxy measures based on the technical characteristics of the projects. 322.The differences between Dr Jenkins’ approach and Mr Biro’s approach are considered in greater detail below, but one difference stands out immediately. Whereas Dr Jenkins sought to ascertain the overcharge generally caused by the Cartel by comparing cartelised and post-Cartel projects (including underground as well as submarine projects), Mr Biro compared the price of the BritNed Interconnector project alone with the prices of other submarine (not underground) power cable projects in the post-Cartel period.”
“Mr Biro’s conclusion was that the margin in the case of BritNed was comparable – and, if anything, lower – than the margin for post-Cartel projects. In short, Mr Biro did not identify any material Cartel effect.”
“372. …Mr Biro considered that losing bids provided valuable economic data regarding what ABB believed to be a competitive price. He considered that there was no economic reason to believe that margins associated with losing bids should have been systematically higher than those associated with winning bids in the post-Cartel period. 373. I accept that this may be true as regards margins that ABB hoped to earn. However, I consider that whilst it is appropriate to consider these losing bids, because there is some probative value in them, the fact that ABB lost these bids cannot be disregarded. Inferentially, these bids were losing bids because they were inferior – including inferior as to price – to the winning bids. Of course, having no information about the winning bids, all that can be done is to note the fact that – for some reason – these losing bids were uncompetitive. One reason might be the existence of baked-in inefficiencies.”
“(1) The reliability of Mr Biro’s model … 416. In conclusion, Mr Biro’s margin analysis represents a reliable tool for assessing the overcharge. The analysis cannot be followed blindly, and I do not propose to follow it blindly, having well in mind its limitations. But I regard the margin analysis as helpful evidence that I must take into account in my overall assessment of the extent of the overcharge, which I consider in Section I below. So far as Mr Biro’s two complementary analyses are concerned, I see them as just that: confirmatory of the margin analysis, but essentially no more helpful than that … (2) The reliability of Dr Jenkins’ model 417. On the other hand, Dr Jenkins’ regression analysis is insufficiently reliable to be used in any way at all. In my judgment, Dr Jenkins has defined too complex a regression, with the result that the outcomes of her model are so unspecific that they simply cannot be relied upon: (1) The proxies for cost are, in my judgment, insufficiently aligned with the actual – highly individual – costs of submarine projects. (2) That problem is exacerbated by the inclusion of underground projects, which are essentially different from submarine projects. (3) The unreliability of the model is further exacerbated by the time trend and order backlog variables. I regard these issues with Dr Jenkins’ model as sufficiently fundamental to its reliability as to justify an entire disregard of that model for the purposes of assessing whether there was an overcharge.”
“429. Those facts are sufficient for me to hold that the cause of action is made out. Of course, this says nothing about the quantum of BritNed’s loss. The process of quantification may show substantial damages (as BritNed contends) or it may show nominal damages (as ABB contends). It is to this process of quantification that I now turn.”
“But that is not the issue before me. I am concerned with the much narrower issue of the overcharge to BritNed arising out of a single, specific transaction: the contract for the supply of the BritNed Interconnector. Sections D to H above have brought the focus to this specific transaction. Whilst, obviously, the general operation of the Cartel is highly material (see Section D), it represents the starting point and not the end point of the quantification process.”
“435. In light of the totality of the evidence, I have concluded that some persons within ABB knew of the Cartel and knew that ABB would face limited competition when tendering for the BritNed Interconnector, that knowledge did not translate into a direct influence on direct costs. I have found that the direct costs in relation to ABB’s bid for the BritNed Interconnector were honestly and competently compiled with a view to putting forward a competitive bid. 436. However, I have also concluded that: (1) Within ABB, Mr Jönsson and Mr Pääjärvi were in a position to influence upwards the level of common costs that ABB allocated to the BritNed tender. Of course, whether they were infact able to do so depends not simply on their position within ABB, but on the nature of the negotiations ABB had with BritNed itself. Although I have found that the Cartel caused competition for the Interconnector to be materially diminished, nevertheless BritNed was able to bring some competitive pressure to bear on ABB. The question is whether that was sufficient to enable BritNed to obtain a competitive price and avoid an overcharge. (2) There was an indirect influence over BritNed’s “hunger” to be competitive, in that this hunger was abated by a sense within ABB that – so far as the BritNed tender was concerned – ABB faced less competition than it might otherwise have done. Again, the question arises whether BritNed was able to bring competitive pressure to bear on ABB. (3) There was a potential for baked-in inefficiencies and cartel savings.”
“It was undoubtedly a painful decision to give this discount in relation to Lot 2 given the smaller scope of that Lot compared to Lot 3, and a real stretch for ABB, but I considered it to be just about worthwhile in order to at least win Lot 2 rather than walk away from the negotiations with nothing.”
“From the mouth of Mr Jönsson, I would not have accepted this evidence. Mr Leupp is a different proposition. I found him to be a witness of truth, who was unaware of the Cartel and so could easily have misappreciated the competitive situation. That is exactly what I find he did. Mr Leupp’s version of events was tested in cross-examination and was maintained by him.”
“442. The conclusion that I draw is that when making decisions regarding pricing for the BritNed bid – including the allocation of common costs – Mr Jönsson and Mr Leupp saw things quite differently, and Mr Jönsson did not explain to Mr Leupp why he (Mr Leupp) might be misreading the situation. As a result, because Mr Leupp was in overall control of ABB’s bid for the BritNed tender, ABB acted in a way unusual for a cartelist: it acted competitively, simply because that was the mind-set of the individual in charge.”
“(i) The expertise of a trial judge is in determining what facts are relevant to the legal issues to be decided, and what those facts are if they are disputed. (ii) The trial is not a dress rehearsal. It is the first and last night of the show. (iii) Duplication of the trial judge's role on appeal is a disproportionate use of the limited resources of an appellate court, and will seldom lead to a different outcome in an individual case. (iv) In making his decisions the trial judge will have regard to the whole of the sea of evidence presented to him, whereas an appellate court will only be island hopping. (v) The atmosphere of the courtroom cannot, in any event, be recreated by reference to documents (including transcripts of evidence). (vi) Thus even if it were possible to duplicate the role of the trial judge, it cannot in practice be done.”
“62. Given that the Extra Division correctly identified that an appellate court can interfere where it is satisfied that the trial judge has gone “plainly wrong”, and considered that that criterion was met in the present case, there may be some value in considering the meaning of that phrase. There is a risk that it may be misunderstood. The adverb “plainly” does not refer to the degree of confidence felt by the appellate court that it would not have reached the same conclusion as the trial judge. It does not matter, with whatever degree of certainty, that the appellate court considers that it would have reached a different conclusion. What matters is whether the decision under appeal is one that no reasonable judge could have reached. … 67. It follows that, in the absence of some other identifiable error, such as (without attempting an exhaustive account) a material error of law, or the making of a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence, an appellate court will interfere with the findings of fact made by a trial judge only if it is satisfied that his decision cannot reasonably be explained or justified.”
“Inferentially, these bids were losing bids because they were inferior - including inferior as to price – to the winning bids. Of course, having no information about the winning bids, all that can be done is to note the fact that – for some reason – these losing bids were uncompetitive.”
“Q. A premise of your analysis is that ABB in the counterfactual would have won the BritNed project. What evidence do you have that that would be correct in the counterfactual? A. So what I have done is I have compared ABB margins during the cartel versus BritNed margin. That is what I have done. You are right that if absent the cartel somebody with a materially different cost base and a materially different competitive offering, much more competitive offering were to have won the BritNed project, then that is something that is not captured in my analysis. It is something that you just can’t – you can’t empirically do at all. I don’t see that as an omission in anything I have done. But you are right, as you were arguing earlier, in those circumstances that would be an omission from my analysis.”
“Overall, the results show that there is no basis for Mr Biro’s conclusion that there is no evidence of an overcharge. The adjustments indicate that (i) there is evidence of an overcharge, and/or (ii) there is an issue with Mr Biro’s methodology that undermines its use (i.e. lost bids are not suitable comparators), such that no conclusion can be drawn on the basis of these rudimentary visual comparisons.”
“If demand conditions and ABB’s appetite to win new projects are important factors that affected ABB’s pricing and varied over time, then it is important to control for them in an analysis of the cartel overcharge.”
“The factual witness evidence indicates that the fit of a project within a manufacturer’s pipeline, and its available capacity in relation to the particular type of cable, were some of the factors which will likely have had a bearing on ABB’s targeted project margins. These factors are, however, difficult to measure and do not lend themselves to quantitative adjustments. In my first report, I was unable to identify a proxy measure for ABB’s appetite to win new projects that was sufficiently reliable to merit its inclusion within my comparator analysis.”
“On the basis of this evidence, the capacity utilisation of ABB’s power cables factory cannot reliably be captured by a quantifiable measure which can be included within an empirical overcharge analysis. The heterogeneous nature of high-voltage submarine power cables projects means that the level of utilisation of ABB’s power cables factory at any point in time will have depended on the particular mix of project types to be produced, the specific machines required to produce the cables and their productions schedules – none of which can be inferred from any simple metric that could be employed in a regression model in order to estimate power cables prices. Moreover, the witness evidence confirms that – contrary to Dr Jenkins’s assumption – ABB’s capacity utilisation was not systematically lower during the cartel period than in the postcartel period. There is therefore no reason to assume that, absent the cartel, project prices and margins would have been systematically lower during the cartel period than in the postcartel period due [to] the presence of under-utilised capacity.”
“This, however, highlights a difficulty in using Cartel-period metrics to assess what would have happened had the Cartel never operated. I have no doubt that – had the Cartel not served as the basis for the allocation of projects to members of the Cartel – ABB (and the other cartelists) would have made different decisions regarding its business (e.g. as regarding reducing or augmenting capacity), which would have affected their levels of order backlog. Equally, the order backlog as it existed during the Cartel, did not arise in a competitive environment. I therefore see considerable difficulties in terms of reliability in Dr Jenkins’ use of any variable based on ABB’s order book during the Cartel period.”
“The problem is that the significance of the order backlog arises out of the assertion of Dr Jenkins, in circumstances where the point she makes is not accepted either by the relevant factual witness (whose evidence I believe) nor by the other expert.”
“Such a correlation must be evidenced for the order backlog variable properly to be input into a model... The fact that, when the order backlog variable is removed from the regression, the overcharge is significantly affected and becomes statistically insignificant suggests that the cartel effect can only be established to a level of statistical significance when the order backlog variable is used. That, as it seems to me, is intrinsically unlikely.”
“(5) This was a very revealing exchange. It shows that even if I had reliable data comparing ABB’s Cartel-period demand and capacity and ABB’s post-Cartel-period demand and capacity, these would not be comparable figures. This is because the flow of work into ABB during the Cartel period is “allocated”, whereas in the post-Cartel period the work comes in as a result of competitive forces. (6) That has an immediate effect on capacity utilisation: in the Cartel period, a supplier will know far earlier and with far greater certainty what work will come in, and what work will not. In the post-Cartel period, the cartelist will not know, because the cartelist will actually be competing. (7) This goes to two points: (a) First, it underlines the correctness of Mr Biro’s view that whilst differences in demand over time may cause changes in price, these differences are fundamentally very difficult to model, and could not be modelled before me (even if they existed, which I do not consider was established). (b) …” (a) First, it underlines the correctness of Mr Biro’s view that whilst differences in demand over time may cause changes in price, these differences are fundamentally very difficult to model, and could not be modelled before me (even if they existed, which I do not consider was established).
“. . . It seems to me to be highly unlikely that this re-negotiated price would have been affected by the Cartel. The overcharge that I have found to exist would have been baked-in at the earlier stage . . .”
“Having reached conclusions as to how – in the counterfactual, no-Cartel, world – these two options would have presented to BritNed, I must decide what BritNed would have done. For me, at this point, to revert to a balance of probabilities test is impossible to justify rationally: I cannot determine what BritNed would have done without a detailed assessment of anterior possibilities.”
“508. If I am wrong in failing to apply the balance of probabilities test to the question of what BritNed would have done in the counterfactual situation, I should state that I consider that BritNed falls far short of showing on the balance of probabilities that it would have opted for Base Case 3.”
“(a) BritNed has to present to the national regulators within ten years after start of operations (as defined in the exemption decisions) a report that contains all the details necessary to scrutinise the total costs and revenues of the project and the rate of return on the investment with 2007 as the base year allowing for comparison with data provided for the exemption request. (b) If, calculated on the basis of the first 10 years, the estimated internal rate of return for the entire project is more than one percentage point above the internal rate of return estimated when filing the exemption request, BritNed shall have two options: It shall either increase the interconnector capacity to such an extent that the initially estimated rate of return is met. The additional capacity would not automatically be covered by the scope of the present exemption; or (ii) Alternatively, BritNed shall accept the profits (discounted to 2007) figures exceeding the initially estimated rate of return by more than one percentage point are capped and used, at equal parts, to finance the regulated asset base in the UK and in the Netherlands.”
“ . . . (b) Given the uncertainties referred to in paragraph 542(2) of the Judgment, and the fact that the damages I am minded to award are small compared to the overall costs and revenues (see paragraph 542(3) of the Judgment), the adjustment to the award should not be large. But it cannot be nominal. The question I considered in paragraph 542 was the alternative question assuming ABB's contentions (contrary to my findings in the Judgment) were right. The present question arises out of an explicit assumption that I made in rejecting ABB's contentions. If that assumption is wrongly founded – as clearly it may be – the risk of over-compensation to BritNed is patent, and the rule described in paragraph 12(9) of the Judgment is engaged. I remind myself: where a court is compelled to use a broad brush in the absence of precision in the evidence of the harm suffered by a claimant, it should err on the side of under-compensation, so as to (i) reflect the uncertainty as to the loss actually suffered and (ii) to give the defendant the benefit of any doubts in the calculation. (c) In my assessment of quantum, I have been using a broad brush and I have sought to ensure that BritNed is fully compensated according to law, but not over-compensated. The assumption in paragraph 538 of the Judgment was a material part of that approach. In light of the present position, that assumption may very well not hold good. In these circumstances, once-again wielding a broad brush, I consider that the award of€13,009,568 must be reduced by 10% to reflect the risk of over-compensation and the need to give ABB the benefit of any doubts in my calculation of damages generally. For these reasons, the damages described in paragraph 550(1) of the Judgment are reduced by 10% (€1,300,956.80 ) from€13,009,568 to€11,708,611.20 .”€13,009,568 to€11,708,611.20 .”
“This court has recently had to deal with collateral benefits in a context not far removed from the present one. The general rule is that where the claimant has received some benefit attributable to the events which caused his loss, it must be taken into account in assessing damages, unless it is collateral. In Swynson Ltd v Lowick Rose llp[2017] 2 WLR 1161 , para 11, it was held that as a general rule “collateral benefits are those whose receipt arose independently of the circumstances giving rise to the loss.”
“. . . In the first place, it did not confer a benefit on the lenders and so no question arises of either taking it into account or leaving it out of account. Lord Nicholls’s “basic comparison” requires one to look at the whole of the transaction which was caused by the negligent valuation. In this case, that means that one must have regard to the fact that the refinancing element of the second facility both (i) increased the lender’s exposure and ultimate loss under the second facility by£2,560,268.45 , and (ii) reduced its loss under the first facility by the same amount. Its net effect on the lender’s exposure and ultimate loss was therefore neutral. Only the new money advanced under the second facility made a difference. . . . The concept of collateral benefits is concerned with collateral matters. It cannot be deployed so as to deem the very transaction which gave rise to the loss to be other than it was.”
“it is a fallacy to consider the problem as though a benefit were being conferred upon a wrongdoer by allowing him to abate the damages for which he would otherwise be liable.”
“. . .assessing future costs and revenue flows is a matter of enormous uncertainty, given the time frames involved, even assuming a constant regulatory regime. It is very difficult – even applying the broadest of brushes – to reach a conclusion as to whether and if so to what extent the IRR Cap would be exceeded.”
“For the purposes of analysis, it is necessary to differentiate between those costs which ABB considered to be directly attributable to the supply of a specific project (or part of a specific project – like the Cable element of the BritNed Interconnector) and all other costs incurred by ABB in the course of its business. This, as will be seen, represents a distinction drawn by Mr Biro as part of his analysis. I shall refer to the former type of costs as ‘direct costs’ and the second type as ‘common costs’ …”
“369. Cartel savings are closely related to baked-in inefficiencies. I am, however, reluctant to use the term “inefficiency” because – so far as the cartelist is concerned – cartel savings are not inefficiencies at all. They are savings to the cartelist, arising out of the fact that the cartelist does not have to incur the full costs of competition. 370. These savings might arise in many ways. In this case, for example, a cartelist who had not been allocated a particular project, might treat the tender process much less seriously (indeed, might not tender at all), and so incur fewer costs. Equally, the advantage of knowing which projects have been “allocated” to which cartelists will make a significant difference in terms of planning future work capacity. 371. Cartel savings can either be part of the direct costs or part of the common costs. To the extent that they form part of common costs, they are controlled for in Mr Biro’s analysis. To the extent they form part of the direct costs, they are not.”
“(b) . . . the efficiencies that accrue to a cartelist as a result of not having to compete are one reason the cartelists make a greater margin through the Cartel than in the competitive world. In other words, one factor comprising the difference of 5.6% between Cartel period margin and post-Cartel period margin is this, entirely illegitimate, saving in cost due to the control and management, by the Cartel, of supply to the market. This, unlike the baked-in inefficiency I have considered, arises through the operation of the Cartel generally and affects the Cartel’s common costs. Essentially, it represents the saving to the cartelist of not having to compete.”
“(8) In closing, BritNed emphasised the effect of the Cartel’s control over supply, although the point was put in terms of an increase in prices to customers, rather than a saving of costs to the cartelists. In terms of overcharge, there is no difference between the two, and I do not consider that it would be right to exclude BritNed from recovering an overcharge simply because I do not agree with BritNed’s description of that overcharge. (9) I find that ABB – and the other cartelists – derived cartel savings from their control of the allocation and supply of cable business in the market. My approach to assessing the monetary benefits of not competing is as follows: (a) Clearly, the cartel saving derived by all of the cartelists was a general one, not related to any particular project. This saving would not feature in the direct costs: it would form a general reduction in the common costs of the cartelists, such that their profit was larger. That would be as true of ABB as of any other cartelist. (b) So far as ABB was concerned, the effect of the Cartel (as between all post-Cartel projects and the successfully won Cartel projects) was 5.6% in terms of gross margin. I accept that this effect was not perceived in the case of the BritNed Interconnector, where this difference was – essentially because of BritNed’s ability to negotiate and the fact that not all of ABB’s officers were cartelists – competed down. (c) But this does not mean that the cartel savings I find existed should not be taken into account in every ABB project during the Cartel period. The cartel savings were common to ABB’s entire business, and a portion of them must be attributed to the BritNed project. (d) In the case of common costs, this is a question of allocation: (i) Generally – and with the exception of BritNed – the effect of the Cartel perceived across the 14 successful cartelised bids comprising the data that is before me amounts to 5.6%. That overcharge occurred in relation to a sample where each and every bid was successful. (ii) The question is, how much of this overcharge can be attributed to the cartel savings that I have identified (as opposed to other forms of overcharge). . . . (iv) The 5.6% margin attributable to the Cartel would have been spread across a larger number of projects, because the losing projects would not have generated any margin, only the cost of tendering and of allocating factory space (in case the bid won). Spreading the margin in this way, suggests that 1.9% of the overcharge is attributable to the cartel savings I have identified. (e) I appreciate that this is a broad-brush allocation, but it is based on a cartel overcharge that I find existed and represents a fair and not excessive allocation of the savings that ABB made to its common costs. These savings were competed away – in the case of the BritNed Interconnector – by ABB: but all that means is that ABB chose to allocate some common costs to other projects. That does not mean that BritNed is not entitled to a share of these cartel savings.”
“. . . this overcharge does not arise in relation to and should not be calculated by reference to a comparison of cartel margin and competitive margin. The “cost savings” overcharge is one attributable to the general operation of the Cartel, having an effect on ABB’s common costs. It is necessary to attribute a portion of this saving to an individual project, and I have done so. But that is a process involving altogether different considerations than in the case of the baked-in inefficiency considered above.”
“215(1) By way of baked-in inefficiency. It could, for example, be the case that ABB was an inefficient producer of cables and therefore tendered a higher (non-competitive) price for the Cable element which ABB actually considered to be competitive. The effect of the Cartel would be to cause ABB’s price to be accepted because of an absence of competition from other, more efficient, suppliers. Such inflation of price arises out of the natural inefficiency of cartels, whereby an uncompetitive supplier receives business it would otherwise not receive simply because of the absence of competition caused by the cartel. Such inefficiencies are structural within the business of the cartelist, who may not even be aware of such inefficiencies. During the trial, inefficiencies of this sort were referred to as “baked-in inefficiencies”, and that is a term that I use in this Judgment.” (Emphasis supplied)