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URL: http://www.bailii.org/scot/cases/ScotCS/2020/2020_CSOH_92.html
Cite as: [2020] CSOH 92, 2020 GWD 36-471, 2020 SLT 1227, [2020] ScotCS CSOH_92

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OUTER HOUSE, COURT OF SESSION

[2020] CSOH 92

CA19/19 & CA29/19

OPINION OF LORD TYRE

In the cause

GLASGOW CITY COUNCIL

Pursuer

against

(FIRST) VFS FINANCIAL SERVICES LIMITED; (SECOND) AB VOLVO (PUBL);

(THIRD) VOLVO LASTVAGNAR AB; (FOURTH) RENAULT TRUCKS SAS; and

(FIFTH) VOLVO GROUP TRUCKS CENTRAL EUROPE GmbH

Defenders

and

(FIRST) MAN SE; (SECOND) MAN TRUCK & BUS SE; (THIRD) MAN TRUCK & BUS

DEUTSCHLAND GmbH; (FOURTH) DAIMLER AG; (FIFTH) IVECO SpA;

(SIXTH) IVECO MAGIRUS AG; (SEVENTH) FIAT CHRYSLER AUTOMOBILES NV;

(EIGHTH) CNH INDUSTRIAL NV; (NINTH) PACCAR INC; (TENTH) DAF TRUCKS NV;

and (ELEVENTH) DAF TRUCKS DEUTSCHLAND GmbH

Third Parties

and in the cause

WEST DUNBARTONSHIRE COUNCIL

against

Pursuer

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(FIRST) VFS FINANCIAL SERVICES LIMITED; (SECOND) AB VOLVO (PUBL);

(THIRD) VOLVO LASTVAGNAR AB; (FOURTH) RENAULT TRUCKS SAS; and

(FIFTH) VOLVO GROUP TRUCKS CENTRAL EUROPE GmbH

Defenders

and

(FIRST) MAN SE; (SECOND) MAN TRUCK & BUS SE; (THIRD) MAN TRUCK & BUS

DEUTSCHLAND GmbH; (FOURTH) DAIMLER AG; (FIFTH) IVECO SpA;

(SIXTH) IVECO MAGIRUS AG; (SEVENTH) FIAT CHRYSLER AUTOMOBILES NV;

(EIGHTH) CNH INDUSTRIAL NV; (NINTH) PACCAR INC; (TENTH) DAF TRUCKS NV;

and (ELEVENTH) DAF TRUCKS DEUTSCHLAND GmbH

Third Parties

Pursuers: Moynihan QC, Irvine; AndersonStrathern LLP

Defenders: M Ross QC, MacGregor; BrodiesLLP

First to Third Third Parties: Lake QC; BTO LLP

Fourth Third Party: Dean of Faculty, Welsh; Dentons UK and Middle East LLP

Fifth to Eighth Third Parties: Thomson QC; Levy & McRae

Ninth to Eleventh Third Parties: McBrearty QC; Pinsent MasonsLLP

11 November 2020

[1] On 18 January 2011, the European Commission announced that it had commenced

an investigation into suspected anti-competitive practices among truck manufacturers in

several EU member states. On 20 November 2014 the Commission reported that it had

informed a number of heavy and medium duty truck producers that in the light of its

investigations, it suspected them of having participated in a cartel by agreeing and

co-ordinating their pricing behaviour, in breach of EU competition law, and that it was

initiating proceedings against them.

[2] On 19 July 2016, the Commission advised the truck producers of its decision (“the

Decision”), and issued a press release reporting it. In summary, the Commission found that

five groups of companies (“the Addressees”), namely MAN, Daimler, Iveco, Volvo/Renault

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and DAF, had engaged in collusive arrangements on pricing and gross price increases in the

European Economic Area (EEA) for medium and heavy trucks, and on the timing and

passing on of costs for the introduction of emission technologies for such vehicles. This

infringement of competition law covered the entire EEA and lasted from 17 January 1997

until 18 January 2011. The undertakings which participated in the infringement were the

defenders and third parties in the present action, with the exception of the first defender

which, it was explained, has been called to provide a “Scottish anchor”. Heavy fines were

imposed on all of the Addressees, with the exception of MAN which had disclosed the

existence of the cartel and applied successfully for immunity. The Decision became final on

29 September 2016. A provisional non-confidential text of the Decision was published on

6 April 2017. The “final non-confidential” text was not published until 30 June 2020.

[3] During the period when the cartel was being operated, a number of Scottish public

authorities purchased trucks from one or more of the Addressees. Those authorities now

sue for damages consisting of losses caused by the truck producers’ anti-competitive

practices. Two of those actions, at the instance of Glasgow City Council and West

Dunbartonshire Council, have been selected as lead cases for the 22 actions raised in

Scotland. In terms of the relevant EU regulations, national courts are not permitted to give

decisions that conflict with a decision of the Commission. The present actions are therefore

“follow-on” actions in which this court must make its decision in accordance with the

findings of the Commission. The defenders and third parties contend, however, that any

claims that the pursuers may have had against them have been extinguished by the

operation of short negative prescription, and moreover that claims in respect of purchases in

earlier years have been extinguished by the operation of long negative prescription. The

present actions were commenced on 27 February 2019.

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[4] The two lead cases came before me for a preliminary proof before answer on the

prescription issues. Evidence was led, in written statements and orally, from four witnesses:

Mr Grant Montgomery, Category Manager for Transport and Environment with Scotland

Excel (a centre of procurement expertise for Scottish local authorities); Mr Emil Laiolo,

Transport Services and Development Manager, Glasgow City Council; Mr Peter Hessett, a

solicitor employed as Strategic Lead (Regulatory) by West Dunbartonshire Council; and

Mr Alan Douglas, Manager of Legal Services, West Dunbartonshire Council. I accept their

evidence as credible and reliable. The parties also entered into a joint minute agreeing

various factual matters in order to minimise the oral evidence that required to be led.

[5] The Decision is concerned solely with two classes of vehicle, namely medium trucks

(6 to 16 tonnes) and heavy trucks (more than 16 tonnes). Some of the pursuers in the

Scottish actions, including West Dunbartonshire Council, have claims in respect of

purchases of other vehicles, such as buses, produced by th e Addressees during the period of

the cartel. This being a follow-on action founded upon the Decision, I understood it to be

accepted on behalf of the pursuers that claims in respect of vehicles other than medium and

heavy trucks (as defined) are irrelevant, and I shall exclude those claims from probation.

The EU competition law framework

[6] Article 101 of the Treaty on the Functioning of the European Union (TFEU) (formerly

article 81 of the Treaty establishing the European Community (TEC)) provides inter alia as

follows:

“1. 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,

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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…”

Article 102 TFEU (formerly article 82 TEC) contains a similar prohibition in relation to abuse

by one or more undertakings of a dominant position within the internal market.

[7] Council Regulation 1/2003 implements the rules on competition laid down in what

are now articles 101 and 102. Article 16(1) provides as follows:

“1. When national courts rule on agreements, decisions or practices under

Article 81 or Article 82 of the Treaty which are already the subject of a

Commission decision, they cannot take decisions running counter to the

decision adopted by the Commission. They must also avoid giving decisions

which would conflict with a decision contemplated by the Commission in

proceedings it has initiated. To that effect, the national court may assess

whether it is necessary to stay its proceedings…”

Article 16(2) contains a parallel prohibition of rulings by national competition authorities

that would conflict with a Commission decision.

[8] Article 23(2) of Regulation 1/2003 empowers the Commission to impose fines for

infringement of article 101 or 102 not exceeding 10% of the undertaking’s annual turnover in

the preceding business year. Article 23(3) provides that in fixing the fine, regard will be had

to both the gravity and the duration of the infringement. In terms of article 23(5), a decision

to impose a fine is stated not to be of a criminal nature.

[9] The Commission’s policy in relation to mitigation of penalties for co-operation is set

out in a Notice on Immunity from fines and reduction of fines in cartel cases (2006/C 298/11),

referred to as “the Leniency Notice”. The notice (which has no legislative force) provides for

both immunity from fines and reduction of fines. Immunity is granted to an undertaking if

it is the first to submit information and evidence (as detailed in the notice) enabling the

Commission to carry out a targeted inspection and find an infringement by the alleged

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cartel. Undertakings which do not qualify for immunity may apply for a reduction of their

fine; in order to qualify they must provide the Commission with evidence of significant

added value to that already in the Commission’s possession.

[10] One of the conditions of both immunity and reduction of fines (in paragraphs 12(a)

and 24 of the Leniency Notice) is that the undertaking must not, unless otherwise agreed,

disclose the fact or any of the content of its application for leniency before the Commission

has issued a statement of objections.

The Decision: a summary

Nature and scope of the infringement

[11] At the outset of the Decision, the Commission noted that the facts as outlined in it

were accepted by the Addressees in the settlement procedure. The principal evidence relied

upon by the Commission consisted of documents submitted by MAN, Volvo/Renault,

Daimler and Iveco, corporate statements made by these Addressees, documents copied by

the Commission during the course of inspections, and replies to its requests for information.

[12] The aggregate market share of the Addressees in the EEA for medium and heavy

trucks is approximately 90%. The pricing mechanism of each group starts generally from an

initial gross list price set by headquarters. Transfer prices are then set for the import of

trucks into different markets via wholly owned or independent distributor companies. The

final net customer prices are negotiated by dealers or by the manufacturers where they sell

directly to dealers or to fleet customers. The final net customer prices will reflect substantial

rebates on the initial gross list price.

[13] Although the truck sector was characterised by a high degree of transparency, one of

the remaining uncertainties for the Addressees was the future market behaviour of

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competing producers, and in particular their respective intentions with regard to changes to

their gross prices and gross price lists. With a view to removing that uncertainty, the

Addressees exchanged gross price lists and information on gross prices, and most of them

engaged in exchanging computer-based truck configurators. All of these elements

constituted commercially sensitive information. Over time, truck configurators, containing

the detailed gross prices for all models and options, replaced the traditional gross price lists.

This facilitated the calculation of the gross price for each possible truck configuration. The

exchange was operated both on a multilateral and on a bilateral level.

[14] The collusive contacts engaged in by the Addressees took the form of regular

meetings at venues of industry associations, at trade fairs, product demonstrations by

manufacturers, or competitor meetings organised for the purpose of the infringement. They

also included regular exchanges via e-mails and phone calls. The Addressees' headquarters

were directly involved in the discussion of prices, price incr eases and the introduction of

new emission standards until 2004. From at least August 2002 onwards, discussions took

place via German subsidiaries which, to varying degrees, reported to their headquarters.

[15] By way of an illustration of the discussions that took place at German level, the

Decision notes (at paragraph 59) that at the end of 2004, an employee of DAF Trucks

Deutschland GmbH (the eleventh third party in the present actions) sent an email to,

amongst others, representatives of the Addressees’ German subsidiaries requesting that they

communicate their planned gross price increases for 2005. The summarised and compiled

price increase information was sent back to all the Addressees a few days later. A meeting

in July 2005 was attended by both headquarter-level representatives and employees of the

German subsidiaries. Activities, meetings and special sessions were scheduled. During one

of the special sessions, the Addressees exchanged information about their planned future

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gross price increases for 2005 and 2006 as well as the additional cost of complying with

emissions standards.

The Commission’s investigation and findings

[16] The investigation began in September 2010 when the MAN companies applied for

immunity in terms of the Leniency Notice procedure. On 17 December 2010, the

Commission granted the MAN companies conditional immunity. Between 18 and

21 January 2011, the Commission carried out inspections at the offices of, inter alia, the

Addressees. Shortly thereafter, on dates between 28 January and 10 February 2011,

applications for leniency were submitted by the Volvo, Daimler and Iveco (but not DAF)

companies. All of the Addressees made submissions to the Commission and responded to

requests from the Commission for information. On 20 November 2014, the Commission

initiated proceedings under Regulation 1/2003 against the Addresses by issuing its statement

of objections, and made its files available to them. Thereafter all of the Addresses

approached the Commission informally and asked for the case to be continued under the

settlement procedure. The Commission agreed to launch settlement proceedings and

provided the Addressees with an estimate of the fines likely to be imposed. Each Addressee

then made settlement submissions including an unequivocal acknowledgment of its liability

for the infringement as regards its object, the main facts, and the legal consequences,

including its role and the duration of its participation.

[17] The Commission characterised the Addressees’ conduct as a complex infringement

of article 101, consisting of various actions which could either be classified as agreements or

concerted practices, by which they knowingly substituted practical cooperation between

them for the risks of competition, with the object of preventing, restricting and/or distorting

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competition with respect to medium and heavy trucks within the EEA. This constituted a

single and continuous infringement of article 101 from 17 January 1997 until 18 January

2011. In accordance with EU case law, it was not necessary to show actual anti-competitive

effects as the anti-competitive object of the conduct in question was proved. The

Addressees, including the parent companies, were held jointly and severally liable for the

infringement. At paragraphs 101 and 102 the Commission observed:

“(101) Where the Commission finds that there is an infringement of Article 101…

it may by decision require the undertakings concerned to bring such

infringement to an end in accordance with Article 7 of Regulation (EC)

No 1/2003.

(102)

Given the secrecy in which the arrangements of the infringement were carried

out, in this case it is not possible to declare with absolute certainty that the

infringement has ceased. It is therefore necessary for the Commission to

require the undertakings to which this Decision is addressed to bring the

infringement to an end (if they have not already done so) and to refrain from

any agreement or concerted practice which may have the same or a similar

object or effect.”

[18] The Commission then proceeded to impose fines on each of the company groups

(other than MAN, as already noted), the highest of which, imposed on Daimler AG, was of a

sum in excess of €1 billion.

The pursuers’ claims

[19] Glasgow City Council seeks payment from the defenders, jointly and severally, of

sums amounting in total to approximately £10.1 million. The council avers that during the

period of the infringement it purchased medium and heavy trucks produced by the

Addressees for sums amounting to around £38 million. The sum sued for is calculated on

the basis that the mean overcharge caused by the operation of the cartel was 26%. The

council also seeks payment of an “overhang period overcharge” in respect of trucks

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purchased within a year after the period of infringement, on the ground that truck prices

would continue to be inflated during that period. Further claims are made with regard to

excessive insurance premiums and fuel and tax overpayments which would not have been

incurred if emission-compliant trucks had been introduced sooner.

[20] West Dunbartonshire Council seeks payment from the defenders, jointly and

severally, of sums amounting in total to approximately £1.9 million. The basis of its claim is

the same as that of Glasgow City Council, except that the West Dunbartonshire Council

claim includes a sum of about £500,000 in respect of buses.

[21] It will be apparent from the chronology narrated above that all of the losses claimed

to have been incurred by the pursuers were incurred more than 5 years before the

commencement of the present actions, and that some were incurred more than 20 years

before. In answer to the defenders’ and third parties’ contention that all of the claims have

prescribed, the pursuers contend:

●

that they did not learn of the Addressees’ concealed wrongdoing until

publication of the Decision in 2016, and accordingly that by virtue of

section 6(4) of the Prescription and Limitation (Scotland) Act 1973 (“the

1973 Act”), prescription did not begin to run against them until then;

●

that if sections 6 and 7 of the 1973 Act were construed in such a manner as to

render their claims in whole or in part prescribed, that would be incompatible

with the EU principle of effectiveness; and

●

that in any event they were not aware and could not with reasonable

diligence have been aware prior to the date of the Decision that they had

suffered loss caused by the Addressees’ illegal activities, so that section 11(3)

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of the 1973 Act applied to postpone the commencement of the prescriptive

period.

[22] In response, the defenders and third parties adopt a common position which was

presented at the preliminary proof partly by senior counsel for the defenders and partly by

the Dean of Faculty. They contend that the pursuers’ claims are not saved from the

operation of prescription by either section 6(4) or section 11(3), or by the principle of

effectiveness. As regards section 6(4), it is averred that by March 2011 at the latest, the

pursuers could with reasonable diligence have discovered the matters forming the substance

of their claims. As regards section 11(3), the prescriptive period had begun to run when the

alleged losses had been sustained, namely when the vehicles had been purchased. There

was no incompatibility with the principle of effectiveness.

[23] The evidence led at the preliminary proof, and much of the legal argument, focused

upon the question of what facts the pursuers were or could reasonably have been aware of

more than 5 years before the actions were raised. The material relied upon by the defenders

and third parties fell into two broad categories: (i) official statements and press reports of

the initiation of the Commission investigation in early 2011 (and of a separate investigation

by the UK Office of Fair Trading which began a few months earlier); and (ii) information

contained in the Addressees’ annual reports. Reference was also made to official statements

and press reports of the Commission decision in 2014 to initiate proceedings, but as these fell

within the 5-year period before the actions were raised they were not founded upon by

anyone to the same extent.

[24] Court proceedings in relation to the infringements have been commenced in other

jurisdictions. It is a matter of agreement between the parties that the first proceedings in the

United Kingdom against any of Addressees were raised by Royal Mail in the High Court,

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London, on 1 December 2016. Proceedings relying on the Decision were raised against,

inter alia, MAN SE in the High Court, Dublin, in November 2016 and in the High Court,

London, in July 2017.

Information av ailable prior to publication of the Decision

Press articles: Office of Fair Trading investigations

[25] On 16 and 17 September 2010, it was widely reported in the UK online press that the

Office of Fair Trading (OFT) was investigating several European truck manufacturers for

alleged price fixing. Articles appeared on the BBC news website and in the online editions

of the Guardian, the Telegraph, the New Statesman, the Financial Times, the Times, the

Herald, and Bloomberg, as well as in two online trade journals called Transport Engineer

(produced by the Institute of Road Transport Engineers for its members) and Logistics

Manager. There was no evidence at the proof as to whether or not the print editions of the

newspapers had contained similar articles. Most of the reports were similarly worded and

appear to have emanated from a single source.

[26] Although the exact conten t varied, the substance of the articles was that the OFT had

begun civil and criminal investigations into a number of truck producers, including

Mercedes-Benz/Daimler, Scania, MAN, Iveco and Volvo/Renault, in relation to price fixing

in what was variously described as the trucks market, the heavy trucks market, the trucking

industry, and the commercial vehicle market. It was further reported that an individual at

Mercedes-Benz’s UK offices had been arrested and released on bail; the Financial Times

(and later the Telegraph) named the individual concerned. The OFT was quoted as saying

that “investigations were at an early stage”, and that it would not be possible to conclude

whether the law had been infringed until it had concluded its investigations. The

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manufacturers were said to be co-operating with the investigation, although the Financial

Times reported that they had said that they did not know its scope.

[27] The Bloomberg article included a comment from a former OFT lawyer that “this type

of investigation is usually the result of one of the cartel members acting as a whistleblower

and seeking leniency from the regulator”.

Press articles: the Commission investigation

[28] On 18 January 2011, a memo from the Commission entitled “Antitrust: Commission

confirms unannounced inspections in the truck sector” stated:

“The European Commission can confirm that on 18 January 2011 Commission

officials started to undertake unannounced inspections at the premises of companies

active in the truck industry in several Member States. The Commission has reason to

believe that the companies concerned may have violated EU antitrust rules that

prohibit cartels and restrictive business practices and/or the abuse of a dominant

market position (Articles 101 and 102 respectively of the Treaty on the Functioning of

the EU).

The Commission officials were accompanied by their counterparts from the relevant

national competition authorities.

Unannounced inspections are a preliminary step into suspected anticompetitive

practices. The fact that the Commission carries out such inspections does not mean

that the companies are guilty of anti-competitive behaviour nor does it prejudge the

outcome of the investigation itself. The Commission respects the rights of defence, in

particular the right of companies to be heard in antitrust proceedings.

There is no legal deadline to complete inquiries into anticompetitive conduct. Their

duration depends on a number of factors, including the complexity of each case, the

extent to which the companies concerned co-operate with the Commission and the

exercise of the rights of defence.”

[29] This statement was reported online by the Financial Times and by Reuters and

Euractiv. The Financial Times further reported that Daimler, Scania, Volvo and MAN had

received “surprise visits” and were co-operating with the Commission investigators. EU

officials had confirmed that the OFT and Commission investigations were separate bu t that

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they were co-operating. An OFT spokeswoman, however, declined to comment to Reuters

on whether there was any link between the two.

[30] A follow-up article in the Financial Times on 3 March 2011 provided further

information and comment, under the headline “Truckmakers in Brussels antitrust probe”. It

is worth setting this article out in full (I have omitted some paragraph breaks):

“Europe’s antitrust officials are investigating allegations that some of the world’s

largest truckmakers have fixed prices and delivery times for more than a decade, in a

probe triggered by German truck group MAN.

In January, officials raided truckmakers’ offices all over the continent. German car

and truck group Daimler, Sweden’s Volvo AB and Scania, MAN and Italy’s Iveco are

among the companies investigated. MAN is likely to escape a penalty after acting as

the whistleblower in the case that could lead to heavy fines, two people close to the

situation said.

Brussels does not apply criminal sanctions in competition cases, but can impose fines

of up to 10 per cent of a company’s annual global turnover, although they rarely

reach this level.

The European Competition Commission declined to comment, citing a standing

policy of not discussing ongoing investigations. All truckmakers that were

approached by the Financial Times also declined to comment. People close to the

situation said antitrust officials alleged truckmakers rigged prices and fixed delivery

times in half a dozen European countries. The probe does not appear to include the

UK, where the Office of Fair Trading started a separate criminal and civil

investigation late last year.

MAN claims it uncovered the European scheme as an indirect consequence of a wide

ranging bribery scandal that emerged two years ago and prompted the truck an d

diesel engine group to significantly step up its compliance unit. The alleged

price-fixing scheme emerged after a tip-off by an employee who called a newly

created compliance help desk. MAN in turn alerted the European Commission.

The case has bewildered executives across the industry – which has just emerged

from its worst crisis in many decades – as they have been left in the dark about its

scope. ‘People are really nervous – not because they are worried, but because they

don’t know what it’s about,’ said one person close to the truck- makers. ‘They are

getting lawyers looking into all meetings, they need clearance before they can do

anything – they are hindered in their day-to-day business.’ Some truck groups have

even ceased to submit monthly sales data to their industry associations such as

Europe’s Acea and Germany’s VDA, due to fear this could be seen as an

inappropriate sharing of information.

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Italy, which accounts for 10 to 15 per cent of the EU’s commercial vehicle market,

supplied no data on January sales to Acea. The industry group, which aggregates

the data, substituted ‘an extrapolation’ made by data provider AAA instead.”

Press articles: closure of OFT investigations

[31] On 22 December 2011, the Financial Times and Reuters reported that the OFT had

dropped its criminal investigation into suspected cartel activity in the trucking sector. The

OFT was reported as saying that there was insufficient evidence available for any individual

to be charged with an offence. The civil investigation was still ongoing but at an early stage.

[32] However, on 15 June 2012, the OFT issued a press release stating that following

discussions with the Commission, it had decided to close its civil investigation into

“suspected cartel behaviour amongst commercial vehicle manufacturers”, because the

Commission was particularly well placed to take the investigation forward as part of its

wider investigation into the European truck industry. The closure of the OFT civil

investigation was reported on the website and in the print edition of the trade journal

Commercial Motor.

Press articles: initiation of proceedings by Commission

[33] The Commission’s decision to initiate proceedings against the Addressees was

announced in a press release dated 20 November 2014 under the headline “Antitrust:

Commission sends statement of objections to suspected participants in trucks cartel”. The

press release stated:

“The European Commission has informed a number of heavy and medium duty

truck producers that it suspects them of having participated in a cartel in breach of

EU antitrust rules. The sending of a statement of objections does not prejudge the

outcome of the investigation.

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The Commission has concerns that certain heavy and medium duty truck producers

may have agreed or coordinated their pricing behaviour in the European Economic

Area (EEA). Such behaviour, if established, would breach Article 101 of the Treaty

on the Functioning of the European Union (TFEU) and Article 53 of the Agreement

on the EEA, which prohibit cartels and restrictive business practices.

Background

In January 2011, the Commission confirmed unannounced inspections in the trucks

sector (see MEMO/11/29).

A Statement of Objections is a formal step in Commission investigations into

suspected violations of EU antitrust rules. The Commission informs the parties

concerned in writing of the objections raised against them. The addressees can

examine the documents in the Commission's investigation file, reply in writing and

request an oral hearing to present their comments on the case before representatives

of the Commission and national competition authorities.

If, after the parties have exercised their rights of defence, the Commission concludes

that there is sufficient evidence of an infringement, it can issue a decision prohibiting

the conduct and impose a fine of up to 10% of a company's annual worldwide

turnover.”

The press release was reported by the Telegraph and Reuters. The Telegraph article stat ed

that Volvo was making a €300 million provision “after examining the Commission’s

announcement”. The Reuters article mentioned Daimler, Volvo, MAN and Iveco as being

among the companies notified, but reported that the EU spokesperson had declined to

identify the companies that had received notice of its findings, stating only that “a large

number were involved”.

Company annual reports

[34] During the period between 2010 and 2014, references were made in the annual

reports of the Volvo, MAN, Daimler and Iveco groups to the OFT and Commission

investigations. The references, which appear in notes to the accounts, are in brief and

general terms. In this context it should be recalled that by virtue of the Leniency Notice, it

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was a condition of the Addressees’ settlement negotiations with the Commission that

neither the fact nor any of the content of the applications for leniency would be disclosed.

[35] The following excerpt from its 2012 annual report is representative of the Volvo

Group’s reporting of the existence of the investigation:

“In January 2011, the Volvo Group and a number of other companies in the truck

industry became part of an investigation by the European Commission regarding a

possible violation of EU antitrust rules.

…

Given the nature of the ongoing investigations initiated by competition authorities,

the Volvo Group cannot exclude that they may affect the Group’s result and cash

flow with an amount that may be material. However, as regards the investigation

initiated in Europe, it is too early to assess whether and when such effect may occur

and hence if and when it could be accounted for. The Volvo Group has therefore not

reported any contingent liability or any provision for the investigation initiated in

Europe…”

[36] In its 2011 annual report, MAN SE reported the Commission investigation as follows:

“From January 18 to 20, 2011, the European Commission conducted a search at MAN

Truck & Bus due to a suspected possible antitrust violation in the commercial

vehicles business… MAN has assured the competition authorities of its

comprehensive cooperation in order to thoroughly clarify the allegations.”

In its 2012 and 2013 annual reports, MAN simply reported that the investigation launched

in 2011 was still ongoing.

[37] Daimler AG’s annual reports for 2010 and 2011 contained the following disclosure:

“In mid-January 2011, the European Commission carried out antitrust investigations

of European commercial vehicle manufacturers, including Daimler AG. Daimler is

taking the Commission’s initial suspicion very seriously and is also – parallel to the

Commission’s investigations – carrying out its own extensive internal investigation

to clarify the underlying circumstances. If antitrust infringements are discovered,

the European Commission can impose considerable fines depending on the gravity

of the infringement. In accordance with IAS 37.92 the Group does not provide

further information on this antitrust investigation and the associated risk for the

Group, especially with regard to the measures taken in this context, in order not to

impair the outcome of the proceeding.”

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(IAS 37 is the international accounting standard dealing with provisions, contingent

liabilities and contingent assets.)

[38] The 2013 annual report of CNH Industrial NV (the eighth third party, a member of

the Iveco Group) stated:

“Since January 2011, Iveco…, together with certain of its competitors, has been the

subject of an investigation being conducted by the European Commission into

certain business practices of the leading manufacturers of commercial vehicles in the

European Union in relation to possible anti-competitive practices. It is not possible

at the present moment to predict when and in what way these investigations will be

concluded.”

By the time of publication of CNH Industrial NV’s 2014 annual report, the Commission had

issued its statement of objections. This is noted, and the following comments are made:

“The Statement of Objections is not a final decision and, as such, it does not prejudice

the final outcome of the proceedings. Under the applicable procedural rules, the

Commission will review the manufacturers’ responses before issuing a decision and

any decision would be subject to further appeals.

Iveco is evaluating the Statement of Objections and the documents on the

Commission’s case file, and intends to issue its response to the Commission in due

course and to avail itself of any opportunity allowed by the procedure to clarify its

position in this matter. Given the numerous uncertainties in the next stages of the

investigation, the Company is unable to predict the outcome or to estimate the

potential fine at this time.”

Similar comments are made in the 2015 annual report, published on 4 March 2016, except

that instead of a reference simply to “Iveco”, a particular company, Iveco SpA (the fifth third

party), is named.

Summary of witnesses’ evidence

[39] Mr Grant Montgomery first became aware that local authorities in Scotland might

have claims against the truck manufacturers on about 19 July 2016, when he read a report on

the BBC website about the fines imposed by the Commission, which appeared to have come

Page 19 ⇓

out of the blue. He drew the matter to the attention of his line managers and consulted

Renfrewshire Council’s legal team. On 25 July 2016 he sent an email headed “for

information only – no action required at this time” to contacts in all Scottish local authorities,

drawing the Commission Decision to their attention and suggesting that they discuss it with

their legal departments. Any further action was outwith the remit of Scotland Excel.

Mr Montgomery had not been aware at the time of the OFT raid on Mercedes-Benz’s

premises in September 2010, or of the OFT and Commission investigations. He kept up to

date by reading various trade publications but, so far as he was aware, he had not seen any

of the press releases or press reports in 2010/2011. Of the sources mentioned, he would

normally only read the BBC website, and occasionally the Financial Times. He would not

read company annual reports as a matter of course, although he might refer to them for

information as to the creditworthiness of a tenderer.

[40] Mr Emil Laiolo became aware in late 2016 or early 2017 of the possibility of a claim

by Glasgow City Council against the truck manufacturers. His information came by word of

mouth from other local authority transport managers. He did not recall having seen

Mr Montgomery’s 2016 email. He was not aware of anyone at Glasgow City Council having

had knowledge of the cartel investigation before the Commission fines were reported. None

of the authorised dealers with whom he had contact had mentioned it. He had not been

aware of events in 2010 and 2011 and was not aware of any of the press releases or reports

from that time. He would normally derive his information from the BBC website. He did

not consider that he would have done anything even if he had seen them, as there had been

no legal finding or conclusion. It was just the start of something that might have come to

nothing. A Scottish local authority would not have had the power or resources to obtain the

information necessary to understand what was going on. It would not have crossed his

Page 20 ⇓

mind to look at company annual reports for further information. He was not a member of

the Institute of Road Transport Engineers but there were other employees of Glasgow City

Council who were.

[41] Mr Peter Hessett was first advised of the possibility of a claim by West

Dunbartonshire Council against the truck manufacturers in August 2017 by a colleague from

another local authority. He had not seen Mr Montgomery’s 2016 email. He had since had

enquiries made as to who within the council had received the email; it did not appear that

any of the recipients had taken any action in response to it. Before 2013, Mr Hessett had

been employed by Renfrewshire Council, where he was responsible for legal services. He

had been unaware at the time of the OFT raid or the Commission investigation. He did not

read the truck companies’ annual reports and did not think that anyone at the council would

do so as a matter of course. He h ad no recollection of seeing any of the press reports; the

only source he would normally have looked at was the BBC news website. He did not think

that the articles would have been of much interest because they only reported the existence

of investigations and not conclusions. In his view, the time when a local authority could

think about the possibility of a claim was not until it was clear that the investigation had

come to something. It was not sensible to expect a local authority to carry out its own

investigations. It was not clear from the press articles what types of trucks were under

investigation.

[42] Mr Alan Douglas was informed of the possibility of a claim by Mr Hessett in 2017.

So far as he knew, no-one at West Dunbartonshire Council had been aware prior to July 2016

that an investigation was in progress. He too had been unaware of announcements made

in 2010 and 2011 and had not seen any of the press reports produced. He would not

normally read any of these publications other than the BBC news website. He did not read

Page 21 ⇓

the truck companies’ annual reports. If he had seen the media coverage he would have

waited until it reached its conclusion before doing anything. Cartels were self-disguising,

and a Scottish local authority would not have the resources to carry out its own

investigation. Even in 2014, there was nothing for a local authority to do until the

investigation reached a conclusion. Until then there was no evidence of wrongdoing upon

which the council could act.

Prescription: the statutory provisions

[43] Section 6 of the 1973 Act provides inter alia as follows:

“(1) If, after the appropriate date, an obligation to which this section applies has

subsisted for a continuous period of five years—

(a) without any relevant claim having been made in relation to the

obligation, and

(b) without the subsistence of the obligation having been relevantly

acknowledged,

then as from the expiration of that period the obligation shall be

extinguished…

…

(4) In the computation of a prescriptive period in relation to any obligation for

the purposes of this section —

(a) any period during which by reason of—

(i) fraud on the part of the debtor or any person acting on his

behalf, or

(ii) error induced by words or conduct of the debtor or any person

acting on his behalf,

the creditor was induced to refrain from making a relevant claim in

relation to the obligation, and

(b) any period during which the original creditor (while he is the creditor)

was under legal disability,

Page 22 ⇓

shall not be reckoned as, or as part of, the prescriptive period;

Provided that any period such as is mentioned in paragraph (a) of this

subsection shall not include any time occurring after the creditor could with

reasonable diligence have discovered the fraud or error, as the case may be,

referred to in that paragraph.”

[44] Section 7 provides:

“(1) If, after the date when any obligation to which this section applies has

become enforceable, the obligation has subsisted for a continuous period of

twenty years—

(a) without any relevant claim having been made in relation to the

obligation, and

(b) without the subsistence of the obligation having been relevantly

acknowledged,

then as from the expiration of that period the obligation shall be

extinguished…

(2) This section applies to an obligation of any kind (including an obligation to

which section 6 of this Act applies), not being an obligation to which

section 22A of this Act applies or an obligation specified inn Schedule 3 to

this Act as an imprescriptible obligation or an obligation to make reparation

in respect of personal injuries within the meaning of Part II of this Act or in

respect of the death of any person as a result of such injuries.”

[45] Section 11 provides inter alia:

“(1) Subject to subsections (2) and (3) below, any obligation (whether arising from

any enactment, or from any rule of law or from, or by reason of any breach of,

a contract or promise) to make reparation for loss, injury or damage caused

by an act, neglect or default shall be regarded for the purposes of section 6 of

this Act as having become enforceable on the date when the loss, injury or

damage occurred.

…

(3) In relation to a case where on the date referred to in subsection (1) above…

the creditor was not aware, and could not with reasonable diligence have

been aware, that loss, injury or damage caused as aforesaid had occurred, the

said subsection (1) shall have effect as if for the reference therein to that date

there were substituted a reference to the date when the creditor first became,

or could with reasonable diligence have become, so aware.”

Page 23 ⇓

The EU law principles of effectiveness and legal certainty

[46] The principle of effectiveness is encapsulated in article 19 of the Treaty on the

European Union and in article 47 of the Charter of Fundamental Rights. Article 19 requires

member states to provide remedies sufficient to ensure effective legal protection in the fields

covered by EU law. Article 47 states that “everyone whose rights and freedoms guaranteed

by the law of the Union are violated has the right to an effective remedy before a tribunal in

compliance with the conditions laid down in this Article”. In Impact v Minister for

Agriculture and Food [2008] 2 CMLR 47 (which pre-dated article 19 TEU and article 47 CFR),

the Grand Chamber of the Court of Justice summarised the principle of effect iveness as

requiring that:

“the detailed procedural rules governing actions for safeguarding an individual’s

rights under Community law… must not render practically impossible or excessively

difficult the exercise of rights conferred by Community law”.

[47] In Anwar v Secretary of State for Business, Energy and Industrial Strategy 2020 SC 95,

Lord Drummond Young, with whom Lord Malcolm agreed, expressed the view (at

paragraph 77) that although it was clear from the Court of Justice authorities that if

obtaining a remedy was “excessively difficult” the remedy would not be effective, the

ultimate question was whether an “effective remedy” had been provided. Earlier in his

opinion, Lord Drummond Young had made the following observations (at paragraph 52):

“…(T)he main purpose of the principle of effectiveness is to ensure the proper

enforcement of rights that arise under Community law. That is not an objective that

is confined to the law of the European Union. It is encapsulated in the maxim ubi jus

ibi remedium, which has been adopted in Scots law, English law and many other legal

systems. It is obvious that if a legal right exists a remedy must be devised to permit

its enforcement; otherwise the right is ineffectual. This extends not merely to the

existence of a notional remedy but to ensuring that the remedy produces practical

results. The principle of effectiveness is accordingly one that is not peculiar to

EU law but is close to principles that are an integral part of most rational legal

systems, and are in particular an integral part of Scots law.”

Page 24 ⇓

[48] The EU principle of legal certainty was stated in R (Intertanko) v Secretary of State for

Transport, Case C-308/06, at paragraph 69, as requiring “…that rules should be clear and

precise, so that individuals may ascertain unequivocally what their rights and obligations

are and may take steps accordingly”.

[49] It is well settled that the imposition of limitation (and prescription) rules by national

law is a manifestation of the principle of legal certainty, and also that it does not conflict

with the principle of effectiveness unless the effect of the limitation rules is to render the

obtaining of a remedy practically impossible or excessively difficult (see eg Rewe I

(Rewe-Zentralfinanz eG v Landwirtschaftskammer für das Saarland) [1976] ECR 1989 at

paragraph 5; Test Claimants in the FII Group Litigation v HMRC [2012] 2 AC 337, Lord Walker

of Gestingthorpe at paragraph 93). An example of a limitation period breaching the

principles of legal certainty and effectiveness is provided by Test Claimants in the FII Group

Litigation v HMRC [2014] AC 1161 (ECJ), in which the Court of Justice ruled that these

principles precluded the introduction of a limitation period retroactively and with

insufficient notice to allow a reasonable time for claims to be made. But the general rule was

stated in Haahr Petroleum v Havn [1997] ECR I-4085 at paragraph 48 as follows:

“It is apparent from the case-law, in particular from the Rewe and Comet judgments,

that the laying down of reasonable limitation periods, which is an application of the

fundamental principle of legal certainty, satisfies the two conditions referred to

above and, in particular, cannot be regarded as rendering virtually impossible or

excessively difficult the exercise of rights conferred by Community law, even if the

expiry of those periods necessarily entails the dismissal, in whole or in part, of the

action brought.”

No distinction is drawn by Community law between rules of prescription on the one hand

and rules of limitation on the other.

Page 25 ⇓

Short negative prescription: section 6(4)

Argument for the pursuers

[50] On behalf of the pursuer it was submitted that by virtue of section 6(4), the running

of the prescriptive period had not begun until publication of the Decision on 19 July 2016. (It

was not submitted that postponement of the running of prescription continued beyond that

date.) In the context of section 6(4)(a)(ii), “fraud” meant concealment of wrongdoing, and

included any case in which the defender’s conduct was unconscionable or such that it was

inequitable for him to avail himself of the lapse of time. Policy required a generous

purposive interpretation to be given to the word “refrain”: cf BP Exploration Operating Co

Ltd v Chevron Transport (Scotland) 2002 SC (HL) 19, in which reference was made to the

observations of Lord President Inglis in Caledonian Railway Co v Chisholm (1886) 13R 773 on

the non-running of prescription during a period when the ground of action was concealed

from the creditor. It included time when the creditor did nothing to enforce the obligation,

whether or not that was the result of a conscious decision on his part not to press the claim.

This was consistent with applying section 6(4) to the present claims, because the pursuers

suffered overcharges of which they could not have known at the time of purchase because of

the intentionally secret nature of the cartel. In judging “reasonable diligence”, the standard

was that which an ordinarily prudent person would do having regard to all the

circumstances. It could be consistent with doing nothing if there was nothing that a

reasonably diligent person could do to plead an action based on the fruits of reasonable

enquiry.

[51] Here the fraud was discoverable only from the substance of the Decision. This was

not a vague and generalised cartel activity: it concerned specific types of trucks and a

defined, albeit long, period of time. The Commission had only been able to discover the

Page 26 ⇓

detail of it with the co-operation of the participants. The concealment did not end until

publication of the Decision. Even after the initiation of the investigation had been

announced, the Addressees maintained the concealment for purposes beneficial to

themselves, namely the fulfilment of the Commission’s conditions for leniency. Such

information as became publicly available emanated from the regulatory authorities and was

necessarily in general terms because no formal finding of wrongdoing had yet been made.

In the United Kingdom the OFT had abandoned its criminal investigation due to lack of

evidence. Nobody in the United Kingdom commenced proceedin gs for damages until after

July 2016.

[52] It would have been impossible for the pursuers responsibly to have raised an action

before publication of the Decision, even for the purpose of interrupting prescription. The

legal wrong now complained of was a specific one: breach of competition law in a particular

manner by particular companies, in relation to two specific types of vehicle and the

introduction of emission technologies, during a particular period. None of those critical

elements could have been known prior to the Decision. The identity of the correct defenders

was not known and could not have been ascertained from publicly available material. There

was no information that would, for example, have permitted the pursuers to sue the

companies at the top of any of the groups mentioned. If th e pursuers had sued on the basis

of the press reports of the OFT investigation, they would have sued the wrong entities. The

OFT investigation was irrelevant: it had been concerned with UK companies, none of which

were Addressees. The press articles were uninformative in relation to the vehicles

concerned: some referred merely to commercial vehicles and none specified the particular

classes of trucks that formed the basis of the Decision.

Page 27 ⇓

[53] The companies’ annual reports were equally uninformative. Long after they had

submitted leniency requests to the Commission, their published annual reports continued to

refer to investigations into “possible” violations, without further specification. This

constituted intentional concealment with a view to seeking immunity or reduced fines.

Only after the Commission’s statement of objections was issued in 2014 did the producers

feel free to provide any details of the companies being investigated. It would be inequitable

to permit the defenders to found upon the leniency applications as a reason for not paying

compensation to the pursuers.

[54] It was accepted that there would be circumstances in which the prescriptive period

might begin to run before publication of a Commission decision, if sufficient information

was already publicly available: the case of Granville Technology Group Ltd v Infineon

Technologies AG [2020] EWHC 415 (Comm) provided an example of that. But the facts of the

present cases were clearly distinguishable from those of Granville.

[55] The evidence of the witnesses accorded with the reality: if an employee of one of the

pursuers had seen any of the press articles and drawn it to the attention of the council’s legal

team, he or she would have been told, correctly, that there was nothing that could or should

be done until the outcome of the investigation was known. It was therefore irrelevant to

consider whether any of the pursuers’ employees ought to have been aware of the press

coverage. In any event, as Sir Geoffrey Vos C warned in DSG Retail Ltd v Mastercard Inc

[2020] EWCA Civ 671 at paragraph 70, where in an internet age huge numbers of documents

were in the public domain, it did not follow that a potential claimant was on notice of a

particular claim or could with reasonable diligence have seen particular documents.

[56] All of the above contentions were derived from domestic law, without reference to

the EU principle of effectiveness. If, however, it were necessary to have regard to that

Page 28 ⇓

principle, the court should, in accordance with the Marleasing principle, construe section 6(4)

in the manner contended for by the pursuers. Cases such as Cogeco Communications v Sport

TV Portugal SA [2020] 5 CMLR 16 emphasised that national legislation specifying the

commencement date for the running of limitation periods must be adapted to the

specificities of competition law, so as not to undermine the full effectiveness of article 102. If

Scottish rules on prescription were applied to the effect that a claim was prescribed under

section 6 before the only effective investigation was concluded and the decision announced,

that would make it practically impossible or excessively difficult for Scottish consumers to

secure an effective remedy. In any event, there was no material difference between the

principle of effectiveness and the approach adopted in Caledonian Railway Co.

[57] If the court were to hold that section 6 could not be construed as the pursuer

submitted, even with regard being had to the principle of effectiveness, then the principle

would require section 6 to be disapplied. It made no difference that an alternative

procedure by way of an action in the Competition Appeal Tribunal (“CAT”) had been

provided by statute. The court should be able to give an effective remedy regardless of the

availability of an alternative route. The case was analogous to Minister for Justice and Equality

v Workplace Relations Commission [2019] 2 CMLR 471. In any event, following amendments

made in 2015 to the Competition Appeal Tribunal Rules 2003, it was not clear that the

special rule allowing follow-on actions to be raised in the CAT within 2 years after the

Commission decision remained in force.

Argument for the defenders and third parties

[58] On behalf of the defenders and third parties it was submitted that the period during

which the operation of prescription was suspended had ended in Sept ember 2010 when the

Page 29 ⇓

OFT investigation was reported. It was accepted that “fraud” in the present context

included concealed wrongdoing, but the concealment had ended in 2010. The pursuers

appeared to be contending that prescription did not begin to run until they had all their

ducks in a row to raise a relevant action; however the observations of the House of Lords in

BP v Chevron demonstrated that that was not correct. The 5-year period began with the end

of concealment even if there remained matters requiring investigation before an action could

be raised. It was not necessary to be in a position to plead a relevant case; it was sufficient

to be able to serve a summons that interrupted the running of prescription. In the present

case the pursuers were or ought to have been aware in 2010, or at least in 2011, that a secret

cartel had been operated. Thereafter there was no concealment, and the fact that

investigation by the pursuers of the details of the cartel would have been necessary was not

a bar to the running of prescription. All that was required was sufficient actual or

constructive knowledge to indicate a need for investigation. That knowledge was acquired

by 2011 at the latest. The fact that an investigation by the Commission was under way did

not suspend prescription.

[59] As regards actual or constructive knowledge, there was insufficient evidence to find

that the pursuers, through their employees, were not aware or co uld not with reasonable

diligence have discovered the concealment. It had been widely reported, and it would be

astonishing if none of the pursuers’ employees had seen any of it. Reasonable diligence on

the part of a public authority with a fleet of trucks required that the press reports would

have been seen and acted upon. The test, derived from Paragon Finance plc v D B Thakerar &

Co [1999] 1 All ER 400, per Millett LJ at 418, was how a person carrying on a business of the

relevant kind would act if he had adequate but not unlimited staff and resources and were

motivated by a reasonable but not excessive sense of urgency. The present case was on all

Page 30 ⇓

fours with the Granville case, in which there was no suggestion that it was necessary to await

the Commission decision before raising an action. In that case Foxton J had observed that

reasonable diligence required at least some attempt to see what material relevant to the

price-fixing cartel was available on the internet. In the present case a simple internet search

would have disclosed that truck producers were under investigation for price fixing, and

this could have been confirmed by reference to their annual reports.

[60] As regards the principle of effectiveness, it was agreed that this was not peculiar to

Community law and that it was an integral part of Scots law. The test, however, was a high

one. It was not enough that investigation might be legally or practically difficult, or

expensive.

[61] Regard also had to be had to the principle of legal certain ty. Limitation periods were

not objectionable per se. In that regard there was nothing special about competition law.

Observations of the Court of Justice to the effect that victims of infringements should receive

“full compensation” did not preclude the operation of limitation or prescription. The Court

of Justice authorities founded upon by the pursuers did not support the proposition that

prescription/ limitation could not begin to run until the Commission had published its

decision; the English authorities demonstrated that it could. Reference was made in

Granville and elsewhere to the court taking a “generous” approach to pleadings where a

claimant was unable to plead a full specification of the infringement.

[62] There was no proper foundation for the pursuer’s argument that the principle of

effectiveness required the disapplication of section 6. Effectiveness had to be looked at in

the round. The CAT had provided an alternative route, and there was no requirement that

availability of a remedy was subject to the same conditions in both the court and the

Tribunal. On a proper interpretation of the Competition Appeal Tribunal Rules, the

Page 31 ⇓

limitation period of 2 years running from the date of the Commission’s decision would have

continued to apply to th e present claims because they arose before 1 October 2015 when

there was concurrence of injuria and damnum, and not on the date of the Decision. So even

although the operation of prescription had by the date of the Decision cut off the right to

recover damages by court action, the effectiveness principle did not require the

disapplication of either section 6 or section 7, because proceedings could have been raised in

the CAT. The pursuers had had an effective remedy, in a specialist tribunal, but had chosen

not to use it.

Decision

Interpretation of section 6(4)

[63] The issues for decision are, firstly, the proper interpretation of section 6(4) and,

secondly, its application to the facts of these cases. The first of these issues has been

authoritatively determined by the House of Lords in BP v Chevron. In order fully to

understand that decision, it is necessary to go back, as did the House of Lords, to the

opinion of Lord President Inglis in Caledonian Railway Co v Chisholm. In that case the

pursuers averred that the defender had concealed the fact that sacks which the pursuers had

carried on their trains were for use in connection with goods other than those being carried

by the pursuers, thereby avoiding a charge which the pursuers would have been entitled to

make, had they known. The defender argued that the then triennial prescription (under an

Act of 1579) applied to restrict proof to the defender’s writ or oath. The court rejected the

defender’s argument. Lord President Inglis observed (page 776):

“The statute is intended to prevent creditors from delaying bringing forward a

certain class of actions enumerated in the statute. It contains, in the first place, an

order or direction that all such actions be pursued within three years, and if the

Page 32 ⇓

creditor fail to comply with that enactment, then he is to be subjected in this penalty,

that he shall have no action unless he prove it by the writ or oath of the defender.

Now, that undoubtedly implies that there is negligence upon the part of the creditor,

that he ought to have pursued his action sooner, and that he ought not to have

allowed the three years to elapse. But how is that possible in the case of these

pursuers if their statements be true? By the false pretences of the defender they were

prevented from discovering that they were carrying sacks free for which they were

entitled to charge. And the defender was in the full knowledge of that and failed to

disclose it. To apply the statute to a case of that kind, it appears to me, would not

only be entirely unjust, but would be entirely against the meaning of the statute. The

statute assumes that the creditor is in a condition to sue, and it is because of his

failure to sue—because of his negligence in putting off the making of his claim—that

the statute imposes the penalty upon him. It is clear to my mind, therefore, that

wherever a case of this kind can be made, that the failure to sue is due to the conduct

of the defender (whether it amount to fraud or not), to concealment on the part of the

defender, or to the bringing forth of pretences which are false in fact, whether

fraudulent or not, the pursuer cannot be visited by the penalty of the statute, because

there is no negligence upon his part, but the sole cause of the delay in bringing

forward his claim and raising the action is the conduct of the defender.”

[64] It will be noted that in the last sentence of this passage, Lord President Inglis referred

to a range of circumstances: conduct of the defender (whether fraudulent or not),

concealment by the defender, and pretences which are false in fact, whether fraudulent or

not. Those observations were clearly influential upon the recommendations of the Scottish

Law Commission in its Report (No 15) on Reform of the Law Relating to Prescription and

Limitation of Actions which led to the passing of the 1973 Act. The Commission noted

(paragraph 93):

“It is a defence to the existing triennial prescription that the creditor had been

induced by the action of the debtor to refrain from pursuing the claim w ithin the

prescriptive period. We consider that on equitable grounds a defence against the

suggested new short negative prescription should similarly be available to the

creditor if he has been deterred from taking action within the prescriptive period by

fraud or concealment by the debtor or by error on the part of the creditor, but only

where the error has been induced by the words or conduct of the debtor… The effect

of such fraud, concealment or error should be to defer the commencement of the

prescription until the date when the fraud, concealment or error was discovered by

the creditor or could, with reasonable diligence on his part, have been discovered.”

Page 33 ⇓

[65] Section 6(4), as enacted, refers to fraud on the part of the debtor or error induced by

words or conduct of the debtor, but does not expressly mention concealment. It is settled,

however, that the words used in the subsection should not be construed as having a

narrower scope than the circumstances described in Caledonian Railway Co v Chisholm and in

the Scottish Law Commission report: see BP v Chevron, Lord Clyde at paragraph 67.

[66] The opinions delivered in BP v Chevron also confirm that a generous interpretation

should be given to the word “refrain” in section 6(4). At paragraphs 31-32, Lord Hope of

Craighead rejected the proposition that the word should be restricted to some conscious act

of self-restraint on the part of the creditor:

“…(T)o read the word in this way in this context would be to open the door to the

risk of the very injustice which the subsection was designed to avoid. It would mean

that time would run against a person whose reason for not making a relevant claim

was not that he was stopping himself from making it, as a matter of conscious and

deliberate decision on his part, but that he was wholly unaware of the obligation

because its existence was being concealed from him by the debtor's fraud. That was

the position of the pursuers in Caledonian Railway Co v Chisholm, where it was held

that it would be unjust for the statute to be applied against them. Departing in this

respect only from paragraph 93 of the report by the Scottish Law Commission,

section 6(4) does not mention the problem of concealment. But it is not hard to see

that, where the existence of the obligation or of the identity of the debtor is concealed

from the creditor, the effect of the concealment is that he is not in a position to

enforce it. If these facts are concealed from him by the debtor's fraud, or by error

which has been induced by the debtor's words or conduct, the ordinary use of

language would seem to be enough to entitle one to say in that context that what has

happened is that the debtor's conduct has induced the creditor to refrain from

making the claim.”

Lord Hope accordingly held that the period of time covered by the word “refrain” in

section 6(4) included time when the creditor did nothing to enforce the obligation, whether

or not that was the result of a conscious decision on his part not to press the claim.

[67] At paragraphs 107 and 108, Lord Millett put the matter thus:

“I think that section 6(4) of the Act operates in a very simple way. The first step is to

take the period between the date when the obligation to make reparation arose and

the date when the particular defender was served. If this primary period exceeds

Page 34 ⇓

five years, then section 6(1) has the effect of extinguishing the obligation at the end of

the fifth year…

The next step is to exclude from the calculation of the primary period any period

during which the creditor's failure to serve the defender was the result of an error

which was induced by the defender or someone acting on his behalf. This period is

coterminous with the subsistence of the error in question. It cannot begin until the

creditor is induced to make the error and it ends when he discovers the truth…”

This is, of course, subject to the proviso to section 6(4) regarding discoverability of the error

or fraud by reasonable diligence on the part of the creditor.

[68] As was accepted by the defenders and third parties, it is unnecessary to conduct an

analysis of what is encompassed by the word “fraud” in the context of section 6(4). In my

opinion it is clear from the dicta above that the focus remains where it was directed in

Caledonian Railway Co v Chisholm, namely on concealment of the obligation by the debtor

which induces the creditor not to make a claim. Whether this is to be characterised as fraud

or as induced error is not of central importance. What is more important is identifying the

time when the concealment comes to an end and the creditor discovers the truth. The

question of earlier discoverability with reasonable diligence must also then be addressed.

[69] The authorities to which I have thus far referred do not address the question of what

it is that has to be discovered in order to bring to an end the creditor’s protection under

section 6(4). That was not an issue in either Caledonian Railway Co v Chisholm, in which

discovery of the concealment immediately revealed the ground of action, or in BP v Chevron,

where the question was not whether a ground of action had arisen but rather the identity of

the correct defendant. It does have to be addressed in the present case in which, at the very

least, there was public disclosure of the existen ce of official investigations into a price fixing

cartel more than 5 years before the actions were commenced.

Page 35 ⇓

[70] In Arcadia Group Brands Ltd v Visa Inc [2014] EWHC 3561 (Comm), the point arose in

the context of claims for damages for infringement of competition law. The relevant English

statutory provision, section 32(1) of the Limitation Act 1980 is not in terms identical to

section 6(4) of the 1973 Act. It provides inter alia that the period of limitation shall not begin

to run 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 concealment or

could with reasonable diligence have discovered it. In the context of that provision, Simon J

(at paragraph 24) identified in the authorities seven principles, some of which were

acknowledged to overlap or reinforce one another:

(1) Section 32(1)(b) is a provision whose terms are to be construed narrowly

rather than broadly, in view of the public interest in finality and the

importance of certainty in the law of limitation;

(2) There is a distinction to be drawn between facts which found the cause of

action and facts which improve the prospect of succeeding in the claim or are

broadly relevant to a claimant's case. Section 32(1)(b) is concerned with the

former;

(3) The section is to be interpreted as referring to any fact which the claimant has

to prove to establish a prima facie case;

(4) The claimant must satisfy “a statement of claim test”: in other words, 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. It is not enough that

evidence that might enhance the claim is concealed, provided that the claim

can be properly pleaded without it;

Page 36 ⇓

(5) Thus section 32(1)(b) does not apply to new facts which might make a

claimant's case stronger. Nor does it apply to newly discovered evidence,

even where it may significantly add support to the claimant's case, nor to

facts relevant to the claimant's ability to defeat a possible defence;

(6) The purpose of section 32(1)(b) is to cover the case, where, because of

deliberate concealment, the claimant lacks sufficient information to plead a

complete cause of action. It is therefore important to consider the facts

relating to an allegation of deliberate concealment vis à vis a claimant's

pleaded case;

(7) What a claimant has to know before time starts running against him under

section 32(1)(b) are those facts which, if pleaded, would be sufficient to

constitute a valid claim, not liable to be struck out for want of some essential

allegation.

[71] In Granville Technology Group Ltd v Infineon Technologies AG (above), all parties were

content to adopt this statement of the applicable principles. On the basis of those principles,

Foxton J concluded (paragraphs 28 and 29):

“28. Reflecting the generally pragmatic and purposive approach to the

interpretation of section 32(1)(b), therefore, the authorities establish that a

claimant can be said to have discovered a fact when the claimant is aware of

sufficient material to be able properly to plead that fact. This conclusion

avoids the improbable interpretation of section 32(1)(b) by which a claimant

who has in fact pleaded a particular fact might be said not yet to have

discovered that fact for section 32(1)(b) purposes.

29. In order to be able to properly plead a claim:

(i) any professional obligations which attach to making allegations of a

particular kind must be satisfied;

(ii) the pleaded case must be one which would not be struck out on the

basis that it has no sufficient evidential basis or was not sufficiently

arguable; and

Page 37 ⇓

(iii) the pleading must be one capable of being supported by a Statement

of Truth.”

Those observations are made in the context of English practice and procedure, as well as

being concerned, as I have already noted, with the wording of the English limitation

provision. It was submitted on behalf of the defenders and third parties that they provided

unreliable guidance. In Scottish practice it was common, as well as professionally

responsible, for an action to be commenced to interrupt the operation of prescription even

where it was not (yet) possible to plead a case that was relevant and sufficiently specific for

proof.

[72] Despite the difference in statutory wording, I am not persuaded that a materially

different approach should be taken in Scotland to the question of what information is

required to bring the operation of section 6(4) to an end. I accept that it is common, and

entirely in accordance with professional obligations, for an action to be commenced in order

to interrupt prescription with a summons that is so inspecific that proof could not be

allowed upon it. I also recognise that in the particular context of claims for infringement of

competition law, where the facts may be difficult to ascertain, there are observations in

English cases to the effect that a “generous approach” should be taken where an application

is made to strike out a claim for insufficiency of pleadings (see eg Nokia Corporation v AU

Optronics Corporation [2012] EWHC 731 (Ch), Sales J at paragraph 67). However, Scottish

practice also recognises that there are limits to what can responsibly be pled. A defender is

entitled to protection against the trouble, expense and damage to reputation that may result

from defending a case which is without merit, and is entitled to fair notice of the claim made

against him. That is so in relation to a claim for infringement of competition law as it is for

any other. The corollary is that prescription will not run against a pursuer who is unable to

Page 38 ⇓

plead a relevant case because critical facts that have to be pled in order to establish a prima

facie case have been and continue to be concealed by the prospective defender or defenders.

In the competition law context, those critical facts would, in my opinion, include at least the

nature of the infringement said to have caused the pursuer loss or damage, and the ident ity

of one or more of the alleged participants in it.

[73] I have already noted that the pursuers accept that there may be circumstances in

which time will begin to run against a claimant in respect of a competition law infringement

before publication of the Commission decision from which the claimant seeks to follow on.

Granville Technology Group Ltd v Infineon Technologies AG provides an example. That action

was raised within a 6-year period after the date of the Commission press release announcing

its decision. There had, however, prior to the Commission decision, been lengthy price

fixing investigations in the United States, culminating in a guilty plea and a fine, all of which

was widely reported in the UK press and referred to in the defendant’s annual reports. A

substantial number of law suits had been raised in the United States, and the Granville

companies had been approached by an American law firm to discuss participating in a class

action for non-US claimants. The American lawyers had provided a draft complaint

containing detailed allegations as to how the cartel had operated. A class action, which the

Granville companies did not join, had been raised in the United States but later dismissed

for want of jurisdiction. In these circumstances, Foxton J held that the claimants had been in

a position to plead a viable case prior to publication of the Commission decision, and that

the action was time-barred.

Page 39 ⇓

Application to the circumstances of the present cases

[74] I turn now to apply these authorities to the facts of the present cases and, in

particular, to the question of when concealment of the infringement came to an end, thereby

starting the running of the prescription clock. In my opinion it cannot be said that the

concealment ended either in September 2010, when the OFT investigation was announced,

or in early 2011, when the Commission investigation was announced. The information that

entered the public domain at that time was extremely limited. The “story” being reported

by the press was the fact that investigations into price fixing had been commenced, coupled,

in the case of the OFT investigation, with the fact that an individual had been arrested. The

names of various groups of companies were mentioned, but in all other respects the

concealment continued. In particular the following matters remained concealed:

●

There was no clear indication of the scope or extent of the alleged price fixing

activities under investigation. As I noted earlier, the press reports referred

variously to the trucks market, the heavy trucks market, the trucking

industry, and the commercial vehicle market. An interested reader would

have remained uninformed as to whether any particular vehicle that he had

purchased fell within the scope of either or both of the in vestigations. The

fact that the investigations concerned particular classes of trucks, ie medium

and heavy trucks, did not emerge until 2014, and the fact that the activities of

the cartel extended to the timing of the introduction of emissions technology

remained concealed until the announcement of the Decision in 2016.

●

There was no confirmation that the suspicions that had led to the

investigations were well-founded. It is clear from the press reports and from

the Commission press release that both the OFT and the Commission were

Page 40 ⇓

careful to assert that their investigations were at an early stage and that the

fact that they had begun did not mean that infringements had occurred. The

manufacturers themselves were reported merely as confirming that they

would co-operate with the investigations, and the Financial Times article on

3 March 2011 went so far as to suggest that executives in the truck industry

were bewildered as to what the investigation was about.

●

Although the press reports refer to various groups of companies, including

Daimler/Mercedes-Benz, MAN, Volvo, Renault, Iveco and DAF, no particular

suable company is specified as having participated in the alleged price fixing

activities.

●

There was no specification of the geographic extent of the alleged activities,

although the Financial Times article in March 2011 stated that the

Commission “probe” did not appear to include the United Kingdom.

[75] It will be recalled that the announcement and press reporting of the commencement

of the OFT and Commission investigations took place against the background summarised

at paragraph 16 above, namely that in September 2010 the MAN companies had disclosed

the cartel to the Commission and applied for immunity, that in December 2010 MAN had

been granted conditional immunity, and that by February 2011 most of the other truck

manufacturer groups who participated in the price fixing activities had applied for leniency.

All of this remained deliberately concealed, for the very good reason that it was in the

interests of the defenders and third parties to continue to conceal it in order to comply with

the conditions of the Leniency Notice, and thereby obtain the benefit of immunity or

leniency in relation to Commission fines. The rationale for operating a system of

immunity/leniency is explained in the introductory paragraphs of the Leniency Notice:

Page 41 ⇓

“(3) By their very nature, secret cartels are often difficult to detect and investigate

without the cooperation of undertakings or individuals implicated in them.

Therefore, the Commission considers that it is in the Community interest to

reward undertakings involved in this type of illegal practices which are

willing to put an end to their participation and co-operate in the

Commission's investigation, independently of the rest of the undertakings

involved in the cartel. The interests of consumers and citizens in ensuring

that secret cartels are detected and punished outweigh the interest in fining

those undertakings that enable the Commission to detect and prohibit su ch

practices.

(4) The Commission considers that the collaboration of an undertaking in the

detection of the existence of a cartel has an intrinsic value. A decisive

contribution to the opening of an investigation or to the finding of an

infringement may justify the granting of immunity from any fine to the

undertaking in question, on condition that certain additional requirements

are fulfilled.

(5) Moreover, co-operation by one or more undertakings may justify a reduction

of a fine by the Commission. Any reduction of a fine must reflect an

undertaking's actual contribution, in terms of quality and timing, to the

Commission's establishment of the infringement. Reductions are to be

limited to those undertakings that provide the Commission with evidence

that adds significant value to that already in the Commission's possession.”

[76] It is not for this court to make or imply any criticism of the defenders and third

parties for complying with the non-disclosure conditions of the Leniency Notice in order to

obtain the benefit of immunity or leniency. One of the consequences, however, of

prolonging the concealment will be to extend the period during which a person in Scotland

who has suffered loss as a consequence of the prohibited pr actices is protected by

section 6(4) from the running of prescription against him.

[77] In my opinion the circumstances of the present cases are clearly distinguishable from

those of Granville Technology Group Ltd v Infineon Technologies AG. In that case the nature and

scope of the price fixing (sale of direct random access memory to manufacturers of personal

computers and laptops) was public knowledge; the identities of the particular corporate

participants were known; and the companies concerned h ad agreed to plead guilty in

Page 42 ⇓

US antitrust proceedings. All of this had been reported in the British press, and the

Granville companies had even been provided with details of a proposed class action and

invited to join in. It would not be difficult for a Scottish court, faced with such

circumstances, to find that the concealment required by section 6(4) was no longer present.

[78] As regards the pursuers’ submission that the press reports of the OFT investigation

were wholly irrelevant, I am not entirely convinced that this would necessarily have been so.

In Granville, the publicity given to antitrust proceedings in the United States was regarded as

relevant to the issue of the claimants’ actual or constructive knowledge. In the present case,

had I regarded the reports of the OFT investigation as containing sufficient information to

allow the pursuers to discover the concealment (which I do not), I would not have regarded

the fact that both of the OFT investigations (criminal and civil) were subsequently

terminated as a reason in itself to treat them as irrelevant to the question of actual or

constructive knowledge.

[79] When one turns to the companies’ annual reports, whose terms I have set out or

summarised above, one finds nothing of substance to add to wh at was reported by the press

in 2010 and 2011. No doubt that was largely for the same reason, ie preservation of

entitlement to immunity or leniency, although one may add to that the discretion accorded

by IAS 37 regarding the reporting of contingent liabilities. All that a reader of the r eports

would glean from them would be that investigations into possible anti-competitive

behaviour by manufacturers of (in the case of all except Volvo) commercial vehicles or (in

the case of Volvo) trucks had been initiated and were continuing, and that t he outcome was

uncertain. Indeed, the passages that I have quoted create an impression that it was still

unclear to the companies themselves what infringement, if any, might have been committed.

All of that, in my view, was entirely sufficient to amount to concealment which, in terms of

Page 43 ⇓

section 6(4), would induce a creditor to refrain from making a claim for compensation in

respect of losses caused by the operation of a price fixing cartel in relation to particular types

of commercial vehicles (or unspecified classes of trucks). The contrast with Granville is once

again obvious: in that case the infringers’ annual reports did disclose “a burgeoning

number of law suits” arising out of the investigations.

[80] On the view that I have taken, the question of wh at the pursuers could with

reasonable diligence have discovered assumes a reduced importance. I accept that the court

has been provided with a reasonably representative sample of evidence of witnesses with

technical and legal expertise within Scottish local authorities. I accept the evidence of those

witnesses that they did not see any of the press releases, press reports or company annual

reports at the time of publication. In my opinion it would have made no material difference

if they had. For the reasons that I have explained, I consider that the published material

merely prolonged the concealment beyond the time when the existence of the cartel was

disclosed to the competition authorities and the investigations were commenced. There is

nothing in it which, if seen by local authority employees such as those who were selected to

give evidence in these cases, would or ought to have led to the discovery of fraud or error

that was inducing their employees to refrain from making a claim for losses sustained as a

consequence of breaches of article 101.

[81] Nor, in my opinion, could it reasonably be contended that sight of the material

reported in 2010 and 2011, or in the company annual reports, ought to have prompted

further inquiries by the pursuers which, if conducted with reasonable diligence would, or

would have been likely to, have led to the discovery of such fraud or error. I reject the

proposition that it was incumbent on a local authority to carry out its own investigation of

an alleged price fixing cartel that was already under investigation by the Commission. The

Page 44 ⇓

analogy suggested during cross-examination of investigation of an alleged irregularity in the

authority’s own financial affairs is clearly inapt. In any event, I am in no doubt that if a

Scottish local authority had attempted to inquire into the existence of a cartel whose

activities had affected the prices paid for commercial vehicles of an unspecified nature

during an unspecified period of time, it would have been met by a refusal by the companies

concerned to provide any information, in order to avoid jeopardising their applications for

immunity and leniency. It is not surprising that, as is common ground, no-one in the

United Kingdom raised any proceedings against any of the Addressees before the details of

the Decision were announced.

[82] The next event to consider in relation to the ending of concealment is the

Commission announcement in November 2014 that it had issued a statement of objections to

companies that it suspected of participating in a price fixing cartel, and the consequent

publicity. Although none of the parties to the present action placed much emphasis on this

event (because it was in no-one’s interest to do so), I ought to express a view on it. I have set

out the Commission press release and summarised the media reports at paragraph 33 above.

In certain important respects the information publicly available was expanded. The press

release contained an express reference to heavy and medium duty trucks, and the fact that

the matter had proceeded to the stage of issuing of a statement of objections was a clear

indication that the Commission, after investigation, was of the view that there was at least a

case to answer. The press release contained no identification of the truck producers

involved; however, the media reports mentioned Daimler, Volvo, MAN and Iveco,

although the Commission declined to confirm the identification. It is also relevant to note

that the companies themselves were no longer bound by the non-disclosure conditions of

the Leniency Notice.

Page 45 ⇓

[83] On the other hand, certain important matters remained undisclosed. The

Commission was still careful to present the matter as a charge rather than a finding of guilt,

and there was clearly no acknowledgment by any of the truck producers that the charge was

well founded. There was no specification of the particular companies involved, or of the

duration of the suspected cartel, or of the geographic area in which it was suspected of

having operated. In those respects the concealment continued and, applying the test already

discussed, it would still not have been possible, in my view, on the in formation available in

November 2014, for the pursuers to plead a prima facie case that they had suffered loss as a

consequence of the operation of a cartel among truck producers.

[84] There remains, at least hypothetically, a possibility that at some date between the

November 2014 announcement and the publication of the Decision in July 2016, further

information regarding the concealment, of which the pursuers would or ought with

reasonable diligence to have been aware, came into the public domain, thereby putting an

end to the operation of section 6(4). However, no evidence of any such information was

produced in evidence and I th erefore make no finding to that effect.

[85] For these reasons, and subject to what I say below in relation to the operation of the

long negative prescription under section 7 of the 1973 Act, I hold that in determining

whether the present actions were timeously raised, the period prior to 19 July 2016 is not to

be reckoned as part of the prescriptive period. Any obligation incumbent upon the

defenders to make reparation to the pursuers had accordingly not been extinguished by the

operation of prescription in terms of section 6 of the 1973 Act when the actions were raised

on 27 February 2019.

Page 46 ⇓

The principle of effectiveness

[86] I have reached this view without express reliance on the EU principle of

effectiveness. Each of the parties submitted, from their own perspective, that in the context

of section 6, the principle added little to the approach adopted by domestic law. I agree, and

it is therefore unnecessary for me to say very much about it.

[87] The application of the principle of effectiveness to the interaction of competition law

and limitation periods was considered by the Court of Justice in Cogeco Communications v

Sport TV Portugal SA, case concerning a claim for damages for infringement of article 102

(abuse of dominant position). Having rehearsed the established law which stated that,

provided the principles of effectiveness and equivalence were observed, it was for member

states to lay down detailed rules on available remedies for breach of article 102, including

limitation periods, the Court made the following observations:

“47 …National legislation laying down the date from which the limitation period

starts to run, the duration and the rules for suspension or interruption of that

period must be adapted to the specificities of competition law and t he

objectives of the implementation of the rules of that right by the persons

concerned, so as not to undermine completely th e full effectiveness of

Article 102 TFEU.

48 It follows that the duration of the limitation period cannot be short to the

extent that, combined with the other rules on limitation, it renders the

exercise of the right to claim compensation practically impossible or

excessively difficult.

49 Short limitation periods that start to run before the person injured by the

infringement of EU competition law is able to ascertain the identity of the

infringer may render the exercise of the right to claim compensation

practically impossible or excessively difficult.

50 It is indispensable, in order for the injured party to be able to bring an action

for damages, for it to know who is liable for the infringement of competition

law.

Page 47 ⇓

51 The same applies to a short limitation period that cannot be suspended or

interrupted for the duration of proceedings following which a final decision

is made by the national competition authority or by a review court.

52 The appropriateness of a limitation period, having regard to the requirements

of the principle of effectiveness, is of particular importance both in respect of

actions for damages brought independently of a final decision of a national

competition authority and for actions brought following such a decision.

With regard to the latter, if the limitation period, which starts to run before

the completion of the proceedings following which a final decision is made

by the national competition authority or by a review court, is too short in

relation to the duration of these proceedings and cannot be suspended or

interrupted during the course of such proceedings, it is not inconceivable that

that limitation period may expire even before those proceedings are

completed. In that case, any person suffering harm would find it impossible

to bring actions based on a final decision finding an infringement of EU

competition rules.”

On this basis, the Court concluded (albeit apparently under a misapprehension as to the

terms of the Portuguese law of limitation) that a limitation period of 3 years which started to

run from the date on which the injured party was aware of its right to compensation, even if

the infringer was not known and which could not be suspended or interrupted in the course

of proceedings before the national competition authority, rendered the exercise of the right

to full compensation practically impossible or excessively difficult.

[88] The view that I have taken of the proper interpretation of section 6 of the 1973 Act,

and its application to the circumstances of the present case, is consistent with the Court’s

judgment in Cogeco. The suspension of operation of the prescriptive period provided for by

section 6(4) prevents the short negative prescription from potentially falling foul of the

effectiveness principle in th e manner described in paragraph 52 of the judgment. I also note

that the judgment emphasises the importance of th e injured party being able to ascertain the

identity of the infringer. It will be recalled that in the present case none of the material that

was publicly available before July 2016 would have enabled the pursuers to identify and

raise an action against the particular companies that had taken part in illegal cartel activities.

Page 48 ⇓

[89] I should mention for the sake of completeness that reference was made on behalf of

the pursuers to a decision of the Amsterdam Court of Appeal in a case called CDC Project 13

SA v Kemira Chemicals OY (4 February 2020), in which (at paragraph 3.5.4) the court

construed the Cogeco judgment as demonstrating that the principle of effectiveness, given

the special nature of infringements of competition law, especially in the event of follow-on

claims, entailed that the injured party had to be able to await the final decision of the

competition authority (whether that be the Commission or a national authority), and had to

have sufficient time after that to raise its action for damages, without a national limitation

regime, as a whole, standing in its way. On the face of it, that view would appear to be

inconsistent with the approach taken, for example, in Granville Technology Group Ltd v

Infineon Technologies AG (above) where it was held th at a limitation period could run prior to

publication of the Commission decision. I did not understand the pursuers in the present

case to insist that in cases concerning infringement of competition law the prescriptive

period could never begin to run until the competition authority had given its decision; nor

would I, for my part, regard that as a necessary consequence of the application of the

effectiveness principle to the operation of section 6 in competition law cases.

Long negative prescription: section 7

[90] In advance of the preliminary proof, the pursuers in the two lead actions lodged lists

of trucks purchased or leased during or after the period when the cartel operated. Some of

the trucks were purchased (in the case of Glasgow City Council) or leased (in the case of

West Dunbartonshire Council) more than 20 years before 27 February 2019. It was conceded

on behalf of the pursuers that, subject to the application of EU law principles, any claims in

respect of overpayment for trucks purchased or leased on or before 27 February 1999 had

Page 49 ⇓

been extinguished by the operation of the long negative prescription in terms of section 7 of

the 1973 Act (set out at paragraph 44 above).

[91] It was submitted, however, that because the effect would be to render such claims

excessively difficult or practically impossible, the principle of effectiveness required the

court to disapply section 7. Reference was made to Bundeswettbewerbsbehörde v Donau Chemie

AG [2013] 5 CMLR 658, in which the Court of Justice stated at paragraph 24 that the right to

claim damages for an infringement of article 101 allowed persons who had suffered loss as a

consequence of such infringement to claim “full compensation” not only for actual loss, but

also for loss of profit and interest. The 20-year cut-off, which contains no exception for fraud

or induced error, would prevent the recovery of full compensation and would therefore

breach the effectiveness principle. The argument in relation to the availability of an

alternative procedure in the CAT, which I have set out at paragraph 62 above in relation to

section 6, applied with equal force in relation to section 7.

[92] In response, the defenders and third parties emphasised that regard also had to be

had to the principle of legal certainty, and submitted that a prescriptive period of 20 years,

even without any exception for circumstances in which the injured party could not

reasonably have been aware of the existence of a claim, did not constitute a breach of the

principle of effectiveness. The words “full compensation” used by the Court in Donau

Chemie had to be read against this background, or else there could never be a period of

absolute time bar. In any event, the existence of an alternative route via the CAT, in which

actions could be commenced within 2 years after the date of the Commission’s decision

precluded any question of breach of the effectiveness principle. On a proper interpretation

of the transitional rules, the special 2-year limitation period for follow-on actions had

survived into the post-2015 regime.

Page 50 ⇓

[93] In my opinion, the submissions of the defenders and third parties are to be preferred

on this issue. I was referred to no authority for the proposition that a long -stop prescription

or limitation period of 20 years would require to be qualified by an exception for lack of

means of awareness of the claim in order to comply with the principle of effectiveness. The

decision of the Court in Haahr Petroleum v Havn (see paragraph 49 above) is clearly to the

opposite effect. As the Court observed in that case, the laying down of reasonable limitation

periods is an application of the principle of legal certainty which does not breach the

effectiveness principle even if the expiry of those periods necessarily entails the dismissal, in

whole or in part, of the action.

[94] The rationale for an unqualified long-stop prescription period of 20 years was stated

as follows in the Scottish Law Commission Report referred to above (at paragraph 34):

“The general principle is that the long negative prescription runs from the date when

a claim arises, and is not affected by absence of knowledge on the part of the person

entitled to enforce it….

If the negative prescription in actions of damages were to commence only when

knowledge of the material facts came to the pursuer, there would be a class of claims

where the application of the prescription might be indefinitely deferred. The law

should not give countenance to latent and antiquated claims which may affect even

the successors of the person responsible and, if revived after many years, may

disturb the basis upon which they have arranged their lives.”

In my opinion that rationale is consistent with the operation of the principle of legal

certainty, and falls within the scope of option s available to EU member states with regard to

enactment of national limitation or prescription rules. I do not regard the reference to “full

compensation” in Donau Chemie as casting any doubt upon that; the point at issue in the

case was different, and there is no inconsistency in requiring national laws to provide full

compensation for breaches of article 101, in the sense of compensation for all types of loss,

subject to a reasonable limitation or prescription period in the interest of legal certainty.

Page 51 ⇓

[95] For these reasons it is unnecessary, in my view, to place any reliance on the existence

of the alternative procedure in the CAT as preventing a breach of the effectiveness principle.

Had I considered it necessary to do so, I would again have preferred the arguments

presented on behalf of the defenders and third parties. The problem perceived to arise by

the pursuers, as I understood it, was this: rule 31 of the (now superseded) Competition

Appeal Tribunal Rules 2003 provided that a claim for damages h ad to be made within a

period of 2 years beginning on one or other of two dates, one of those being related to the

date of the relevant competition authority decision. That rule was preserved by rule 119 of

the Competition Appeal Tribunal Rules 2015, but only if “the claim arose before 1 October

2015” (rule 119(3)). The pursuers submitted that it was unclear whether this was a reference

to the date or dates when the loss was incurred or to the date of the competition authority

decision that was being used as the basis of the follow-on action. If the latter was correct,

then the 2-year period did not apply to the claims in the present cases, and ordinary

prescription rules would apply instead. On that interpretation, the availability of a remedy

in the CAT added nothing to the availability of a remedy in the courts. On behalf of the

defenders and third parties it was submitted that the former interpretation was clearly

correct. I agree. The general rule is that a claim arises when there is concurrence o f injuria

and damnum, and I see no reason to interpret the words differently here. Although it will

usually be preferable for a claimant to await the decision of the competition authority in

order to benefit from the latter’s conclusions in a follow-on action, it is not necessary to do

so. Regardless of whether the injured party’s claim is follow-on or standalone, it arises

when the loss was sustained and not when a competition authority decides that an

infringement has taken place.

Page 52 ⇓

[96] Nor, in my opinion, does it matter that a different limitation period applies in the

CAT from that applicable in the courts. The point in the Workplace Relations Commission case

was a different one: the problem identified there was that a body created to decide

questions of EU law relating to workplace discrimination did not (in contrast to the courts)

have power to disapply a provision of national law that conflicted with EU law. I do not

consider that any of the authorities founded upon by the pursuers vouched the proposition

that the same limitation regime must apply both to the courts and to a specialist tribunal

such as the CAT. The fact that each is bound to give effect to EU law does not, in my view,

mean that the principle of effectiveness is breached if a right of action is cut off by the

operation of prescription in one forum before it has been cut off in the other.

[97] I therefore hold that any obligation that the defenders may have had to make

reparation to the pursuers in these cases for losses sustained on or before 27 February 1999

has been extinguished by the operation of long negative prescription.

Short negative prescription: section 11(3)

Arguments for the parties

[98] As an alternative to the postponement of the operation of prescription by

section 6(4), it was submitted on behalf of the pursuers that in terms of section 11(3) (set out

at paragraph 45 above), the commencement of the prescriptive period was postponed until

publication of the Decision. In the light of my conclusion in relation to section 6(4), this

issue becomes academic, but it is necessary for me to express my view on it.

[99] It is fair to say that senior counsel for the pursuers presented this submission without

notable enthusiasm, as he recognised the difficulties created for him by the decisions of the

Supreme Court in David T Morrison Ltd v ICL Plastics Ltd 2014 SC (UKSC) 222 and Gordon’s

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Trs v Campbell Riddle Breeze Paterson LLP 2017 SLT 1287. Nevertheless I was invited to adopt

the same approach as that taken by Sheriff Reid in WPH Developments Ltd v Young & Gault

(Glasgow Sheriff Court, 8 April 2020), and to hold that on a purposive construction of

section 11(3), and in accordance with the effectiveness principle, prescription in relation to a

latent loss did not begin to run until the creditor became or ought to have become aware that

he had suffered a legal wrong, especially where, as here, the wrong was concealed from him.

[100] On behalf of the defenders and third parties, it was submitted that such an argument

could not be advanced in the face of the two Supreme Court decisions. The ratio of Gordon’s

Trs was clear: section 11(3) did not postpone the running of the prescriptive period until the

creditor became aware that he had suffered a detriment because something had gone wrong.

The sheriff in WPH Developments Ltd had misunderstood the ratio of Gordon’s Trs and the

case was wrongly decided. The contrary approach adopted by Lord Doherty in Midlothian

Council v Raeburn Drilling and Geotechnical Ltd 2019 SLT 1327 was correct and should be

followed.

Decision

[101] Delivering the judgment in Gordon’s Trs, with which the other members of the

Supreme Court agreed, Lord Hodge noted at paragraph 17 that in Morrison v ICL, the court

had held that for the prescriptive period to begin under section 11(3), the creditor had to be

aware (actually or constructively) only of the occurrence of the loss or damage, and not of its

cause. Lord Hodge then proceeded, at paragraph 18, to identify “the question which this

appeal raises” as follows:

“In Morrison v ICL this court did not have to address the question which this appeal

raises, namely whether in section 11(3) the creditor must be able to recognise that he

has suffered some form of detriment before the prescriptive period begins. In

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Morrison v ICL the property damage was manifest on the date of the explosion. But

where a client of a professional adviser suffers financial loss by incurring

expenditure in reliance on negligent professional advice, the client, when spending

the money, will often be unaware that that expenditure amounts to loss or damage

because of circumstances, existing at the date he or she spends the money, of which

the client has no knowledge. A question which the current appeal raises is whether

section 11(3) starts the prescriptive clock when the creditor of the obligation is aware

that he or she has spent money but does not know that that expenditure will be

ineffective.”

(My emphasis.)

[102] It will be noted that the point identified by Lord Hodge as “the question which this

appeal raises” (underlined above) is not exactly the same question as that iden tified in the

last sentence, ie whether the prescriptive clock starts when the creditor is aware that he has

incurred expenditure but does not know that it will be ineffective. At paragraph 21,

Lord Hodge answered the question which he had identified as raised by the appeal as

follows:

“…Section 11(3) does not postpone the start of the prescriptive period until a creditor

of an obligation is aware actually or constructively that he or she has suffered a

detriment in the sense that something has gone awry rendering the creditor poorer

or otherwise at a disadvantage. The creditor does not have to know that he or she

has a head of loss. It is sufficient that a creditor is aware that h e or she has not

obtained something which the creditor had sought or that he or she has incurred

expenditure.”

That, in my opinion, is the ratio of the judgment, addressing as it does the question raised

for decision. As the last sentence makes clear, the prescription clock will start to run either

when the creditor becomes aware that he or she has not obtained something sought or (if

earlier) when he or she incurs expenditure.

[103] At paragraph 24, Lord Hodge applied the ratio thus enunciated to the facts of the

case. He rejected the contention that time did not begin to run until the date of the Land

Court decision which held that the attempt to regain vacant possession of the fields had

been ineffective. Instead, he concluded:

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“…With the benefit of hindsight the failure to obtain vacant possession on

10 November 2005 can be seen as having caused loss to the trustees. At that moment,

as in Dunlop v McGowans, the prescriptive period began to run under section 11(1),

unless it was postponed by subsection (3). But there was no postponement under the

latter subsection: the trustees were aware on 10 November 2005 that they had not

obtained vacant possession of those fields. That was a detriment. They were in any

event actually or constructively aware by 17 February 2006 that they had incurred

expense in legal proceedings to obtain such possession. As the trustees did not

commence legal proceedings against the respondents until 17 May 2012, it follows

that the respondents’ obligation to make reparation t o them has prescribed.”

In this passage, Lord Hodge identified two events, either of which would have started the

prescription clock, namely (i) the trustees’ awareness that they had failed to obtain vacant

possession of the fields, and (ii) the incurring of legal expenses, another fact of which the

trustees were actually or constructively aware. As the former occurred first, that was the

date from which prescription ran.

[104] Applying the ratio of Gordon’s Trs to the circumstances of the present cases, the

earliest of the events identified by Lord Hodge was the incurring of what is now alleged to

have been excessive expense on the purchase of each truck whose price was unlawfully

inflated by the price fixing activities of the cartel. On each such occasion there was a

concurrence of injuria and damnum, and an actual awareness by the pursuers that they had

incurred expenditure. All of those circumstances occurred more than 5 years before the

raising of the present actions, and accordin gly, in my opinion, section 11(3) is of no

assistance to the pursuers. In particular, it would be wholly inconsistent with the decisions

in Morrison v ICL and Gordon’s Trs, which are of course binding upon me, to hold that

section 11(3) postponed the operation of prescription until the pursuers became aware, on

publication of the Decision, that they had suffered detriment as a consequence of the

defenders’ wrongdoing.

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[105] In so holding, I am respectfully differing from the analysis of Sheriff Reid in WPH

Developments Ltd. According to the learned sh eriff’s analysis (at paragraphs 143-144), the

ratio of Gordon’s Trs is to be found in the passage at paragraph 24, and the case is not a

binding authority for the proposition (a) that a creditor's awareness of the occurrence of

damnum is to be assessed with the benefit of hindsight or (b) that a creditor's mere

awareness of expenditure incurred by it precludes the operation of section 11(3). In

Sheriff Reid’s view (see paragraphs 145-158), the observations of Lord Hodge at

paragraphs 18-22 were obiter and constituted an unsatisfactory basis upon which to draw

wider conclusions. In my respectful opinion, the learned sheriff’s analysis conflates the ratio

of Gordon’s Trs with its application to the particular facts of that case. It fails to take account

of the fact that Lord Hodge’s analysis addresses both patent and latent injury. The Supreme

Court’s decision that prescription began to run when the trustees failed to obtain vacant

possession of the fields, as opposed to when they incurred expenditure, followed from the

fact that that was what had happened first. That decision in no way detracted from or

departed from the analysis in paragraphs 17-21, which confirmed that the prescription clock

could be started by the incurring of expenditure, unless it had already been started by an

earlier event such as, in Gordon’s Trs, the failure to obtain vacant possession.

Disposal

[106] Parties were agreed that before pronouncing any interlocutor I should put the case

out by order for discussion of further procedure. Questions of expenses are reserved.