United Kingdom Competition Appeals Tribunal

Neutral citation [2010] CAT 30 
IN THE COMPETITION 
APPEAL TRIBUNAL 
 
Case Number: 1166/5/7/10
Victoria House 
Bloomsbury Place 
London WC1A 2EB 
8 December 2010
 
 
Before: 
 
VIVIEN ROSE 
(Chairman) 
SHEILA HEWITT 
GRAHAM MATHER 
 
 
 
Sitting as a Tribunal in England and Wales 
 
BETWEEN: 
 
ALBION WATER LIMITED 
Claimant 
 
- v - 
 
DWR CYMRU CYFYNGEDIG 
Defendant 
 

 

_____________________________________________________________________ 

JUDGMENT (RULE 40 APPLICATION) 

_____________________________________________________________________ 

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APPEARANCES 

Mr. Rhodri Thompson QC and Mr. Christopher Brown (instructed by Shepherd and 
Wedderburn LLP) appeared on behalf of the Claimant. 

Mr. Christopher Vajda QC and Mr. Meredith Pickford (instructed by Hogan Lovells 
International LLP) appeared on behalf of the Defendant. 

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1. The Defendant (“Dwr Cymru”) has applied to strike out sections of the Particulars 
of Claim lodged on 18 June 2010 by the Claimant (“Albion”). The claim is brought 
under section 47A of the Competition Act 1998 (“section 47A”) and seeks 
compensation for loss allegedly arising from Dwr Cymru’s infringement of the 
Chapter II prohibition. That infringement was the subject of a long running appeal 
before the Tribunal (Case 1046/2/4/04) culminating in a series of judgments. The 
infringements on which Albion relies to found its claim under section 47A are the 
Margin Squeeze Judgment and the Unfair Pricing Judgment. A glossary of relevant 
terms is provided as an annex to this Judgment. 

2. The relief sought at the end of Albion’s Particulars of Claim lists three kinds of 
damages: compensatory damages and/or restitution (valued at £4,600,301), 
aggravated damages (valued at £1 million) and exemplary damages (valued at 
£10.32 million). The strike out application relates to much (if not all) of the claim 
for compensation/restitution and to the whole of the claim for exemplary damages. 
The Tribunal’s powers to strike out all or part of a claim under section 47A is 
conferred by rule 40 of the Tribunal’s Rules. This provides that the Tribunal may 
reject a claim for damages in whole or in part at any stage of the proceedings if it 
considers that there are no reasonable grounds for making the claim. 

3. The claim for compensatory damages is itself made up of two elements. The first 
arises from alleged loss of profits in respect of the supply of water by Albion to 
Shotton Paper. The second element is a loss of profit arising from Albion’s 
inability to enter into a contract to supply the Corus steel works at Shotton with 
water also carried by Dwr Cymru through the Ashgrove System. 


Challenge to the claim for compensation/restitution relating to supply to Shotton 
Paper 
4. Since March 1999, Albion has supplied water on a retail basis to Shotton Paper. It 
has acquired that water from Dwr Cymru at the price set by Dwr Cymru under a 
contract which we refer to as the Second Bulk Supply Agreement. Since 2001, 
Albion has wished to replace this arrangement with a different arrangement 
whereby Albion would buy the water directly from United Utilities (who currently 


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supplies it wholesale to Dwr Cymru), have that water partially treated and 
distributed by Dwr Cymru through the Ashgrove System, and then sell it at a retail 
price to Shotton Paper. 

5. The dispute before the Tribunal in the earlier proceedings concerned the price at 
which Dwr Cymru offered, on 2 March 2001, to provide Albion with a common 
carriage service for partially treating and distributing the water through the 
Ashgrove System. That price has been referred to in these and in the earlier 
proceedings as “the First Access Price”. The Tribunal found that the First Access 
Price gave rise to a margin squeeze, having regard to the retail price at which Dwr 
Cymru was itself offering to supply water to Shotton Paper. This finding was set 
out in the Margin Squeeze Judgment: see paragraphs [312] and [360(iv)]. The 
Tribunal further found that the First Access Price was abusive because it was an 
excessive price and was unfair in itself: see the Unfair Pricing Judgment at 
paragraphs [275] onwards. The scope of the remedy that was appropriate as a result 
of the Tribunal’s findings of infringement was the subject of a hearing before the 
Tribunal some time later, giving rise to the Remedies Judgment in April 2009. The 
remedies granted by the Tribunal comprised a declaration as to the scope of the 
infringement and a series of orders as to Dwr Cymru’s future conduct. The 
declaration granted was in the following terms: 
“[Dwr Cymru] abused its dominant position in the market for the partial treatment 
and transportation, via the Ashgrove system, of non-potable water abstracted from 
the Heronbridge abstraction point for supply to Shotton Paper within the meaning 
of section 18 of the Competition Act 1998, by proposing (in March 2001) to 
charge a price for the provision of such partial treatment and transportation which: 
(1) was both excessive and unfair in itself; and 
(2) imposed a margin squeeze.” 

6. The orders made included an order that Dwr Cymru refrain from any conduct 
having the same or equivalent effect and further stated that any common carriage 
access price offered by Dwr Cymru to Albion not exceeding 14.4p/m3 in 2000/2001 
prices shall not be conduct having the same or equivalent effect as the infringement 
identified in the declaration. 


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7. In the Particulars of Claim Albion calculates its loss relying on the findings of the 
Tribunal as to the amount by which the First Access Price exceeded what would 
have been the reasonable price for common carriage through the Ashgrove System. 
In the table set out at paragraph 197 of the Unfair Pricing Judgment the Tribunal 
used three different methods to calculate by how much the First Access Price was 
excessive, finding that it was between 7.4p/m3 and 9.6p/m3 too high. 

8. Albion calculates the average of the amounts derived from those three different 
methods as being 8.8 p/m3, (hereafter referred to as the “abuse differential”). It 
calculates its loss by multiplying the volume of water that it has supplied to Shotton 
Paper in a given year by that abuse differential. The calculation is set out in an 
Annex to the Particulars of Claim. Thus, in the first period following the offer of 
the abusive First Access Price, that is 8 March 2001 to 31 March 2002, Albion 
calculates its loss by taking the volume of water supplied to Shotton Paper in that 
period, namely 7,164,490m3, and multiplying it by 8.8 pence arriving at a loss of 
£630,475. It makes the same calculation for subsequent years (with some 
adjustments in particular to take account of the interim relief granted by the 
Tribunal pending the resolution of the appeal) arriving at a total loss of £4,328,696 
on the supply of water to Shotton Paper. 

9. Dwr Cymru argues that Albion cannot base its claim for loss of profit on the abuse 
differential because Albion has never at any stage paid the First Access Price to 
Dwr Cymru. Albion never accepted the offer of the First Access Price and never 
entered into a common carriage arrangement with Dwr Cymru. All along Albion 
has acquired water under the Second Bulk Supply Agreement. Dwr Cymru 
therefore argues that a claim put on this basis must be predicated on the Second 
Bulk Supply Price being abusive. The claim must thus be struck out because since 
there has been no finding of abuse in relation to the Second Bulk Supply Price, 
there can be no follow-on damages claim in respect of any such alleged 
infringement under section 47A. 

10. Albion argues that it can base its claim on the abuse differential because the 
Tribunal’s infringement findings should be read as finding that the charges set by 
Dwr Cymru for the two elements which comprise the common carriage service, 


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namely partial treatment and distribution, were abusive. Those same charges are 
incorporated in the Second Bulk Supply Price because what Dwr Cymru provides 
under the Second Bulk Supply Agreement includes not only the water but also the 
services of partial treatment and distribution. Dwr Cymru has stated in the past that 
the sums it has incorporated in the Second Bulk Supply Price for partial treatment 
and distribution are precisely the same as the charges which make up the First 
Access Price. Thus the First Access Price was made up of a charge of 7.2p/m3 for 
partial treatment and of 16.0p/m3 for distribution (see paragraph 267 of the Main 
Judgment). The Second Bulk Supply Price was made up of a charge of 7.2p/m3 for 
partial treatment, 16.0p/m3 for distribution and 3.9 p/m3 for the actual water. 

11. Albion asserts that we can and should transpose the Tribunal’s finding that the First 
Access Price offered to Albion was excessive to the extent of 8.8p/m3 to the Second 
Bulk Supply Price and conclude that the Second Bulk Supply Price was also on 
average 8.8p/m3 higher than it should have been. Since Albion has in fact paid the 
Second Bulk Supply Price over the years, it has, it asserts, been overpaying by 
8.8p/m3 just as it would have done had it accepted the First Access Price offered in 
March 2001. 

12. On this point we agree with Dwr Cymru that this is not a method of calculating loss 
that is available to Albion in the context of an action which follows on from the 
earlier findings of infringement made by the Tribunal. That method of calculating 
loss relies on an assertion in effect that the Second Bulk Supply Price was abusive 
because it incorporated excessive prices for two of the three elements which went to 
make up the overall price (namely partial treatment and distribution). We are 
satisfied that the Tribunal’s finding that the First Access Price was abusively high 
does not equate, expressly or impliedly, to a finding that the Second Bulk Supply 
Price was abusive. 

13. On the contrary, Mr Vajda QC for Dwr Cymru showed us that in the Remedies 
Judgment the Tribunal declined Albion’s invitation to include any reference to the 
Bulk Supply Price in the declaration made. Albion had asked the Tribunal to make 
an order that the bulk supply agreement between Dwr Cymru and Albion should 
remain in place and that the price should be based on 14.4p/m3 (that is the price that 


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the Tribunal had found would have been a reasonable common carriage price) plus 
the cost of the water as invoiced by United Utilities to Dwr Cymru. The Tribunal 
hearing the arguments on remedies rejected Albion’s submissions that the finding of 
abuse in relation to the First Access Price must mean that the Second Bulk Supply 
Price was also abusive because the charges for partial treatment and distribution 
were carried across from the one price to the other. The Tribunal said: 
“At no point did the Tribunal find that the Bulk Supply Price constituted an 
infringement of the Chapter II prohibition. Moreover, Albion rightly 
acknowledged… that the Bulk Supply Price ‘was not the direct subject-matter of 
its complaint to the Authority or its appeal to the Tribunal’.” 

14. The Tribunal hearing the remedies arguments held that it had no jurisdiction to give 
a direction in respect of the Second Bulk Supply Price because there had been no 
finding expressly or by necessary implication as to whether that price was an abuse 
of a dominant position. 

15. It may be that Albion could establish that the Second Bulk Supply Price was also 
abusive. But there has as yet been no such decision to that effect capable of being 
relied on by Albion for the purposes of proceedings under section 47A. We bear in 
mind the comments of Patten LJ in Enron Coal Services v English Welsh and 
Scottish Railway Ltd [2009] EWCA Civ 647 (“Enron”): 
“31. …The use of the word “decision” makes it clear that 47A is differentiating 
between findings of fact as to the conduct of the defendant made as part of the 
overall decision and the determination by the regulator that particular conduct 
amounts to an infringement of the Chapter II prohibition. It is not open to a 
claimant … to seek to recover damages through the medium of section 47A simply 
by identifying findings of fact which could arguably amount to such an 
infringement. No right of action exists unless the regulator has actually decided 
that such conduct constitutes an infringement of the relevant prohibition as 
defined... The corollary to this is that the tribunal (whose jurisdiction depends 
upon the existence of such a decision) must satisfy itself that the regulator has 
made a relevant and definitive finding of infringement. The purpose of 47A is to 
obviate the necessity for a trial of the question of infringement only where the 
regulator has in fact ruled on that very issue.” 

16. We therefore find that in so far as the claim for damages as currently pleaded by 
Albion relies on a finding that the sums paid by Albion under the Second Bulk 
Supply Agreement were excessive because the costs attributed to providing partial 
treatment and distribution under that Agreement were the same as those which 


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generated the First Access Price, there are no grounds for Albion to pursue that 
claim in the context of these proceedings. 

17. Dwr Cymru raised a second objection to the claim for damages said to arise out of 
the abusive nature of the First Access Price. This objection was based on what was 
referred to as the “temporal” aspect of the abuse. Dwr Cymru pointed to the fact 
that the Remedies Judgment records that Albion proposed that the Tribunal should 
declare that in March 2001 “and thereafter” Dwr Cymru abused its dominant 
position by offering the First Access Price. The Tribunal however decided to omit 
any temporal aspect from the declaration which reads simply that “in March 2001” 
Dwr Cymru abused its dominant position. Dwr Cymru argued that by claiming loss 
of profits covering the period March 2001 to April 2009, Albion is alleging that the 
infringement lasted for that period whereas the Tribunal has made no such finding. 

18. We do not consider that Albion’s claim for loss of profits over an extended period 
necessarily depends on the infringement itself being of any particular duration. 
Some infringements of the competition rules have the character of continuing 
infringements, for example a price fixing cartel may last for a number of years. 
Some infringements have the character of a “one off” event; for example the 
abusive cessation of supply by a dominant undertaking or a refusal by a dominant 
undertaking in certain circumstances to grant a patent licence or allow access to its 
essential facilities. In each case, the issue for the court considering a follow-on 
claim for damages is for how long did the claimant suffer loss as a result of the 
infringement. The duration of the loss is not the same as the duration of the 
infringement. The victim of a cartel may not suffer loss for the whole life of the 
cartel if he, for example, manages after a while to secure a reasonably priced supply 
of product from a company outside the cartel or if, for reasons unconnected with the 
cartel, he decides to exit the business which used the cartelised product. The two 
issues may be linked if the period of loss comes to an end because, for example, the 
cartel collapses and prices gradually fall to a competitive level or because the 
dominant undertaking relents and grants a patent licence or allows access to its 
essential facilities. But the question in each case is for how long did the losses 
arising from the infringement endure rather than for how long did the infringement 
itself endure. 


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19. In the present case Albion has pleaded that its losses arising from the abusive offer 
made in March 2001 lasted until April 2009: as Mr Thompson QC on behalf of 
Albion put it: “this whole unhappy saga was triggered by the offer that was made in 
March 2001 and the complaint was made on the basis of that and defended on the 
basis of that. All the causation and everything that has happened since then 
essentially flowed from that event.” (see Transcript, 26 November 2010, page 66). 
We do not read the Remedies Judgment as concluding that the effects of the offer 
made on 2 March 2001 did not extend beyond the end of that month. Dwr Cymru 
may, in its defence, point to some event during that period which it can claim broke 
the chain of causation and brought the period of Albion’s losses to an end earlier. 
Adjudicating on such an issue does not involve the Tribunal in finding the existence 
of any infringement different from or additional to the infringement set out in the 
declaration in the Remedies Judgment. We have to consider rather what loss 
flowed from that infringement and over what period it was suffered. 

20. We therefore reject Dwr Cymru’s challenge to the Particulars of Claim based on the 
alleged “temporal” aspect of the infringement. 


Challenge to the compensation/restitution claim in respect of Corus 
21. In paragraph 108 of the Particulars of Claim Albion asserts that the consequence of 
Dwr Cymru’s abusive conduct was to deny Albion the opportunity to earn a 
reasonable margin or indeed any margin at all. In paragraph 109, Albion goes on to 
allege that that effect extended to the potential supply to the Corus steel making 
plant on an adjoining site, also supplied with water through the Ashgrove System. 
Paragraph 109 reads as follows: 
“This effect… extends, on a conservative basis, to the entire Ashgrove system, 
including supply to Corus on the adjoining site. The Claimant attached to its 
original notice of appeal a letter dated 11 July 2003 (…) in which Corus indicated 
that it was highly dissatisfied with the lack of competition in the water industry and 
invited the Claimant to tender for its business with effect from 1 April 2004. The 
Claimant was in the event unable to do so as a result of the ongoing dispute with 
the Defendant and the weak regulatory response of the Authority. As such, the 
Claimant lost the opportunity substantially to expand its business not only at 
Shotton but at the other Corus sites at Llanwern and Trostre…” 


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22. Dwr Cymru’s challenge to this aspect of Albion’s claim was based on similar 
grounds to its challenge to the Shotton Paper claim. First it argued that there was 
no finding of abuse in relation to any offer of a common carriage service made to 
Albion in respect of the Corus works at Shotton; Albion never asked for a price for 
common carriage and it cannot be assumed that, if Albion had asked in March 2004, 
Dwr Cymru would have quoted the First Access Price. Again, Mr Vajda pointed to 
the fact that before the hearing about remedies, there was an exchange of 
correspondence setting out draft orders, one of which incorporated a reference to 
Corus in the draft declaration which the Tribunal would be invited to make. In the 
event, as we have seen, there was no reference to Corus in the declaration setting 
out the scope of the infringement. 

23. We agree that Albion cannot, in these proceedings, base a claim for loss on any 
alleged abuse in relation to Dwr Cymru’s price for common carriage for supply to 
Corus. Although it may be able to establish on the facts that Dwr Cymru would 
have quoted the First Access Price and that that price would have been abusive, 
there has been no finding of infringement in that regard. In so far as the claim for 
loss of profit arising from being unable to supply Corus, Shotton relies on an 
assumption that Dwr Cymru would only have quoted an abusive common carriage 
price for that supply, we agree that the claim must be struck out. 

24. However, paragraph 109 may not be based entirely on such an allegation. The 
pleading may be intended to be read as a more general claim for loss of opportunity 
in that if Albion had been able to build up its business on a profitable supply to 
Shotton Paper (using a reasonable common carriage arrangement with Dwr Cymru) 
then it would have been in a sufficiently strong and healthy position to expand its 
business to supply other customers, in particular the Corus plant at Shotton. 

25. In so far as Albion is relying on a more general claim along those lines, it could 
properly be regarded as flowing from the offer by Dwr Cymru of an abusive price 
for common carriage of water to Shotton Paper. Although the claim may be 
somewhat tenuous as currently drafted, we do not consider that it is unarguable. We 
would therefore reject the application to strike out the claim for damages in respect 
of supply to Corus, Shotton to that extent. 


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26. Dwr Cymru also challenged the claim for loss of profit arising from an inability to 
supply Corus Shotton on the same “temporal” ground as it did in relation to the 
supply to Shotton Paper. We reject that argument for the reasons set out in 
paragraphs 18 and 19 above. 


Challenge to the claim for exemplary damages 
27. In the Particulars of Claim at paragraphs 73 onwards Albion sets out a claim for 
exemplary damages. This is based on the two well-known cases in the House of 
Lords: Rookes v Barnard [1964] AC 1129 and Kuddus v Chief Constable of 
Leicestershire Constabulary [2002] AC 122. In short, Albion alleges that Dwr 
Cymru refused to offer a reasonable price for common carriage “in cynical 
disregard for the interests of [Albion] or its customer Shotton Paper”. 

28. Dwr Cymru invites the Tribunal to strike out the claim for exemplary damages on 
the basis that it is precluded as a matter of law by the judgment of Lewison J in 
Devenish Nutrition v Sanofi-Aventis [2007] EWHC 2394 (Ch) (“Devenish”).1 

29. In Devenish Lewison J considered the availability of exemplary damages under 
both European and domestic law. As to the first, he referred to judgment of the 
Court of Justice in Cases C-295/04 etc Manfredi v Lloyd Adriatico Assicurazioni 
[2006] ECR I-6619 which held that in accordance with the principle of equivalence, 
it must be possible for a national court to award exemplary or punitive damages in 
claims founded on the EU competition rules, if such damages may be awarded that 
national court in similar actions founded on domestic law. Lewison J held however 
that there were two aspects of EU law that ruled out the award of exemplary 
damages to Devenish. Both aspects arose from the fact that the damages claim in 
Devenish relied on a finding of infringement made by the European Commission in 
the Vitamins cartels decision. Lewison J held (paragraph 48) that “…in anti-trust 
cases the imposition of fines and an award of exemplary damages serve the same 
aim: namely to punish and deter anti-competitive behaviour”. He therefore 
concluded that the principle of non bis in idem precluded the award of exemplary 
damages where the Commission had already imposed a fine for the infringement. 


1 The point on exemplary damages was not challenged on appeal: Devenish Nutrition v Sanofi-Aventis 
[2008] EWCA Civ 1086. 
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Secondly he referred to the obligation imposed on the Member States by article 16 
of Regulation 1/20032 not to take a decision which runs counter to a decision taken 
by the European Commission. He held that the Commission had decided on the 
adequacy of punitive measures for the defendants as a result of their participation in 
the vitamin cartels. If the national court were to award exemplary damages, that 
could only be because the national court had concluded that the fines imposed by 
the Commission were insufficient to punish and deter. The national court is not in a 
position to reach such a conclusion, because that would "run counter" to the 
decision already adopted by the Commission. 

30. Lewison J then went on to consider whether exemplary damages were available as a 
matter of domestic law, having regard to the rule against double jeopardy. He noted 
that it was common ground between the parties in that case that as a result of the 
decision of the House of Lords in Kuddus, there is no longer a cause of action test 
for the award of exemplary damages. In other words the mere fact that a claim is 
brought under Article 101 TFEU does not of itself rule out an award of exemplary 
damages. He then considered the cases of Archer v Brown [1985] QB 401 and 
Borders (UK) Ltd v Metropolitan Police Commissioner [2005] EWCA Civ 197. In 
the former case, Peter Pain J relied on the double jeopardy rule in refusing to award 
exemplary damages against a defendant who was serving a prison sentence for the 
conduct from which the claim of damages arose. However, in the Borders (UK) 
case the Court of Appeal held that a claim for exemplary damages was not ruled out 
either by the imposition of a term of imprisonment for the relevant conduct or by 
the fact that criminal confiscation proceedings were pending against the defendant. 
The Court of Appeal held that an award of exemplary damages would necessarily 
be taken into account in any later confiscation proceedings because the defendant’s 
assets would have been depleted by that amount. What appears to have been 
decisive for the members of the Court of Appeal in Borders (UK) was that there 
was no possibility in practice that there would be double counting by the imposition 
of both a confiscation order and an award of exemplary damages. 

31. The conclusion drawn by Lewison J in Devenish was expressed as follows: 


2 Official Journal 2003 L1 page 1. 
page
“62. I draw from Borders that the fact that a person has been imprisoned for an 
offence is not, in itself, enough to bring the principle against double jeopardy into 
play; but that so far as financial remedies are concerned, the principle is still a 
good one to the extent that there should be no practical danger of double counting 
or duplication of penalty.” (emphasis added) 

32. Dwr Cymru seeks to rely on Devenish even though it has not been fined for its 
infringement by the European Commission, by the Office of Trading or by the 
Tribunal. Mr Vajda argued that Lewison J’s judgment in the Devenish case is 
authority for the proposition that no court (that is neither the Tribunal nor the High 
Court) has power to award exemplary damages in a follow-on claim for damages. 
He relies on a passage in Devenish where Lewison J dealt with the question whether 
exemplary damages could be claimed against a cartel member whose fine had been 
commuted by the European Commission under its leniency programme:3 
“51. Mr Layton [Counsel for the claimants] also argued that in the case of the 
Aventis companies the fines had been commuted to zero as a result of the 
application of the Leniency Notice. Thus he said that these companies, at least, had 
not been sanctioned for the unlawful conduct at all. I do not accept this submission. 
The Commission decided in principle that fines should be imposed on the Aventis 
companies. It is true that by the application of the Leniency Notice, those fines 
were commuted to zero as a result of Aventis' conduct as whistleblower; but the 
starting point for the application of the Leniency Notice was the finding of 
unlawful conduct coupled with the imposition, in principle, of a fine. The 
application of the Leniency Notice serves the important policy aim that it is of 
even more importance to encourage whistleblowers than to punish participants in a 
cartel. In my judgment the national court should not undermine that policy by an 
award of exemplary damages against a person who has had his fine commuted as a 
result of the application of the Leniency Notice. If Mr Layton's submission were 
correct, then a more guilty wrongdoer would escape liability for exemplary 
damages, while a less guilty wrongdoer, whose fines had been commuted would 
not. This seems to me to be wrong in principle. 
52. In my judgment, therefore, the principle of non bis in idem precludes the 
award of exemplary damages in a case in which the defendants have already been 
fined (or had fines imposed and then reduced or commuted) by the European 
Commission.” 

33. Mr Vajda emphasised the last two sentences of paragraph 51 and argued that if it is 
right that exemplary damages cannot be awarded against a cartel member which has 
had its fine commuted because it is a “less guilty wrongdoer” then it must follow 


3 The leniency programme is the scheme under which the European Commission commutes the fine 
imposed on the first cartel member who comes forward to provide information to the Commission 
about the existence and extent of the cartel: see the Commission Notice on immunity from fines and 
reduction of fines in cartel cases, Official Journal (2006) C298 page 17 which is the current version. 
page
that where no fine has been imposed at all, the wrongdoer must be even less guilty 
and hence even less susceptible to a claim for exemplary damages. 

34. We do not agree that the Devenish judgment is authority for any such broad 
proposition. It is clear from the judgment read as a whole that Lewison J’s 
conclusion that exemplary damages were ruled out as a matter of EU law was 
limited to the case where the Commission had imposed a fine or had commuted the 
fine for the specific policy reasons underlying the Leniency Notice. A principle that 
the mere availability of the domestic power to fine for a competition law 
infringement precludes a claim for exemplary damages does not follow from what 
Lewison J said in his analysis of EU law and appears to be entirely inconsistent 
with his findings as to domestic law. 

35. Where the Office of Fair Trading or the Tribunal expressly decides not to impose a 
fine, for example because the infringement was not committed negligently or 
intentionally, a claimant is unlikely to be able to establish the “cynical disregard” 
element that is necessary for exemplary damages to be awarded. But that is not 
what has happened here. 

36. Clearly no question of “running counter” to a decision of the European Commission 
arises in this case. So far as domestic law is concerned, we consider that the 
position is as described in paragraph 62 of Lewison J’s judgment. A claim for 
exemplary damages may be maintained in respect of a breach of the Competition 
Act 1998 provided that there is no practical danger of double counting or 
duplication of penalty. In the present case, no fine has been imposed on Dwr 
Cymru and there is no practical possibility of any fine being imposed by any 
enforcement body in the future. There is no danger of double jeopardy and the 
exemplary damages claim should not be struck out. 

37. We also find, in rejecting Mr Vajda’s subsidiary points, that the wording of section 
47A makes clear that the heads of damage available in a follow-on damages claim 
before the Tribunal are intended to be the same as the heads of damage available in 
the High Court, at least where the claimant has suffered loss or damage as a result 
of the infringement. The earlier domestic cases cited in Devenish also refute Mr 


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Vajda’s suggestion that exemplary damages are only available where there is a 
“lacuna” because of the absence of any public law power to punish the alleged 
egregious conduct. Finally we reject the suggestion that no award of exemplary 
damages can be made in a follow-on action because that would require the Tribunal 
to find facts relating to the presence or absence of “cynical disregard” on the part of 
Dwr Cymru and that would not be a finding in relation to causation or quantum. 
We do not read the judgment of Patten LJ in Enron as restricting the scope of the 
Tribunal’s factual enquiry in so far as that enquiry is necessary to resolve issues as 
to the kinds of damages which can be claimed and the quantum of those damages, 
provided the inquiry does not involve finding other infringements. 

38. We therefore reject Dwr Cymru’s application to strike out the claim for exemplary 
damages in this case. 


Conclusion 
39. All the decisions set out in this ruling are the unanimous decisions of the Tribunal. 
The parties asked us to issue our ruling on the matters of contention between them 
without determining which parts of the Particulars of Claim survive and which 
should be struck out. We therefore invite the parties to submit, as soon as possible, 
a draft order consequent on our findings. We will then set a timetable for the future 
conduct of the case. 


 
 
 
 
 
 
Vivien Rose 
 
 
 
 
 
Sheila Hewitt 
Graham Mather
 
 
 
 
 
Charles Dhanowa 
Registrar 
 
Date: 8 December 2010

 
page
GLOSSARY OF TERMS 
 
 
The Tribunal judgments in the infringement proceedings: Case 1046/2/4/04 
 
The Main Judgment 
Albion Water Ltd v Water Services 
Regulation Authority [2006] CAT 23 (6 
October 2006) 
The Margin Squeeze Judgment 
Albion Water Ltd v Water Services 
Regulation Authority [2006] CAT 36 (18 
December 2006) 
The Unfair Pricing Judgment 
Albion Water Ltd v Water Services 
Regulation Authority [2008] CAT 31 (7 
November 2008) 
The Remedies Judgment 
Albion Water Ltd v Water Services 
Regulation Authority [2009] CAT 12 (9 
April 2009) 
Other Terms 
 
The Tribunal’s Rules 
 
The Competition Appeal Tribunal Rules 
2003 (SI 2003 No. 1372) 
The Chapter II prohibition 
 
The prohibition of the abuse of a 
dominant position contained in section 
18(1) of the Competition Act 1998 
First Access Price 
 
The price offered by Dwr Cymru for 
common carriage in March 2001, namely 
23.2p/m3 
Second Bulk Supply Agreement 
 
The agreement entered into between 
Albion and Dwr Cymru on 10 March 
1999 for the supply of non-potable water 
via the Ashgrove System 
Second Bulk Supply Price 
 
The price payable by Albion under the 
Second Bulk Supply Agreement, namely 
26p/m3 
Ashgrove System 
 
The system of pipes owned and operated 
by Dwr Cymru through which water is 
supplied to Shotton Paper and Corus 
Shotton 
Shotton Paper 
 
A paper-making plant situated on 
Deeside supplied with non-potable water 
via the Ashgrove System 
Corus Shotton 
 
A steel producer supplied with non-
potable water via the Ashgrove System 
United Utilities 
 
A water undertaker and supplier of non-
potable water from the River Dee at 
Heronbridge to Dwr Cymru 
p/m3 
 
Pence per cubic metre 

 
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