Inner House refuses time-bar appeal by manufacturers involved in truck cartel in repayment action by Scottish councils

Lord Carloway

About this case:

• Citation:
  [2022] CSIH 1
• Judgment:
  External link
• Court:
  Court of Session Inner House
• Judge:
  Lord Carloway

Glasgow City Council and West Dunbartonshire Council raised actions against five defenders and eleven third parties (the manufacturers) involved in a Europe-wide cartel relating to truck sales, seeking over £12 million between them. The defenders and third parties claimed that the pursuers’ actions were time-barred by operation of section 6 of the Prescription and Limitation (Scotland) Act 1973.

The appeal was heard by the Lord President, Lord Carloway, siting with Lord Woolman and Lord Pentland. The two-day hearing was live-streamed in November 2021, the first time an appeal hearing had ever been streamed from the Court of Session.

Deliberate concealment

The pursuers, along with other Scottish local authorities, had purchased several heavy and medium trucks from the manufacturers from 1998 to 2012. In 2016, following an investigation, the European Commission determined that, between 1997 and 2011, five groups of truck manufacturers had breached Article 101 TFEU and unlawfully colluded in respect of the pricing of trucks, the timing of the introduction of emissions technologies, and the passing of associated costs to consumers.

Following the announcement of the Commission’s findings, twenty-two local authorities raised actions seeking reparations for overpayments in respect of trucks purchased during the period of collusion, with the pursuers’ actions selected as the lead cases. A preliminary proof was held by the commercial judge on the issue of prescription, in which the manufacturers argued that the pursuers would have been aware of investigations into anti-competitive practices prior to 2016.

The commercial judge considered that prior to 2016 most of the information concerning the fraud had been concealed and accepted that witnesses led by the pursuers would not have seen any of the press reports relating to potential investigations. There was nothing to prompt further inquiries which, if conducted with reasonable diligence, would have been likely to have led to the discovery of the fraud.

It was submitted for the manufacturers that on any view a mass purchaser of trucks who knew or ought to have known of an alleged competition law infringement had enough information to take advice and to collate evidence. The pursuers had not adequately demonstrated that they had been unaware of the infringement or had no knowledge of what was in the public domain prior to 2016.

The pursuers submitted that it did not follow from the availability of material prior to 2016 that such material would put a local authority on notice of a claim. The commercial judge had found there was continuing deliberate concealment beyond November 2014, and essential details concerning the cartel were not published until July 2016, and this was enough to satisfy section 6(4) of the 1973 Act.

Striking omission

Delivering the opinion of the court, Lord Carloway said of the available information prior to 2016: “The existence of information ‘in the public domain’ does not carry with it an implication that it is public knowledge. The pursuers did not trade in trucks. They purchased trucks for their own use. There was no obvious reason for them to be alert to the financial or business pages of the news media to see what was happening in that sector of the market. The published information does not seem to have been in any prominent part of the media.”

He continued: “The evidence indicated that it was not something which gained much traction. There was no reason for local authorities to search the annual reports and accounts of truck manufacturers to see what they might reveal. There would have to have been something which put the pursuers on notice, and meant that they ought to have carried out further research.”

Commenting on the evidence led by the manufacturers, Lord Carloway said: “They did not seek to adduce evidence from any local authority that they were aware of the investigations into truck cartels at any point in advance of the Commission’s decision in 2016. This is a striking omission. A reasonable inference is that the manufacturers were unable to find anyone who could testify to his or her council’s awareness of the activities of the OFT or the EU Commission in advance of the 2016 decision.”

Noting that no other claimant had raised an action based on the earlier disclosures, he added: “The correct inference from all of the circumstances is, as the commercial judge found, that the pursuers could not, with reasonable diligence, have discovered the cartel until the Commission’s decision.”

Lord Carloway concluded: “[The manufacturers] assert that the pursuers ought to have been aware of the allegations of cartel infringement and embarked on investigations in order to ascertain the nature of the cartel’s operation and, with greater precision, the identity of its membership. Such an assertion involves holding that the judge’s findings of fact on these matters cannot reasonably be explained or justified. That is not the case. They are readily explicable having regard to the testimony of the witnesses, the limited nature of the published material and the surrounding circumstances.”

The court therefore concluded that section 6(4)(a) of the 1973 Act came into operation, and thus refused the reclaiming motions.

Representation:

Pursuers and Respondents: Moynihan QC, Irvine; Anderson Strathern LLP

Defenders and Reclaimers: Ross QC; MacGregor QC; Brodies LLP

Fourth third Parties and Reclaimers: Dean of Faculty (Dunlop QC), Welsh; Dentons UK and Middle East LLP

Fifth to Eighth Third Parties and Reclaimers: D Thomson QC; Levy & McRae LLP