2 TRAVEL GROUP PLC (IN LIQUIDATION) V CARDIFF CITY TRANSPORT SERVICES LIMITED
2 Travel brought a follow on claim from an OFT decision in 2008 in which Cardiff Bus had been found guilty of abusing a dominant position within the market and operating with exclusionary intent.
2 Travel had set up a no frills bus service along four routes in Cardiff. In response to this, Cardiff Bus then set up its own no-frills bus service along the same routes at similar times of the day. Cardiff Bus withdrew the service shortly after 2 Travel exited the market. The OFT held that Cardiff Bus was a dominant undertaking and that the sole reason for setting up the Cardiff Bus service was to push 2 Travel out of the market, consequently abusing its dominant position.
Despite being in breach of the Chapter II prohibition, Cardiff Bus was immune from penalty under s.40 CA98 as its annual worldwide turnover did not exceed £50m. Consequently the OFT did not impose a financial penalty.
THE COMPETITION APPEAL TRIBUNAL (CAT) DECISION:
2 Travel brought a claim against Cardiff Bus for loss and damage under six broad heads:
Loss of profits
Loss of a capital asset
Loss of a commercial opportunity
Wasted staff and management time
Costs relating to 2 Travel’s liquidation
The CAT awarded damages to 2 Travel in respect of its claim for lost profits in the amount of £33,818.79. The CAT rejected claims for loss of a capital asset, loss of a commercial opportunity, wasted staff and management time and liquidation costs.However, most interestingly the CAT awarded exemplary damages to 2 Travel in the sum of £60,000.
This is the first ever award of exemplary damages in a UK competition law case. Exemplary damages can be awarded to punish a party for entering into anti-competitive activity where that party has calculated a profit could be made in excess of any compensatory damages it may be forced to pay. Many are concerned that this decision could open the floodgates on further awards of exemplary damages by the CAT. This could potentially violate the principle ne bis in idem (no one shall be punished twice for the same offence). Whether or not the CAT continues to award exemplary damages is yet to be seen. However as long exemplary damages are limited to cases where the OFT has not already punished the undertaking this should protect the ne bis in idem principle.
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