Cardiff Bus: Exemplary Damages in Follow-on Cases

(by Morten Hviid) Should there ever be the possibility of awarding exemplary damages in a private follow-on action for breach of competition law?  To my mind, the answer to this general question should be “NO”.  To be a follow-on claim, there must already have been an infringement decision by a relevant competition authority.  Where it finds an infringement, the competition authority is tasked with designing an appropriate punishment aimed at deterring and punishing the anticompetitive conduct.  When the follow-on case is commenced, the matter of punishment has already been dealt with and non bis in idem [not twice for the same] should rule out subsequent exemplary damages.  It should not be for a court or a Tribunal to run the case again as regards punishment unless this is as a result of an appeal of the original infringement decision.  With no differences in the standard of proof, arguments that “the defendant should have been fined” belongs to an appeal of the OFT decision, not in a new action for damages.

On the whole this logic has been followed in the UK, for example in Devenish[1] where Lewison J held (at [48]) that “the imposition of fines and an award of exemplary damages serve the same aim: namely to punish and deter anti-competitive behaviour”.  However, based on a logic that, while a zero fine as a result of a leniency programme is still a punishment, immunity from a fine arising from an OFT policy decision is not, the Competition Appeals Tribunal [CAT] in their recent Cardiff Bus decision[2] chose to award £60,000 in exemplary damages.