Establishing Boundaries for Extraterritorial Jurisdiction in Competition Damages Claims: DSG Retail Ltd v MasterCard [2015]

Introduction

The case of DSG Retail Limited and Another v. MasterCard Incorporated and Others ([2015] CAT 7) addresses significant issues regarding the extraterritorial jurisdiction of the United Kingdom Competition Appeals Tribunal (CAT) in competition law damages claims. The claimants, DSG Retail Limited (DSG) and Dixons Retail Limited (Dixons RL), sought damages for alleged infringements of Article 101 of the Treaty on the Functioning of the European Union (TFEU) by MasterCard Incorporated and its affiliated entities. The key issue revolved around whether the claimants could serve MasterCard's foreign entities out of jurisdiction under section 47A of the Competition Act 1998.

Summary of the Judgment

Mr. Justice Roth, presiding as a Tribunal in England and Wales, examined the application by DSG and Dixons RL for permission to serve proceedings out of the United Kingdom jurisdiction. The Tribunal considered whether the claimants met the criteria set out in the Practice Direction 6B and section 47A of the Competition Act 1998. The Tribunal concluded that while some aspects of the claim related to MasterCard's actions up to 21 June 2008 fell within the Tribunal’s jurisdiction, claims alleging infringements after this date did not. Consequently, permission to serve out of jurisdiction was partly granted, subject to amendments clarifying the scope of the claims.

Analysis

Precedents Cited

The Tribunal referenced several pivotal cases to support its decision:

Gerber Garment Technology Inc v Lectra Systems Ltd [1997]: Established that parent companies cannot claim for losses incurred by subsidiaries.
Sempra Metals Ltd v IRC [2007]: Affirmed the ability to claim interest as damages in competition law cases.
VTB Capital Plc v Nutritek International Corp [2012]: Articulated the three basic principles for serving foreign defendants, emphasizing the necessity of a serious issue on the merits, a good arguable case, and the appropriateness of the forum.
Spiliada Maritime Corporation v Cansulex Ltd [1987]: Highlighted the court’s role in determining the most appropriate forum for disputes involving foreign parties.
WH Newson Holding Ltd v IMI [2013]: Clarified that section 47A actions must rely on express infringement findings from the Commission’s Decision.

These precedents collectively underscored the importance of adhering to established legal frameworks when determining jurisdiction, especially in complex cross-border competition disputes.

Legal Reasoning

Judge Roth meticulously analyzed whether the claimants’ actions fell within the scope of section 47A, which allows claims based on infringements already established by the European Commission’s Decision. The court determined that:

Serious Issue to be Tried: The claimants demonstrated a real prospect of success concerning MasterCard’s conduct up to 21 June 2008, aligning with the established infringement period.
Jurisdictional Gateways: The claims satisfied the tort gateway and the necessity of including MasterCard’s foreign entities as essential parties to the dispute.
Appropriateness of the Forum: Given that the bulk of MSC payments and resultant losses occurred in England and were intricately linked with High Court proceedings, England and Wales was deemed the appropriate forum.

However, the Tribunal found that claims alleging infringements post-21 June 2008 extended beyond the Tribunal’s jurisdiction under section 47A, as these alleged new or continued infringements were not conclusively established by the Commission’s Decision.

Impact

This judgment delineates the boundaries of section 47A’s applicability, particularly in extraterritorial contexts. It underscores the necessity for claimants to base their damages claims strictly on infringements already evidenced by authoritative decisions, thereby preventing the Tribunal from becoming a venue for unestablished competition law claims. Moreover, it highlights the importance of precise pleading, especially when dealing with multinational defendants. The impending Consumer Rights Act 2015, as noted by Judge Roth, will further clarify and expand the Tribunal’s jurisdiction in competition disputes, potentially streamlining future claims.

Complex Concepts Simplified

Extraturitorial Jurisdiction

This refers to the authority of a court to hear and decide cases that have effects beyond its national borders. In this case, the Tribunal had to determine whether it could exercise such jurisdiction over American and Belgian entities of MasterCard.

Section 47A of the Competition Act 1998

Section 47A allows parties who have been affected by a competition law infringement, as determined by the European Commission, to seek damages in UK civil proceedings. However, it restricts claims to those infringements already established by the Commission’s Decision.

Follow-On Action

A follow-on action is a legal claim for damages that arises after an initial finding of infringement by a regulatory body—in this case, the European Commission’s Decision against MasterCard.

Multilateral Interchange Fees (MIFs)

MIFs refer to fees set by payment card organizations (like MasterCard) that banks charge merchants for processing card transactions. The European Commission found that MasterCard’s MIFs were set at inflated levels, constituting a violation of competition law.

Conclusion

The DSG Retail Limited v. MasterCard judgment serves as a critical reference point for understanding the limitations and capabilities of the UK’s Competition Appeals Tribunal in handling extraterritorial competition damages claims. By affirming the necessity for claims to be grounded in established infringement findings and delineating the scope of permissible claims under section 47A, the Tribunal ensured that its jurisdiction remains both precise and just. This decision not only provides clarity for future competition law claims but also emphasizes the importance of aligning legal strategies with legislative and judicial frameworks. As the legal landscape evolves with forthcoming legislation like the Consumer Rights Act 2015, this judgment will continue to inform the boundaries of competition damage claims in the UK.