Introduction

The case of NTN Corporation & Ors v Stellantis NV & Ors ([2022] EWCA Civ 16) deals with pivotal issues in competition law, specifically focusing on the defenses available to suppliers implicated in cartel activities when faced with claims for damages by purchasers. This case examines whether a defendant cartel member can successfully plead a mitigation defense by asserting that the claimant mitigated any alleged overcharge through methods such as securing increased discounts from other suppliers. The core question revolves around the sufficiency of such defenses when based solely on hypothetical inferences without concrete evidence.

Summary of the Judgment

The Court of Appeal dismissed the defendants’ appeal, upholding the lower tribunal’s decision to strike out their mitigation defense. The defendants, part of a collusive cartel, argued that any overcharge they imposed was mitigated by the claimant through cost-offsetting measures like securing discounts from other suppliers. However, the court found that the defendants failed to provide sufficient particularization or evidence to establish a realistic or plausible link between the alleged overcharge and the claimant’s mitigation efforts. The plea was deemed overly theoretical and lacked the necessary factual foundation to proceed to trial.

Analysis

Precedents Cited

The judgment extensively references foundational cases that shape the principles of loss mitigation in legal claims:

• Sainsbury's Supermarkets Limited v Visa Europe Services LLC [2020] UKSC 24: This Supreme Court case addressed the "broad axe" approach to mitigation, emphasizing the need for pragmatic and proportionate justice over precise calculations.
• British Westinghouse Electric v Underground Electric Railways [1912] AC 673: Established the duty of claimants to take reasonable steps to mitigate losses resulting from a breach.
• Royal Mail Group Limited v DAF Trucks Limited & Ors [2021] CAT 10: Interpreted the principles from Sainsbury’s in the context of competition law, setting guidelines for pleading mitigation defenses.
• Additional references include Staniforth v Lyall (1830) 7 Bing 169, Bradburn v Great Western Ry (1874) L.R 10 Ex1, and Jebsen v East and West India Dock Co (1875) L.R 10 C.P. 300, which explore the boundaries of acceptable mitigation practices.

Legal Reasoning

The court applied a two-pronged test to assess the validity of the mitigation defense:

1. Causal Connection: There must be a direct and proximate link between the alleged overcharge and the claimant’s mitigation efforts.
2. Realistic Prospect: The defense must present a plausible and convincing argument that such mitigation would occur, not merely speculative theories.

In this case, the court found that NTN's defense was largely hypothetical, relying on broad inferences without substantive evidence. The mere existence of a cost control system within the claimant did not logically or reasonably lead to the conclusion that any potential overcharge would be effectively mitigated through offsetting methods.

Impact

This judgment reinforces the stringent standards required for defendants in cartel-related damages claims to successfully plead mitigation defenses. Future cases will likely see courts demanding more concrete evidence rather than theoretical assertions when such defenses are raised. It also clarifies that while the "broad axe" principle allows for some flexibility, it does not permit defenses based solely on hypothetical assumptions without factual backing.

Complex Concepts Simplified

Mitigation by Off-Setting

This defense involves a defendant arguing that any financial loss claimed by a plaintiff has been offset by gains or savings elsewhere. For instance, if a supplier overcharges a purchaser, the purchaser might claim they mitigated this loss by negotiating better deals with other suppliers.

Causal Nexus

A causal nexus refers to the direct link between two events or actions. In legal terms, it means demonstrating that the defendant’s actions directly caused the claimant’s loss.

Realistic Prospect

This term means that a defense or claim has a genuine and plausible chance of success based on the evidence presented, rather than being merely arguable or speculative.

Conclusion

The NTN Corp v Stellantis decision underscores the necessity for defendants in cartel-related damage claims to provide robust and evidence-backed defenses when alleging that claimants have mitigated losses through off-setting measures. The court's insistence on a clear causal link and realistic plausibility sets a high bar, ensuring that defenses are not merely speculative but grounded in factual reality. This judgment serves as a critical guide for future litigations in competition law, emphasizing the importance of detailed and specific pleadings in establishing the legitimacy of mitigation defenses.