KME Yorkshire Ltd & Ors v Toshiba Carrier UK Ltd & Ors

Factual and Procedural Background

This appeal arises from an order of the Chancellor dated 19 October 2011, which dismissed various applications by defendants to strike out the claim or to summarily dismiss it, as well as applications challenging the jurisdiction of the courts of England and Wales. The claim concerns damages for breaches of the anti-cartel provisions under Article 101 of the Treaty on the Functioning of the European Union and equivalent statutory duties under English law.

The background involves a decision by the European Commission published on 16 December 2003 ("the Decision"), which found that several companies engaged in price fixing and market sharing in the industrial tubes sector between 1988 and 2001. Some defendants named in the proceedings were fined under this Decision, while the first defendant, a UK company, was not named in the Decision but is alleged to have been involved in implementing the cartel.

The claimants commenced proceedings in December 2009 for damages resulting from these breaches. The defendants applied to strike out the claim or for summary judgment and to challenge jurisdiction, which applications were dismissed by the Chancellor. The appeal concerns only certain defendants’ challenges to these dismissals.

Legal Issues Presented

1. Whether the claim form and amended Particulars of Claim disclose an arguable cause of action against the first defendant (the UK company) for infringement of Article 101.
2. Whether there is a real prospect of success for the claimants against the first defendant given the alleged lack of evidence.
3. Whether the courts of England and Wales have jurisdiction over the foreign defendants in light of the claim against the UK defendant.
4. The interpretation of the legal requirement of a "concurrence of wills" or agreement under Article 101, specifically whether implementation of an unlawful anti-competitive agreement by a party with knowledge suffices to establish liability.
5. The extent to which knowledge, intent, or unlawful conduct of a parent company can be imputed to its subsidiaries in the context of Article 101 breaches.

Arguments of the Parties

Appellants' Arguments

• The statements of case do not disclose an arguable cause of action against the UK defendant because they lack an essential element of an agreement under Article 101, namely a meeting of minds or concurrence of wills.
• Implementation of an unlawful anti-competitive agreement alone, even with knowledge of the agreement, is insufficient to establish liability.
• There is a complete lack of evidence supporting key allegations against the UK defendant, so the claim has no real prospect of success.
• Reliance on the lack of pleading of knowledge or involvement by the UK defendant, asserting that the claim form is a "blunderbuss" of alternative allegations that do not properly distinguish between defendants.
• Submission that knowledge or anti-competitive conduct of a parent company should not be imputed to subsidiaries absent "decisive influence."

Respondents' Arguments

• The claim form and amended Particulars of Claim adequately allege that the UK defendant participated in and implemented the cartel arrangements with knowledge, constituting a stand-alone claim under Article 101.
• Concerted practices, which need not amount to a full agreement, are sufficient to establish infringement under Article 101.
• Acts of implementation by a party with knowledge of the cartel agreement are capable of amounting to concerted practices and thus infringement.
• Given the secretive nature of cartel conduct, the claimants are entitled to plead on the basis of limited evidence prior to disclosure.
• There is no need to impute knowledge from parent to subsidiary absent evidence of decisive influence; however, the claim against the UK defendant is made on its own knowledge and conduct.

Table of Precedents Cited

Court's Reasoning and Analysis

The court carefully analysed the pleadings, the relevant Commission Decision, and the parties’ submissions concerning the legal requirements for establishing liability under Article 101. It rejected the appellants’ narrow interpretation that liability requires a direct agreement or "concurrence of wills" by the UK defendant, holding that concerted practices and acts of implementation with knowledge suffice to establish infringement.

The court emphasised established EU jurisprudence distinguishing concerted practices from formal agreements, noting that practical cooperation substituting competition is prohibited. It found that the allegations against the UK defendant, including refraining from competing and exchanging confidential information with competitors, sufficiently pleaded a stand-alone claim for infringement.

The court also addressed the evidential arguments, recognising the inherent secrecy of cartel conduct and the consequent difficulty in pleading with precision prior to disclosure. It accepted the Chancellor’s discretion in refusing summary judgment despite limited evidence at this stage.

Regarding imputing liability within corporate groups, the court clarified that knowledge or unlawful conduct is not automatically imputed from parent to subsidiary absent evidence of "decisive influence." The claim against the UK defendant was based on its own alleged conduct and knowledge, not imputation.

The court dismissed the appeal, concluding that the pleadings disclose an arguable cause of action with a real prospect of success against the UK defendant and that jurisdiction over the foreign defendants is properly established if the claim against the UK defendant stands.

Holding and Implications

The court DISMISSED THE APPEAL.

The direct consequence is that the order of the Chancellor dismissing the defendants’ applications to strike out the claim, grant summary judgment, and challenge jurisdiction is upheld. The claim against the UK defendant proceeds on the basis of a stand-alone cause of action for infringement of Article 101, including implementation of cartel arrangements with knowledge.

No new precedent was established; the decision applies established EU and English law principles concerning cartel claims, the sufficiency of pleadings, the evidential threshold at early stages, and the limits of imputing liability within corporate groups.