Roche Products Ltd. & Ors v Provimi Ltd

Factual and Procedural Background

In May 1999, the European Commission initiated an investigation into the vitamins and pigment markets within the European Union and European Economic Area. On 21 November 2001, the Commission issued a Decision, published in January 2003, finding that several manufacturers, including companies from the Roche and Aventis groups, had engaged in cartel activities contrary to Article 81 of the EC Treaty. These cartels operated for up to ten years between 1989 and 1999, involving price fixing and market sharing in the sale of various vitamins.

Following the Commission’s Decision, four actions were commenced in the Commercial Court in May 2002 by two English companies and one German company, all direct purchasers of vitamins from companies within the Roche and Aventis groups. The claimants allege that the defendants participated in cartels, causing damage by selling vitamins at inflated prices, thus entitling the claimants to damages for breach of statutory duty under Article 81.

The defendants seek to strike out or set aside parts of these proceedings on grounds of no arguable case and/or lack of jurisdiction of the English courts over most defendants. The jurisdictional issues involve the application of EC Regulation 44/2001 and the Lugano Convention, particularly in relation to alleged foreign jurisdiction clauses.

The court considered the complex issues under broad headings including the Commission Decision, jurisdictional framework, parties and allegations, strike-out applications, and challenges based on jurisdiction clauses from Switzerland, Germany, and France.

Legal Issues Presented

1. Whether the claimants have an arguable case that certain subsidiaries (Roche UK and Rhodia Ltd) infringed Article 81 by implementing cartel agreements entered into by parent companies within the same undertaking.
2. The extent to which knowledge or concurrence of wills is required for a subsidiary to be liable for breach of Article 81.
3. The proper application of jurisdictional rules under Regulation 44 and the Lugano Convention in the presence of jurisdiction clauses in contracts governed by Swiss, German, and French law.
4. Whether jurisdiction clauses in contracts with Swiss, German, and French companies exclude English court jurisdiction over claims for damages based on alleged cartel infringements.
5. The interpretation and scope of jurisdiction clauses under Swiss, German, and French law, particularly in relation to tortious claims for breach of Article 81.
6. The application of Article 6(1) of Regulation 44 regarding claims against multiple defendants domiciled in different states and the risk of irreconcilable judgments.

Arguments of the Parties

Claimants' Arguments

• Article 81 prohibits agreements between undertakings that restrict competition, including price fixing and market sharing.
• The EU concept of an "undertaking" can encompass multiple corporate entities acting as a single economic unit; thus subsidiaries like Roche UK and Rhodia Ltd are part of the infringing undertaking.
• Implementation of a cartel agreement by a subsidiary is itself an infringement of Article 81, giving rise to a statutory duty breach under English law and a private law cause of action for damages.
• It is arguable that Roche UK and Rhodia Ltd "gave effect" to the cartels by implementing the fixed prices, even if they did not independently enter into the agreements.
• There is a good arguable case that the claimants suffered loss caused by the cartel pricing and that the claims against Roche UK and Rhodia Ltd are not artificial but substantive.
• Regarding jurisdiction, the claims against various defendants are closely connected, making it expedient to hear them together under Article 6(1) to avoid irreconcilable judgments.
• The claimants argue that the Swiss, German, and French jurisdiction clauses do not cover tortious claims for damages based on breaches of Article 81, and so do not oust English jurisdiction.

Defendants' Arguments

• The Commission Decision identifies only Roche Switzerland and Aventis France as infringing undertakings; there is no finding that Roche UK or Rhodia Ltd infringed Article 81.
• EU Competition law requires a "concurrence of wills" for an entity to be party to an infringing agreement; mere implementation by a subsidiary without knowledge does not constitute infringement.
• Subsidiaries cannot be imputed with the knowledge of their parent companies; claimants have not pleaded knowledge by Roche UK or Rhodia Ltd.
• Therefore, claims against Roche UK and Rhodia Ltd have no reasonable prospect of success and should be struck out.
• Jurisdiction clauses in contracts governed by Swiss, German, and French law are valid and confer exclusive jurisdiction on courts in those countries.
• Swiss law principles limit the scope of jurisdiction clauses to foreseeable disputes closely connected to the contract; claims based on cartel infringements are not foreseeable and thus outside the clause scope.
• German law requires clear and unambiguous wording for jurisdiction clauses to cover tortious claims; the clauses do not clearly include claims based on fraud or tort of intent.
• French law experts argue that the claims are contractual or quasi-contractual and thus within the scope of French jurisdiction clauses.
• The defendants contend that the claimants have not satisfied the threshold under Article 6(1) of Regulation 44 to join non-UK defendants due to lack of close connection and risk of irreconcilable judgments.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by examining the Commission Decision, emphasizing the EU competition law concept of an "undertaking" as an economic unit potentially comprising multiple corporate entities acting as a single economic entity. The Decision identified Roche Switzerland and Aventis France as the infringing undertakings, but the court considered whether subsidiaries such as Roche UK and Rhodia Ltd, by implementing the cartel agreements, could also be liable under Article 81.

The court rejected the defendants’ reliance on the Viho case, distinguishing it on the basis that Viho involved subsidiaries implementing internal pricing within a single economic unit, whereas here the issue was whether subsidiaries implementing agreements entered into by parent companies with other independent undertakings could be liable. The court found it arguable that subsidiaries implementing the cartel agreements without separate independence are themselves infringers, and that the knowledge or concurrence of wills requirement may be satisfied by the concept of a single economic unit where legal entities do not act independently.

Regarding causation, the court accepted that there was a real issue as to whether the claimants suffered loss due to cartel pricing and that subsidiaries’ participation in implementing the cartel could have caused that loss.

On jurisdiction, the court analyzed the jurisdictional framework under Regulation 44 and the Lugano Convention, considering the effect of jurisdiction clauses in contracts governed by Swiss, German, and French law. It applied principles from EU case law, particularly the ECJ’s decisions, to determine that the validity of jurisdiction clauses must be assessed under Article 23 of Regulation 44, with national laws relevant only to interpret the scope and the arising-out-of relationship.

For the Swiss jurisdiction clauses, the court found that under Swiss law, jurisdiction clauses are construed narrowly and limited to foreseeable disputes closely connected to the contract. Given that the claimants did not know of the cartels at contract formation, and that cartel claims are not foreseeable, the court concluded the Swiss jurisdiction clauses do not cover the tortious claims here.

For the German jurisdiction clauses, the court recognized that German law requires clear and unambiguous wording for jurisdiction clauses to cover tortious claims, especially those based on fraud or tort of intent. The clauses here did not clearly include such claims, and the courts named do not have jurisdiction over cartel matters. The court rejected defendants’ arguments that the clauses could be reinterpreted or extended to cover cartel claims.

For the French jurisdiction clauses, the court considered expert opinions on whether the claims were contractual or tortious in nature. It concluded that a French court would likely characterize the claims as tortious and that the scope of the French jurisdiction clauses was insufficiently broad to cover these claims.

Finally, the court found that the claims against Roche UK and Rhodia Ltd had a real prospect of success and that the claimants satisfied the requirements of Article 6(1) of Regulation 44 to bring claims against multiple defendants in England to avoid irreconcilable judgments.

Holding and Implications

The court held that:

• The claims by the German claimant against Roche UK and Rhodia Ltd are not to be struck out for lack of arguable case; those companies can be liable for implementing the cartel agreements under Article 81.
• The Swiss, German, and French jurisdiction clauses in the relevant contracts do not exclude English jurisdiction over the tortious claims for damages based on cartel infringements.
• The claimants can invoke Articles 5(2), 5(3), and 6(1) of Regulation 44 and the Lugano Convention to establish jurisdiction in England over the defendants, including those domiciled outside England.
• The applications by the Roche and Aventis groups to decline or strike out parts of the proceedings on jurisdictional grounds were rejected.

Implications: This decision allows the continuation of complex multi-party cartel damage claims in the English courts, affirming that subsidiaries implementing cartel agreements within a single economic unit may be liable under Article 81. It clarifies the limited scope of foreign jurisdiction clauses in contracts concerning tortious cartel claims and confirms the application of Regulation 44 and the Lugano Convention to such multi-jurisdictional claims. No new precedent was established beyond these case-specific determinations.