Factual and Procedural Background
The Plaintiffs brought a follow-on damages claim arising from an unlawful price-fixing cartel in the worldwide market for thin film transistor liquid crystal display (LCD) panels operating between 5 October 2001 and 1 February 2006. A Regulatory Authority issued a decision finding the cartel and fining several undertakings, including the Defendant group (hereafter "Company A"). The Plaintiffs were companies carrying on business in England and Wales selling desktop computers with monitors, notebooks and, from 2003 for one Plaintiff, TVs. Most relevant purchases were made from intermediaries downstream of the Defendants; it was common ground that upstream suppliers passed on the full overcharge and that one group member passed on 100% intra-group.
The trial before Judge Pelling (the trial judge) involved extensive expert econometric evidence about the size of the overcharge and the extent of downstream pass on. Judge Pelling assessed the Plaintiffs' damages at £4,412,716 and, after accounting for settlements, awarded £942,438 (including interest). The Plaintiffs appealed, challenging three aspects of the judge's assessment. This appeal was heard by the court whose reasons are summarized below.
Legal Issues Presented
- Whether the trial judge erred in applying a principle that, where precise calculation is not possible, the court "should err on the side of under-compensation".
- Whether the trial judge made clear and obvious errors in determining the level of the cartel-induced price increase (the "overcharge").
- Whether the trial judge applied the correct legal test for downstream pass on, specifically the requirement of a "direct and proximate causal link", in finding that the Plaintiffs passed on 65% of the overcharge.
Arguments of the Parties
Plaintiffs' Arguments
- The trial judge applied the incorrect legal principle of erring on the side of under-compensation when precision was not possible.
- The judge made clear and obvious errors in calculating the overcharge (including rejection of models incorporating lagged prices and certain explanatory variables).
- The judge failed to apply the requisite test for downstream pass on (a direct and proximate causal link) and therefore erred in finding any pass on (or at least in fixing it at 65%).
Defendants' Arguments
- The overcharge was limited and, in any event, the Plaintiffs passed on 100% of any overcharge to their customers (so suffered no recoverable loss).
- The judge was entitled to prefer the Defendants' econometric model and to apply a cautionary "broad brush" approach in areas of uncertainty.
- The burden was on the Defendants to prove downstream pass on and they discharged it by expert evidence.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Livingstone v. Rawyards Coal Co (1880) 5 App Cas 25 |
Compensatory measure of damages: sum to put injured party in the position they would have been in but for the wrong. |
Used as the foundational statement of the compensatory principle underpinning assessment of overcharge damages. |
| Sainsbury's Supermarkets Ltd v Mastercard Inc and others [2020] UKSC 24; [2020] 4 All ER 807 |
In competition cases primary claim is direct loss measured by overcharge less any downstream pass on. |
Applied to confirm that overcharge minus passed-on amounts is the correct compensatory measure; guided treatment of mitigation/pass on issues. |
| Asda Stores Ltd v. Mastercard Inc [2017] EWHC 93 (Comm) |
Described a cautionary approach: where using a broad brush, the court "should err on the side of under-compensation". |
Trial judge cited this authority for the cautious approach; the appellate court examined and rejected that principle as a settled rule for competition follow-on cases. |
| Britned Development Limited v. ABB AB [2018] EWHC 2616 (Ch) and Britned Developments Ltd v ABB AB [2019] EWCA Civ 1840; [2020] 4 CMLR 7 |
Held that there is no rule to "err on the side of under-compensation"; aim should be the right amount of compensation without systemic bias. |
Relied on to conclude that the cautionary "under-compensation" approach is incorrect; the court used Britned to justify adjusting the trial judge's figures where he expressly stated he had applied that cautionary principle. |
| Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5; [2014] FSR 29 |
Appellate restraint on overturning trial judge's factual findings (plainly wrong test). |
Applied in framing the appellate standard: interference only if findings are plainly wrong or based on identifiable error. |
| Henderson v Foxworth Investments Ltd [2014] UKSC 41; [2014] 1 WLR 2600 |
Reinforces appellate deference to trial judges on factual findings. |
Used to support the court's approach to reviewing complex factual and expert determinations. |
| Volpi v Volpi [2022] EWCA Civ 464; [2022] 4 WLR 48 |
Appellate approach to factual findings. |
Referenced as part of the authorities limiting appellate intervention on findings of fact. |
| Thomson v Christie Manson & Woods Ltd [2005] EWCA Civ 555; [2005] PNLR 38 |
Approach to appellate review of complex expert evidence. |
Cited to support caution before disturbing trial judge's expert-driven findings. |
| Royal Mail Group Ltd v. Daf Trucks Ltd [2023] CAT 6; [2023] 5 C.M.L.R. 6 and Royal Mail Group Ltd v DAF Trucks Ltd [2024] EWCA Civ 181 |
Set out test for pass-on mitigation: defendant must prove a "direct and proximate causative link" between Overcharge and any increase in prices by the claimant; identified non-exhaustive factual indicators. |
Adopted as the applicable test for downstream pass on; the court applied the test and the identified factors (knowledge of overcharge, relative size, relationship between cost and product, identifiable purchaser claims) as considerations in assessing pass on. |
| Sainsbury's Supermarkets Ltd v Visa Europe Services LLC [2020] UKSC 24; [2020] Bus LR 1196 |
Explained merchants' options to deal with increased costs and the evidential burdens in pass-on cases; principle of proportionality and lack of need for unreasonable precision. |
Used to frame evidential burdens and to justify pragmatic use of the "broad axe" where precision is unattainable. |
| Stellantis Auto SAS v Autoliv AB [2025] CAT 9 |
Confirmed that the Royal Mail factors are non-exhaustive and that pass-on remains a question of fact. |
Referred to as confirming that downstream pass on assessment is fact-specific and that the listed indicators are not exhaustive. |
Court's Reasoning and Analysis
The court proceeded in two main strands: (A) correction of any legal error in the judge's methodological approach to assessment of damages and overcharge; and (B) review of the judge's factual findings on the overcharge and on downstream pass on under the appellate standard.
A. Legal principle on "broad brush" and cautionary approach
The court reiterated that when the evidence cannot produce precision the court must use "sound imagination and a broad axe" to arrive at the best estimate, aiming to give the right amount of compensation without systematically erring in either direction. The appellate court held that the cautionary principle identified in Asda (to "err on the side of under-compensation") is not a rule to be applied as a matter of law, relying on Britned which disapproved it. The trial judge had quoted and said he applied the cautionary approach; the appellate court treated his stated use of that approach as an error of principle to the extent it affected his numerical conclusions.
B. Overcharge assessment — models, proxies and time-lags
The court reviewed the trial judge's careful engagement with competing expert evidence. The judge had accepted a multiple regression approach advocated by Attorney Parker over the trend extrapolation proposed by Attorney Van der Laan. The court endorsed the judge's preference for a multiple regression model and his acceptance of semiconductor prices as the best available proxy for demand, while recognising a limited endogeneity risk and limited post-cartel price persistence. The trial judge accepted Attorney Parker's baseline results (5.7% monitors; 2.4% notebooks) but applied modest upward adjustments to account for these residual uncertainties, producing 8% monitors, 4% notebooks and 14% TVs.
The Plaintiffs argued the judge wrongly rejected models incorporating lagged prices which, they said, produced much higher overcharges. The appellate court examined the record and concluded the judge did not misunderstand the evidence on lagging; he had considered the competing expert explanations and was entitled to prefer Attorney Parker's reasons for rejecting lagged-price specifications. The court also concluded it was permissible for the judge to reject alternative proxy variables (GDP, business confidence) and not to adopt a blend of models the Plaintiffs had not advanced at trial.
However, because the judge expressly stated that he had limited the extent of his upward adjustments so as to "avoid over-compensation" (the cautionary principle now disapproved by Britned), the appellate court concluded that the judge's stated methodology had introduced the disapproved cautionary bias into his final percentages. Given that, and because the judge's footnote disclaiming conscious application of the cautionary principle did not displace his expressed reasoning, the appellate court considered it necessary to reassess the numerical adjustments itself rather than remit.
C. Downstream pass on (mitigation)
The court set out the legal test: the defence of downstream pass on requires the Defendant to prove a direct and proximate causative link between the overcharge and any increase in the Plaintiffs' downstream prices, applying indicators identified in Royal Mail but remaining a fact-specific inquiry. The trial judge examined limited documentary evidence and expert economic reasoning on pass on, considered the Plaintiffs' pricing features (psychological pricing, extended warranties, product bundles and low margins) and the market context, and concluded pass on probably lay between 50% and 100%, finally adopting a blended rate of 65%.
The Plaintiffs argued the judge failed to apply the "direct and proximate causative link" test and that available evidence did not support any pass on. The appellate court found that the judge had applied the relevant legal test (even if not in those precise words), had considered the necessary factual indicators and was entitled to reject both parties' extreme positions (0% and 100%).
Nonetheless, the appellate court concluded the trial judge again stated that he had applied the cautionary "err on the side of under-compensation" approach when selecting the 65% blended rate. Because that approach is not a correct rule of law, the appellate court considered it necessary to reassess the numerical outcome. Applying the broad-axe reasoning itself (and acknowledging limited guidance), the appellate court adjusted the pass-on figure downward from 65% to 60%.
Holding and Implications
Core Ruling: The appeal is allowed in part. The trial judge's methodology was correct in most respects, but where he expressly stated that he had applied a cautionary principle of erring on the side of under-compensation the court treated that as error and adjusted the numerical assessments.
Direct effects on the parties:
- The appellate court adjusted the overcharge percentages to: 10% for monitors, 6% for notebooks and 16% for TVs (replacing the judge's 8%, 4%, 14%).
- The court adjusted the downstream pass-on rate from 65% to 60%.
- The parties accepted that recalculation of the monetary award on those new percentage bases could be carried out straightforwardly; the appellate court directed that damages should be assessed on the revised percentages.
Implications beyond the parties: The judgment reiterates that courts must aim to assess compensation without systematic bias and that the previously cited cautionary rule (erring on the side of under-compensation) is not a rule of law to be applied as a matter of course. The decision applies existing authorities on appellate restraint and on the factual, evidence-driven test for downstream pass on; it does not purport to establish a novel legal principle beyond those conclusions.