First award of damages made for breach of competition law

06/07/12

In its judgment in the case of 2 Travel v Cardiff Bus, the Competition Appeal Tribunal has made the first award of damages for breach of competition law in the UK.

The Claimant, 2 Travel, began running ‘no-frills' bus services in Cardiff in 2004. In response the Defendant, Cardiff Bus, which is the incumbent bus operator in Cardiff, began running its own ‘no-frills' services (known as the ‘white buses') on the same routes. After a few months, 2 Travel left the Cardiff market, and shortly thereafter it became insolvent. In a 2008 Decision, the OFT held that the white buses had been operated at a loss, with the intention of excluding 2 Travel from the market, and that they amounted to an abuse of Cardiff Bus's dominant position. No fine was imposed as Cardiff Bus benefited from immunity from fines due to its low turnover.

2 Travel's liquidators then claimed damages in a follow-on action before the CAT. In the proceedings 2 Travel alleged that the infringement had resulted in its insolvency and claimed damages of tens of millions of pounds.

In its judgment, the CAT held that the white services had resulted in lost revenues to 2 Travel and awarded compensatory damages of £33,000. However, the CAT rejected the claim that the infringement had caused 2 Travel's insolvency, holding that the company would have become insolvent when it did in any event, due to its own mismanagement and weak financial position. In the event, therefore, 2 Travel was unsuccessful as to the overwhelming majority of the claim pursued. The total amount claimed at various times in the case varied, and was at one time in the order of £50m, but was just over £20m at the time of trial.

The CAT also awarded exemplary damages of £60,000, holding that Cardiff Bus knew that its conduct was probably unlawful, and that its claim that the white services had been operated as a market test was untrue.

The judgment is here.