Friday, October 31, 2008

UK judges reject claims for US style damages

According to a report by Times Online the Court of Appeal has rejected demands to award US-style damages in a recent decision.

The court upheld the principle that damages are limited to compensation for a claimant's provable losses. The judges did not agree with the claimants' demands to share their opponent's unlawfully-gained profits nor did they see it as necessary to deter other potential wrongdoers.

The verdict was reached in a case where a number of poultry farmers and animal feed producers had sued several large companies, including Sanofi-Aventis, BASF and Roche. These companies had been found guilty of breaching competition laws and had been fined 855 Mio. € for illegal price-fixing for vitamines.
The plaintiffs could not prove any financial loss, as they had passed on the supplier's high prices to their customers. Nevertheless they argued that they should receive a part of the cartel's profits. They also asked the court to award punitive damages to deter other cartels.

Both points had already been rejected by a High Court judge. He had found that the system of compensatory damages was adequate. Any demand for punitive damages were also regarded as unfair, as the cartel members had already been fined by the EU and should therfore not be punished twice.

The Court of Appeal confirmed these views. This is regarded as a blow to the government's plans to encourage British consumers and small businesses to pursue legal action against companies that breach competition law.

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