European briefing

Inntrepreneur Pub Co (CPC) v Crehan [2006] UKHL 38 has a long history. The basic facts were simple. Mr Crehan entered into agreements with Inntrepreneur (a company formed to facilitate the merger of the tied estates of Courage and Grand Metropolitan) in 1991. He ran two pubs in Staines. The venture was unsuccessful. When Crehan was sued by Inntrepreneur for arrears, he argued that the tying obligations in his leases were contrary to Art 81, EC, and claimed damages.

Inntrepreneur argument

Inntrepreneur took the point that if the agreements were unlawful, then Crehan himself was party to them, and could not recover damages for his own wrong. That contention initially found favour with English judges, but was ultimately rejected by the ECJ in Case C'“453/99 Courage [2001] ECR I-6297. After a long trial, Park J held that the beer ties had caused Crehan's business to fail, so that if the agreements were contrary to Art 81, EC substantial damages were due ([2003] EWHC 1510 (Ch), [2003] EuLR 663). But he held that the agreements had not infringed Art 81. He did not consider that the state of the UK market in 1991 was such that the networks of tied houses then operated substantially foreclosed competition, as Case C'“234/89 Delimitis [1991] ECR I'“935 requires.

In reaching that conclusion, Park J differed from the view taken by the Commission in other cases involving UK tied estates. The Commission, however, had never taken a decision about Inntrepreneur's particular agreements, and Park J considered that he should form his own view on the evidence before him. The Court of Appeal ([2004] EWCA Civ 637, [2004] EuLR 693 '“ see Solicitors Journal, (2004) SJ 148, 656, 04.06.04) considered that Park J had made a mistake in not deferring to the views expressed by the Commission on that issue, albeit in other cases. The uniform application of competition law, in its view, required very great respect to be shown to the decisions of the Commission on those matters. It accordingly awarded damages. Inntrepreneur appealed to the House of Lords, which has unanimously allowed the appeal.

Lords: not bound by European Commission

The speeches in the House of Lords conceptualise the circumstances in which the Commission's finding on an issue of competition law will be binding on a national court in terms redolent of issue estoppel. A decision will, on this view, be binding if either:

(a) it applies competition law to the very agreements with which the national court is concerned; or

(b) the national court is being asked to make a decision that might be directly contrary to a decision in relation to particular agreement.

In the first case, the legal and factual circumstances of the two cases are 'completely identical'. An example would be the case where both the Commission and the national court examine the validity of the same agreements between the same parties. In the second case, although the legal and factual issues are not identical, the practical effect of the court's judgment may be to prevent the enforcement of a Commission decision. An example would be where the national court is being asked to enforce an agreement by injunction, while the Commission is considering the validity of an amended version of that agreement between the same parties. If the national court were to enforce the original agreement, that might directly conflict with a decision by the Commission that the amended agreement is void.

The House of Lords did not consider that either of these situations applied in Crehan. The Commission had taken decisions between different parties on a factual issue that also arose between Crehan and Inntrepreneur, and the judge's findings were inconsistent with that decision. But the decisions were not incompatible in either of the narrow senses identified above: the Commission had taken no decision about Inntrepreneur's contracts, and by enforcing Inntrepreneur's contracts, the court would not be enforcing the contracts of any other landlord. The task of the judge, therefore, was to make up his mind on the fundamental issues based on the evidence, factual and expert, that he had heard. Any other approach would, their Lordships felt, have been unfair to the parties, and inconsistent with the role of the national judge in making findings of fact and law as to the domestic application of Art 81.

Fairness or incoherence?

The decision is driven by concerns for certainty, clarity and fairness. There is something nebulous in the idea that Commission decisions about the application of Art 81 to contract X might be binding on a national court deciding an issue about contract Y, neither of whose parties participated in the original decision. But if a decision is not binding, what is it? Conceptions of 'deference' or 'respect' are unattractively woolly when what is at stake are private rights.

Nevertheless, the ultimate result does and should give rise to great concern. Judges are not economically expert: the Commission is. Judges are not, for the most part, intimately familiar with competition law and policy: the Commission is. The adversarial process, especially when dealing with complex expert questions, does an expensive and poor job in resolving the sort of questions with which competition law deals. It is also badly one-sided when one is pitting a relatively under-resourced person against a fantastically well-resourced undertaking. That the judge in Crehan reached a result that the Commission would clearly have rejected, and had clearly rejected, ought to be a source of very great concern for the coherence of Community competition policy and its effective enforcement in national courts