Competition and Markets Authority (Respondent) v Pfizer Inc and another (Appellants)

The Supreme Court allowed the appeal brought by Flynn Pharma Ltd and Flynn Pharma (Holdings) Ltd (Flynn) and Pfizer Inc and Pfizer Ltd (Pfizer) (the appellants) against a decision of the Court of Appeal (CMA v Flynn Pharma Ltd and another [2020] EWCA Civ 617). The appellants challenged the Court of Appeal’s decision to set aside an order of the Competition Appeal Tribunal (CAT) which had awarded the appellants a proportion of their costs of their appeal against a decision of the Competition and Markets Authority (CMA) fining them for an infringement of competition law. The CAT had awarded the appellants costs on the basis that, as the successful party, they were entitled to recover their costs of the appeal. The Court of Appeal held that the CAT had disregarded the principle that, in proceedings by or against a regulator in the exercise of its statutory functions, the default position is that no order for costs should be made against the regulator, except for good reason. The Court of Appeal substituted an order for no costs.The appellants argued that the Court of Appeal had erred in concluding that there was such a principle. They argued that the only principle was that, in exercising its discretion, a court or tribunal should take into account the risk that there will be a chilling effect on the conduct of the public body if costs orders are routinely made against it in those kinds of proceedings, even where the body has acted reasonably in bringing or defending the application.The Court held that the Court of Appeal had been wrong to hold that there was a general principle that a court or tribunal exercising such a discretion should adopt as its starting point that it will not make an order for costs where the unsuccessful respondent is a public body defending a decision it has taken in the exercise of its functions in the public interest unless there is some good reason to do so; the lack of success not being of itself a good reason to depart from that starting point. The Court held that there was no generally applicable principle that all public bodies should enjoy a protected status as parties to litigation where they lose a case which they have brought or defended in the exercise of their public functions in the public interest. The principle supported by the Booth line of cases was, rather, that where a public body is unsuccessful in proceedings, an important factor that a court or tribunal exercising an apparently unfettered discretion should take into account was the risk that there will be a chilling effect on the conduct of the public body if costs orders are routinely made against it in those kinds of proceedings, even where the body had acted reasonably in bringing or defending the application. The Court held that the CAT had been entitled to apply the starting point it had established in the earlier Eden Brown decision and that the CAT’s assessment as to the appropriate starting point in Eden Brown was consistent with what the Court of Appeal said in BT v Ofcom (Business Connectivity). The CAT had undertaken precisely the task that was remitted to it by the Court of Appeal in BT v Ofcom (Business Connectivity). The Court held that the CAT was entitled to conclude that the substantive legislative framework and the applicable procedural provisions relevant to assessing the starting point in Competition Act cases did not point towards a different answer.The appeal was allowed. The Court of Appeal’s order for no costs was set aside and the CAT’s order awarding the appellants a proportion of their costs of the appeal was restored.