Goode Concrete v CRH Plc & Others (No 1)

• Jurisdiction: Ireland
• Judge: Mr. Justice Cooke
• Judgment Date: 20 January 2011
• Neutral Citation: [2011] IEHC 15
• Docket Number: [No. 10685 P./2010]
• Court: High Court
• Date: 20 January 2011

[2011] IEHC 15

THE HIGH COURT

[No. 10685 P./2010]

Goode Concrete v Cement Roadstone Holdings PLC & Ors

COMPETITION

MR JUSTICE COOKE

APPROVED TEXT

BETWEEN

GOODE CONCRETE

PLAINTIFF

AND

CEMENT ROADSTONE HOLDINGS PLC, ROADSTONE WOOD LIMITED AND KILSARAN CONCRETE

DEFENDANTS

COMPETITION ACT 2002 S4

COMPETITION ACT 2002 S5

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 101

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 102

CAMPUS OIL LTD & ORS v MIN FOR INDUSTRY & ORS (NO 2) 1983 IR 88 1984 ILRM 45

CURUST FINANCIAL SERVICES LTD & ANOR v LOEWE-LACK-WERK OTTO LOEWE GMBH & CO & ANOR 1994 1 IR 450

COMPETITION ACT 2002 S14(5)

LEANORT LTD v SOUTHERN CHEMICALS LTD UNREP HIGH 18.8.1988 (EX TEMPORE)

COMPETITION ACT 2002 S14(5)(A)

INJUNCTIONS

Interlocutory injunction

Below cost selling - Concrete sector - Whether fair issue or serious question to be tried - Whether damages adequate remedy - Evidential basis for allegation that damages not adequate remedy - Exclusively commercial loss - Whether plaintiff in position to make good undertaking as to damages - Whether any adequate proof produced - Balance of convenience - Difficulty in formulating terms of injunction - Campus Oil Limited v Minister for Energy (No 2) [1983] IR 88, [1984] ILRM 45 and Curust Financial Services Limited v Loewe-Lack-Werk [1994] IR 450 applied - Leanort Limited v Southern Chemicals Limited , (Unrep, HC, 18/9/1988,) considered - Competition Act 2002 (No 14), ss 4, 5 and 14 - Treaty on the Functioning of the European Union, articles 101 and 102 - Interlocutory relief refused (2010/10685P - Cooke J - 20/1/2011) [2011] IEHC 15

Goode Concrete v Cement Roadstone Holdings plc

Facts The plaintiff was an unlimited company engaged in the manufacture of ready-mixed concrete and related products. The plaintiff applied for interlocutory injunctions to prevent the defendants, who were competitors of the plaintiff, from allegedly engaging in the below-cost selling of concrete products. It was contended that the defendants were in breaches of the Competition Act 2002, and Articles 101 or 102 of the Treaty on the Functioning of the European Union (TFEU). The plaintiff contended that it was at imminent risk of being put out of business by the anti competitive and therefore illegal conduct of the defendants which included the alleged collusive bidding for contracts and in tendering for contracts at product prices which were below "average variable cost" of production to the defendants. The claims of the plaintiff were denied by the defendants who contended that there was no relationship of ownership, financial interdependence or of day to day cooperation between them and that, at all relevant times, they had operated only as either independent competitors or as supplier and customer.

Held by Cooke J in refusing the relief sought. The evidential basis did not exist in this case for concluding that damages would not be an adequate remedy for the plaintiff if the injunction was refused. The claim for urgency for interlocutory relief was made without any evidential basis being laid in the affidavit evidence by way of substantiation of the current financial position of the plaintiff or the nature or extent of the financial difficulties it claimed to face. It had not been established that the particular circumstances of the relevant markets were such as would render it impossible to arrive at a reasonable assessment of damages should the plaintiff succeed and no injunction having been granted. If the plaintiff were to obtain an injunction pending the hearing it would be required to give an undertaking as to damages. Having regard to its own evidence as to its precarious financial position and assertion that it might soon go out of business, the Court could not conclude that it would be in a position to make good its undertaking as to damages should the injunction be granted in the absence of any indication as to how the undertaking would be secured.

Reporter: R.F.

Mr. Justice Cooke

1 On the 26^th November, 2010, the plaintiff applied by notice of motion to this Court for a series of interlocutory injunctions, the essential purpose of which is to prevent the defendants, pending the trial of this action, from selling or offering to sell certain products in the concrete and cement sector at allegedly below-cost prices in breach of ss. 4 or 5 of the Competition Act 2002, and Articles 101 or 102 of the Treaty on the Functioning of the European Union (TFEU).

2 The plaintiff is an unlimited company engaged in the manufacture and supply of materials to the construction industry, particularly ready-mixed concrete and related products.

3 The first named defendant (more correctly designated, the Court believes, as "CRH plc",) is the holding company of a major commercial group and one of Ireland's largest publicly quoted enterprises. Many of its numerous subsidiaries are also engaged in this sector in the State or internationally. The second named defendant is one of those subsidiaries and is engaged in the manufacture and supply of cement, concrete and related products and is thus a competitor of the plaintiff. (The first and second named defendants are referred to jointly as "CRH".) The third named defendant ("Kilsaran",) which is an unlimited company is also engaged in this trade and is also a competitor of the plaintiff.

4 Although the issues raised in this application involve a number of related products, the case is primarily concerned with the production and supply of ready-mixed concrete which is used in building construction and is supplied in various grades, particularly in the grade described as "35 Newton" (35N). Most of the figures for price and market shares canvassed in this application are based mainly on that product and on that grade in particular.

5 It is an acknowledged characteristic of that product market that its geographic market can be defined with reasonable precision. It does not appear to be disputed that ready mixed concrete must be produced, delivered and used in place within about two hours of manufacture. Thus the geographic market is defined by a transportation radius by lorry delivery from the point of production. In effect, for these parties the geographic market is the greater Dublin area, based upon the 2 hour radius of delivery distances from the production plants of the operators in that market.

6 The claim made by the plaintiff as the basis for the interlocutory relief sought is that it is at imminent risk of being put out of business as a competitor in that market by the anti competitive and therefore illegal conduct of the defendants. The allegation is that they, as the main operators in that geographic market for those products, have combined to eliminate the plaintiff by means of secret ownership of Kilsaran by CRH, or by their collusive bidding for contracts; or by dint of the "collective dominance" of the three defendants in tendering for contracts at product prices which are anti competitive because they are well below cost and particularly below "average variable cost" of production to the defendants.

7 It appears also to be an accepted characteristic of this market that the major part of the turnover of the undertakings concerned is made up of sales of product to development projects and construction sites on the basis of supply contracts concluded through tender procedures. This part accounts, according to the plaintiff, for approximately 80% of sales in this market.

8 In the main grounding affidavit of Peter Goode, managing director of the plaintiff, detailed information and statistics are furnished in relation to the structure, volumes and other characteristics of the related markets in cement, aggregates and concrete. It seems likely, (although no finding on this point is called for in the present application), that CRH plc is an undertaking with the dominant position in the cement market in the State, through its wholly owned subsidiary Irish Cement Limited (which is not a party to this proceeding,) because it enjoys a market share of at least 70% and possibly as much as 90% while the only other producers of cement have market shares in single figures. The position of CRH in the aggregates market appears to be similar. The present application is not directly concerned with either of those markets, but such a position of dominance in the cement market may well be of relevance to the evaluation of dominance in the concrete market given that cement is an indispensable ingredient of concrete products.

9 The market in respect of which the injunctive relief is claimed is that of ready-mixed concrete and in his grounding affidavit, Mr. Goode suggests that the market shares of the main undertakings in the greater Dublin area are as follows:

COMPANY	2008	2009	2010
CRH/Roadstone	23%	29%	36.5%
Kilsaran	30%	30%	37%
Cemex	17%	16%	15%
Goode	15%	14%	5.5%
Keegan	8%	7%	3%
CPI	3%	2%	1.5%
Others	4%	2%	1.5%
Total	100%	100%	100%

10 It is not obvious or inevitable therefore that either CRH or Kilsaran individually occupies a dominant position in the relevant market on the basis of those market shares only. The plaintiff nevertheless alleges that CRH and Kilsaran together occupy a position of dominance. This is based first on the claim that Kilsaran is in fact secretly owned or controlled by CRH and secondly on the proposition that a position of joint dominance between them exists based on some unspecified form of financial interdependence or assistance between them. Alternatively, it is suggested that by their positions and conduct in the market they fall to be construed as having a "collective dominance".

11 It must immediately be said that these claims and assertions as to the existence of...