[2025] UKUT 00138 (LC)

We look at market share in two stages. We address first the claimant’s argument that the MGV in the 2012 contract (of 250,000 per annum) applied to the extensions to that contract and to the short-term contracts that followed it, and that it would have applied likewise in the no scheme world. This is a question primarily of construction of the 2012 contract and the extension and short-term contracts.

The MGV in the 2012 contract was expressed simply as follows: “Network Rail shall purchase a minimum of 250,000 sleepers per annum”. That term is set out along with prices, and the price banding terms we explained above at paragraph 21.

As to the agreements made for the period beyond 31 March 20197we have copies only of two documents. The first is the second one-year extension, dated 23 May 2018; under the heading “Description of change” it said:

“1.

Extension to the Cemex contract for a further 12 months to end 31st March 2019.

2.

Reduction in scope of supply during this period and price increase requested by Cemex….”

The document went on to set out in more detail the changes that it effected, and referred to NR’s need to continue stockpiling and its requirement of “further volume from Cemex than originally anticipated.” It is not clear what that means. On the following page is a table of prices and estimated volumes which appears to say that the volume required was estimated to be 128,900 sleepers, well below the MGV; in light of that, the reference to “further volume” earlier in the document does not appear to be to an increase in production, but rather to a continuation of production where none had been anticipated. In fact, we know from Cemex’s sales data (Table 2 above at paragraph 63) that the claimant sold 222,881 sleepers to NR in 2018/19, well above 128,000 but still below the MGV.

The other copy agreement we have is a two-page document headed “Contract Variation Proforma”, dated 18 January 2019. It states:

“There are 3 parts to this variation:

1.

Extension to the Cemex contract to manufacture sleepers for 10 weeks from 1/4/19 to 14/6/19.

2.

Sleeper pricing, profile and volumes from 1/4/19 to 14/6/19.

3.

Pricing for sleepers produced and/or dispatched from 01/02/19 to 31/03/19.”

The document goes on to set out prices and payment terms, and then states that a total of 68,160 sleepers will be produced during the 10 weeks following 1 April 2019 (equivalent to about 340,000 over a year).

What we can see from these two documents is that volume and pricing was agreed afresh on each occasion. On ordinary principles of contract law we see no reason why the MGV in the 2012 contract should have applied automatically to the extensions or the short standalone contracts. The MGV is not expressed in the 2012 contract to be something the extensions have to include; and we can see from the two documents we have that the parties were free to make a new deal about price and volume. These are short-term agreements, entered into if and only if NR so required; it would make no sense for its choice to be restricted by an MGV agreed five years earlier. Just as the extension contract was an opportunity to renegotiate the price (as Mr Jarvis agreed, and as we can see did happen) so it was an opportunity to renegotiate volume (and we can see that sales fell below that volume in 2018/19 without any suggestion of any penalty for NR). We find that the extension contracts, and the short-term contracts that followed the extensions, were not subject to the MGV.

That means that in the no scheme world, as in the real world, the claimant’s share of the reduced market in sleepers during this period was for NR to determine, one extension or contract at a time, and it would have depended partly on the location of the work that needed to be done to the track but also, crucially, on price.