The Supreme Court will rule tomorrow on an appeal by fruit importer Fyffes against the High Court's dismissal of its mammoth "insider trading" action against industrial holding group DCC, writes Arthur Beesley, Senior Business Correspondent
Fyffes share price came under pressure for separate reasons yesterday, losing 7.2 per cent to close at 84 cent following news that the company had received a "statement of objections" from the European Commission over its role in an alleged cartel.
The group said it had fully complied with the commission's requests for information.
The multimillion euro legal confrontation with DCC has been ongoing since early 2002, when Fyffes sued DCC over the sale of its 10 per cent stake in the fruit group in February 2000. DCC received €106 million for its Fyffes shares, yielding a €85 million profit. The case ran for 87 days in the High Court in 2005.
The ruling tomorrow follows a five-day hearing last month in which Fyffes sought to overturn Ms Justice Mary Laffoy's rejection of its claim for €85 million in compensation from the DCC transaction.
Ms Justice Susan Denham presided over the five-judge Supreme Court. At issue in the appeal is whether Ms Justice Laffoy was correct in her ruling that DCC chief Jim Flavin was not in possession of price-sensitive information about Fyffes' trading at the time of the sale of DCC's stake in the business.
Mr Flavin was then a director in Fyffes, and he had trading reports for November and December 1999 that indicated a negative performance in the first-quarter of the 2000 financial year.
The Supreme Court must also decide whether the lower court was correct in holding that Fyffes' own conduct in relation to how it dealt with the same information was relevant to the issue of price sensitivity.
The two sides are also divided over whether Ms Justice Laffoy should have considered the impact of a Fyffes profit warning on March 20th, 2000, when assessing whether the information available to Mr Flavin was price sensitive.
Ms Justice Laffoy found Mr Flavin did "deal" in the Fyffes shares and effectively controlled the whole process, but did not do so unlawfully. She ruled there was "a fundamental incongruity" between Fyffes' own conduct in early 2000 and its claim that Mr Flavin had price-sensitive information.
Fyffes said in its appeal that the insider-dealing laws were enacted to achieve equality in the market. It argued that Mr Flavin had a significant advantage over other investors in making the transaction.
DCC said it had "never occurred" to Fyffes that Mr Flavin had price-sensitive information or that the information warranted disclosure to the stock market because the information was not price sensitive.
