Iiyama (UK) Ld ) & Ors v Samsung Electronics Co Ltd & Ors [2016] EWHC 1980 (Ch)

[2016] EWHC 1980 (Ch)Case No HC-2014-001980
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice,, Rolls Building, Fetter Lane,Date 29/07/2016
London, EC4A 1NL
Before
MR JUSTICE MORGAN
Between
(1) IIYAMA (UK) LIMITEDClaimants(2) IIYAMA DEUTSCHLAND GMBHClaimant(3) IIYAMA BENELUX BVClaimant(4) IIYAMA POLSKA SP ZOOClaimant(5) IIYAMA FRANCE SARLClaimant(6) MOUSE COMPUTERS CO LIMITEDClaimant(1) SAMSUNG ELECTRONICS CO LIMITEDDefendants(2) SAMSUNG ELECTRONICS LIMITEDDefendant(3) SAMSUNG ELECTRONICS (UK) LIMITEDDefendant(4) SAMSUNG SEMICONDUCTOR EUROPE LIMITEDDefendant(5) LG DISPLAY CO LIMITEDDefendant
Neil Calver QC and Colin West (instructed by Stewarts Law LLP) for ClaimantsJames Flynn QC, Paul Stanley QC and Robert O’Donoghue (instructed by Covington & Burling LLP) for First to Fourth DefendantsDaniel Piccinin (instructed by Cleary Gottlieb Steen & Hamilton LLP) for Fifth DefendantHearing Hearing dates: 25 th and 26 th May 2016
Judgment

Introduction

[1]In these proceedings, the Claimants claim damages for alleged infringements of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) and/or of Article 53 of the Agreement on the European Economic Area (“the EEA”) and/or of Chapter I of the Competition Act 1998.[2]Amongst other things, Article 101 of the TFEU prohibits price-fixing cartels “which have as their object or effect the prevention, restriction or distortion of competition within the internal market”. Article 53 of the Agreement on the EEA similarly prohibits price-fixing cartels in so far as they affect competition in the territory covered by the Agreement on the EEA and trade between the Contracting Parties to that Agreement. Chapter I of the Competition Act 1998 is in similar terms to Article 101 of TFEU, save that it is expressed by reference to trade and competition within the United Kingdom.[3]The matters complained of by the Claimants are the subject of a Decision of the European Commission dated 8 December 2010, having the reference COMP/39.309 – LCD – Liquid Crystal Displays. In this judgment, I will refer to Liquid Crystal Display panels as “LCDs”. In summary, the Commission found that a number of persons had infringed Article 101 of TFEU and Article 53 of the Agreement on the EEA. The Commission held that the relevant persons had entered into a world-wide price fixing cartel in relation to LCDs and had implemented that cartel within the EU and within the EEA, that is to say, within the territorial scope of Article 101 of TFEU and of Article 53 of the Agreement on the EEA. The First and Fifth Defendants were addressees of this decision. The present claim against the Defendants is pleaded as a follow on claim, alternatively, as a stand-alone claim for damages for infringement of these Articles.[4]As will be seen, an issue which I will need to consider relates to the territorial scope of these provisions for the purposes of the claims made in these proceedings. It is common ground that the general principles to be applied to Article 101 of the TFEU and to Article 53 of the Agreement on the EEA are the same and that the references in the claim to the Competition Act 1998 do not add anything which needs to be separately considered. Accordingly, when I consider the territorial scope of these Articles, I will refer to Article 101 alone. Since I will refer to Article 101 alone, I will also refer only to the EU and not also to the EEA. However, it is to be understood that what is said in relation to Article 101 and the EU applies equally to Article 53 and the EEA.[5]The principal issues which I will need to address in this judgment are the following:(1) is the claim against any of the Defendants within the territorial scope of Article 101?(2) if the claim against any of the Defendants is within the territorial scope of Article 101, has the loss claimed by any of the Claimants been caused by an infringement of Article 101, having regard to that territorial scope?(3) do any of the Claimants have a claim against any of D2 to D4, companies incorporated in England and Wales and therefore within the jurisdiction of this court?(4) does the court have jurisdiction over D1 and D5, companies incorporated in South Korea?(5) should the court exercise jurisdiction over D1 and D5?

The parties

[6]The Claimants are companies within the iiyama group of companies. The iiyama group is involved in the manufacture and distribution of iiyama brand products, including LCD televisions and LCD computer monitors.[7]The First Claimant (“C1”) is incorporated in England and Wales. The Second Claimant (“C2”) is incorporated in Germany. The Third Claimant (“C3”) is incorporated in the Netherlands. The Fourth Claimant (“C4”) is incorporated in Poland. The Fifth Claimant (“C5”) is incorporated in France. C1 to C5 are the main European subsidiaries of the iiyama Group. The Sixth Claimant (“C6”) is incorporated in Japan. C6 was not involved in the matters the subject of the claim until 1 May 2006. Before that date, C6’s role was performed by iiyama Corporation (“Corporation”), another Japanese company. Corporation is not a party to these proceedings. Although the relationship between Corporation and C6 is somewhat confusingly described in the pleadings and in the skeleton arguments, the Claimants have now confirmed that no claim is pursued in these proceedings for any losses allegedly suffered by Corporation.[8]The First Defendant (“D1”) is incorporated in South Korea and is the parent company of the Second, Third and Fourth Defendants (“D2”, “D3” and “D4”, respectively). D2, D3 and D4 are incorporated in England and Wales and are wholly owned subsidiaries of D1.[9]The Fifth Defendant (“D5”) is incorporated in South Korea.

The procedural history

[10]The Claim Form in these proceedings was issued on 19 December 2014. The Particulars of Claim are dated 14 April 2015. On 17 April 2015, the Claim Form and the Particulars of Claim were served on D2, D3 and D4 within the jurisdiction.[11]On 11 May 2015, the Claimants applied for permission to serve the Claim Form and the Particulars of Claim on D1 and D5 out of the jurisdiction. That application was supported by two witness statements both dated 11 May 2015 from the Claimants’ solicitor, Mr Campbell. The application was placed before Master Price for consideration on the papers and, on 13 May 2015, the Master granted the Claimants permission to serve D1 and D5 out of the jurisdiction and extended the time for service on them to 19 October 2015. The proceedings were then served on D1 and D5.[12]On 12 June 2015, D2 to D4 served their Defence to the claim.[13]On 22 September 2015, D1 applied for an order declaring that the court had no jurisdiction in relation to the claim against it or that the court should not exercise any such jurisdiction against it and for the Claim Form and the Order of 13 May 2015 to be set aside as against it. In the application notice, D1 contended that the claim against it did not fall within any relevant gateway for the court’s jurisdiction and that permission to serve out on it should not have been granted because the courts in England and Wales were not the appropriate forum for the claim.[14]Also on 22 September 2015, D2 to D4 applied for orders that the Claim Form and Particulars of Claim be struck out as against them pursuant to CPR 3.4(2)(a) alternatively that they be granted summary judgment pursuant to CPR 24.2(a)(i).[15]On 2 October 2015, D5 made a similar application to that made by D1 on 22 September 2015. D5 has also raised the contention that the order of 13 May 2015 should be set aside on the ground that there had been material non-disclosure by the Claimants on their ex parte application to the Master for permission to serve out of the jurisdiction.[16]On 8 February 2016, the Claimants served their Reply to the Defence of D2 to D4.[17]On 4 May 2016, the Claimants applied for permission to amend the Particulars of Claim in accordance with a draft Amended Particulars of Claim.

The Commission Decision

[18]The Commission Decision of 8 December 2010 is a lengthy document. The Claimants are in possession of a redacted version of this document. The redactions were made on the grounds of confidentiality. The document starts with a lengthy section containing many paragraphs of recitals, followed by the operative parts of the decision which are contained in four Articles.[19]By Article 1 of the decision, it was determined that a number of named persons, including D1 and D5, had infringed Article 101 of TFEU and Article 53 of the Agreement on the EEA by participating in a single and continuous agreement and concerted practice in the sector of LCDs for TV, notebook and monitor application. In the case of both D1 and D5, the period of infringement was stated to be from 5 October 2001 to 1 February 2006. By Article 3 of the decision, the undertakings listed in Article 1 were directed immediately to bring to an end the infringement referred to in Article 1, in so far as they had not already done so. Article 4 identified the persons to whom the decision was addressed and these included D1 and D5.[20]For present purposes it is sufficient to give a highly abbreviated summary of the recitals in the decision. In what follows, numbers in square brackets are the paragraph numbers of the recitals. The decision includes the following findings:(1) the suppliers of LCDs and their major customers are global actors; LCD panels are sold world-wide and prices are set on a world-wide basis: [48];(2) from October 2001 to January 2006, LCD panels were sold directly by the addressees of the decision to customers in the EEA (Direct EEA Sales): [49];(3) a number of panels were incorporated and transformed in the final IT and TV products for sale in the EEA by the addressees and/or their subsidiaries (Direct Sales through Transformed Products); this was particularly the case in relation to Samsung which owned and supplied factories in the EEA which later distributed the final products mostly within the EEA: [50];(4) in addition, LCD panels produced by the addressees could also be purchased by customers in the EEA as part of IT and TV final products sold in the EEA by third parties (Indirect Sales): [51];(5) the parties to the infringement engaged in bilateral and multilateral meetings and other contacts in relation to LCD panels for IT and TV applications from 5 October 2001 until at least 1 February 2006: [70];(6) anti-competitive practices included price-fixing at world-wide and EEA level, directly or indirectly, and were not restricted to specific geographic or shipment destinations: [72];(7) the agreement between the cartelists did not target any specific geographic area; participants were aware of and sought effects on the European market: [94];(8) the arrangements applied at world-wide level and therefore covered the entire EEA territory and were therefore liable to affect competition in the whole of the internal market and the territory covered by the EEA agreement: [228];(9) the application by the EU of its competition rules is governed by the territoriality principle as a universally recognised principle of international law: [230];(10) in determining the territorial scope of Article 101, the decision of the Court of Justice in Ahlström Osakeyhtiö v Commission, (“Woodpulp I”) [1988] ECR I-5913 established that the decisive factor was whether the relevant arrangement or practice was implemented within the territory of the EU: [230];(11) the test in Woodpulp I was supplemented by the decision of the General Court in Gencor Ltd v Commission (“Gencor”) [1999] ECR II - 753, a decision on the first Merger Regulation on the control of concentrations between undertakings, which established that those rules applied if the conduct at issue had immediate, foreseeable and substantial effect in the EU: [231];(12) the relevant agreements related to the world-wide sales of LCD panels, without geographical limitations, affecting prices globally; the agreement related to direct sales of LCD panels to undertakings seated in the EEA and Europe was also targeted by substantial indirect sales in which the parties had a very high joint market share: [235];(13) applying the test in Woodpulp I, the agreements and practices were implemented in the EEA by direct sales into the EEA: [236];(14) the participants in the cartel sought to implement their agreement and to have effect within the EEA, even if the negotiation of the price took place outside the EEA: [237];(15) further, the test in Gencor was satisfied in that the Direct EEA Sales and the Direct EEA Sales through Transformed Products had foreseeable, immediate and substantial effect with the EEA: [238];(16) the Commission had jurisdiction to apply both Article 101 of the TFEU and Article 53 of the Agreement on the EEA: [243];(17) Article 101 of the TFEU and Article 53 of the Agreement on the EEA had been infringed: [273];(18) the arrangements had an appreciable effect on trade between Member States and between contracting parties to the EEA Agreement: [321];(19) D1 was fully aware and regularly involved in the everyday conduct of its subsidiaries: [351]; [the Claimants have obtained an unredacted version of this paragraph and the unredacted version refers to D1 setting the prices for its subsidiaries];(20) the Samsung subsidiaries were dependent on their headquarters in relation to the prices charged and the Samsung group as a whole must be considered as a single economic undertaking for the purposes of Article 101: [352]; [again, the Claimants have obtained an unredacted version which provides more detail in this respect];(21) it was appropriate to set the starting date for the arrangements as 5 October 2001: [368];(22) the end date of the infringement should be taken (in respect of D1 and D5) as 1 February 2006: [369];(23) given the secrecy with which the cartel arrangements were carried out, it was not possible to declare with absolute certainty that the infringement had ceased so that it was necessary to require the addressees to bring the infringement to an end, if they had not already done so: [373];(24) in determining the basic amount of the fine to be imposed, the Commission started with the value of the undertaking’s sales of the goods or services to which the infringement directly or indirectly related in the EEA: [379];(25) the sales of LCD panels directly or indirectly concerned by the infringement in the EEA were Direct EEA Sales, Direct EEA Sales Through Transformed Products and Indirect Sales (in the latter case, the value of the LCD panels sold by one of the addressees of the decision to another undertaking outside the EEA, which would then incorporate the panels into final IT or TV products and sell them in the EEA): [380];(26) for the purpose of establishing the value of sales in this case, the relevant EEA turnover consisted of those sales where the first real sale of the LCD panel, as such or in a final IT or TV product, was made into the EEA by one of the addressees of the decision; although the Indirect Sales referred to above could have been included, this was not to be done in this case as sufficient deterrence was achieved without including them: [381];(27) the value of the LCD panels delivered into the EEA should be taken into account: [383];(28) D1 was granted immunity from the fines otherwise appropriate: [459];(29) D5’s fine was reduced by 50%: [463].[21]Some of the addressees of the Commission Decision have appealed against some of the findings in of Commission Decision. D5 appealed to the General Court and from there to the Court of Justice of the European Union (CJEU). It is not necessary for the purposes of my judgment to describe the issues raised in those appeals nor the decision of the courts. Another addressee of the Decision, Innolux, also appealed to the General Court and to the CJEU but, again, it is not necessary to describe the issues in those appeals nor the decisions of the courts.

D2 to D4’s applications

[22]D2 to D4 have applied to strike out the claim against them under CPR 3.4(2)(a) on the ground that the pleaded case against them does not disclose reasonable grounds for bringing the claim. D2 to D4 have also applied for reverse summary judgment under CPR 24.2(a)(i) on the ground that the Claimants have no real prospect of succeeding on their claim and under CPR 24.2(b) on the ground that there is no other compelling reason why the claim should be disposed of at a trial rather than at a summary stage. As the application for summary judgment allows the court to consider wider considerations than an application to strike out the claim, in practice, I need only consider whether the Claimants’ claim has a real prospect of success.[23]The test to be applied when considering, for the purposes of CPR 24, whether a claim has a real prospect of success is very well known and was not in dispute in this case. In summary:(1) a “real” prospect is to be distinguished from a fanciful prospect;(2) a case has a real prospect of success where the allegations carry some degree of conviction and go beyond allegations which are merely arguable;(3) the court should not conduct a mini-trial in relation to matters of disputed fact;(4) the court should have regard not only to the evidence before it on the application for summary judgment but also the evidence which can reasonably be expected to be available at trial;(5) some disputes of law can be suitable for summary determination, particularly where it is possible to say that the point of law is a bad one; the sooner that can be said the better;(6) claims under Article 101 require scrutiny so as to prevent cases lacking in merit going forward to long and expensive trials;(7) claims under Article 101 can raise questions of mixed law and fact that are not suitable for summary determination;(8) the court should be cautious about giving summary judgment in relation to a claim under Article 101 where the jurisprudence of the CJEU is in the course of development;(9) there can be a compelling reason for a trial where there are matters which ought to be investigated.

General principles as to the territorial scope of Article 101

[24]In its decision, the Commission referred to Woodpulp I and Gencor. In Woodpulp I, the Court of Justice recognised that there were territorial limits on the scope of Article 101. It laid down a test to determine when cartel conduct outside the EU could be held to give rise to an actionable infringement of Article 101 within the EU. The central passages in the reasoning of the court are at paragraphs [16] to [18] of its judgment, as follows:
“16. It should be observed that an infringement of Article [101], such as the conclusion of an agreement which has had the effect of restricting competition within the common market, consists of conduct made up of two elements, the formation of the agreement, decision or concerted practice and the implementation thereof. If the applicability of prohibitions laid down under competition law were made to depend on the place where the agreement, decision or concerted practice was formed, the result would obviously be to give undertakings an easy means of evading those prohibitions. The decisive factor is therefore the place where it is implemented. 17. The producers in this case implemented their pricing agreement within the common market. It is immaterial in that respect whether or not they had recourse to subsidiaries, agents, sub-agents, or branches within the Community in order to make their contacts with purchasers within the Community. 18. Accordingly the Community's jurisdiction to apply its competition rules to such conduct is covered by the territoriality principle as universally recognized in public international law.”
[25]In the present case, it was agreed that if a cartel is “implemented” in the EU, then there is an infringement of Article 101.[26]The Gencor case did not concern Article 101 or its predecessors. Instead, the issue in that case was whether the Commission had jurisdiction under the Merger Regulation (4064/89) in relation to a proposed merger of groupings of companies, all of whom (bar one) were incorporated outside the then EC. The Commission decided that the merger would create an anti-competitive duopoly in platinum and rhodium so that the effect of the merger would impede competition in the common market. The addressees of the decision challenged the decision in the Court of First Instance on the ground that the Commission had not observed the restrictions on its jurisdiction which arose from the principles of territoriality and comity. The concentration in that case was to be carried out in South Africa. When assessing the arguments as to the territorial scope of the relevant provisions, the Court did not consider that the addressees’ challenge to the Commission Decision was advanced by reliance on Woodpulp I because the test of “implementation” within the EC would appear to be satisfied in a case where the relevant companies had sold, and would continue to sell, into the EC. Then at [90], the Court added:
“90. Application of the Regulation is justified under public international law when it is foreseeable that a proposed concentration will have an immediate and substantial effect in the Community.”
[27]The statement in [90] of the judgment in Gencor is sometimes described as identifying a test of “qualified effects”. There is room for argument whether there are now two tests for the territorial scope of Article 101, i.e. the “implementation” test in Woodpulp and the “qualified effects” test from Gencor. It is open to argument that there remains a single test, i.e. the “implementation” test. However, it was not suggested by the Defendants in the present case that I should attempt to determine that matter on these applications and, instead, the Defendants accepted that I should proceed on the basis of the possibility that the territorial scope of Article 101 was satisfied if either the “implementation” test or the “qualified effects” test was satisfied.[28]Shortly before the hearing of the present applications, Mann J handed down a judgment which considered in detail the question of the territorial scope of Article 101: iiyama Benelux BV v Schott AG [2016] EWHC 1207 (Ch). As it happens, the Claimants in that case are the same as the Claimants in the case before me. Further, the Defendants in that case included what appear to be associated companies of D1 and D5 in the case before me. Yet further, the claim for damages was based on the findings in two Commission Decisions and one of those Decisions contained detailed findings and reasoning much of which follows a pattern similar to the pattern of the Commission Decision relating to LCDs.[29]I can summarise the essential reasoning of Mann J in relation to the territorial scope of Article 101 as follows (references to numbers in square brackets are to the paragraphs of his judgment):(1) Article 101, which expressly refers to a cartel which has as its object or effect competition within the internal market, is set out at [3];(2) there are territorial limits on the scope of Article 101: [110];(3) the leading authority as to the territorial scope of Article 101 is Woodpulp I: [114]-[118];(4) cartelists cannot avoid an infringement of Article 101 merely by entering into the relevant agreement outside the EU: [115];(5) the decisive matter is whether the cartel is implemented in the EU: [116];(6) if the cartel, wherever made, is implemented in the EU then Article 101 is infringed: [116];(7) there is room for discussion as to what amounts to implementation; direct sales into the EU are a way of implementing in the EU a cartel wherever made: [119];(8) there is no decision that the concept of implementation is wider than the normal meaning of that word: [120];(9) sales by cartelists outside the EU are not an implementation within the EU: [140];(10) even if sales outside the EU have an indirect effect (an “end of the road effect”) within the EU, those sales are not an implementation of the cartel within the EU: [140];(11) Gencor was a case about a proposed merger: [122];(12) Gencor referred to it being “foreseeable that a proposed concentration will have an immediate and substantial effect in the Community”: [125];(13) there is room for debate whether the formulation in Gencor was a different test from the implementation test or whether it was a justification for imposing a duty under Article 101: [127] and [131];(14) if the Gencor formulation did identify a test which was different from the implementation test, then there was no sign of an even wider test as to the territorial scope of Article 101: [130];(15) if the Gencor test is different from the implementation test, then whilst there might be room for argument on the facts of a case whether the effect was foreseeable or substantial, the effect must be “immediate”: [143];(16) the reference to “immediate” does not extend to “knock on” effects e.g. from direct sales outside the EU: [148].[30]In the case before Mann J, the Claimants claimed damages because the cartelists had made sales at cartel prices which contained an element of overcharge made possible by the existence of the cartel and the overcharge was passed on to the Claimants. However, Mann J rejected these claims because:(1) the cartel in question was entered into outside the EU;(2) the sales which involved the overcharge were outside the EU;(3) sales outside the EU were not the implementation of the cartel in the EU;(4) accordingly, those sales were not an infringement of Article 101;(5) the effect of those sales in the EU was not an immediate effect (if one were to apply the test in Gencor).[31]The Claimants argued that the above principles as to the territorial scope of Article 101 only applied to cases of public enforcement (for example by the European Commission) of Article 101 and did not apply to cases of private claims for damages suffered by reason of the operation of the cartel. The Claimants did not put forward any persuasive arguments in support of that contention and I do not accept it.[32]The Defendants argued that, when considering the territorial scope of Article 101, it would be helpful to have regard to the principles developed by the courts in the United States in relation to the territorial scope of the Sherman Act. In particular, the Defendants sought to rely upon the decisions in Dynamic Random Access Memory (DRAM) Antitrust Litigation, Centreprise International Ltd v Micron Technology Inc (2008) 546 F. 3d 981 and Motorola Mobility LLC v AU Optronics Corp (2014) 775 F. 3d 816. The second of these cases concerned the same worldwide cartel in LCD panels with which the proceedings before me is also concerned. These decisions are interesting but in the end they are not helpful for the purpose of determining the territorial scope of Article 101. The antitrust legislation and jurisprudence in the United States is quite different from that in the EU in a number of ways. One particular difference which is highly material is that the Federal law of the United States does not allow claims by indirect purchasers: see Illinois Brick Co v Illinois 431 US 720.

Some other principles of European competition law

[33]The argument before me proceeded on the basis that the following legal principles were established:(1) parties to a cartel are jointly and severally liable for their infringement of Article 101; thus, if there is a cartel between A, B and C and a purchaser buys goods from A, paying an overcharge as a result of the cartel, the purchaser is entitled to sue A and/or B and/or C for the harm caused to him by the infringement of Article 101;(2) a person who is an indirect purchaser from an infringer can sue the infringer (and, indeed, other parties who are jointly and severally liable for the infringement) for compensation for harm caused to the indirect purchaser by the infringement;(3) a purchaser from a supplier who was not a member of the cartel but who was able to charge a higher price than it would otherwise have charged, as a result of the increased prices charged by the members of the cartel, is entitled to damages from the members of the cartel for the harm caused by the higher price it has paid;(4) a purchaser who has paid an overcharge by reason of the operation of a cartel is not entitled to recover any part of the overcharge which it has passed on to its customers.

The supply chains in the present case

[34]It is necessary to give a simplified summary of the supply chains in relation to the LCDs, and transformed products incorporating LCDs, which are said to be relevant to these proceedings.[35]The basic supply chain up to 30 April 2006, somewhat simplified, was as follows:(1) D1 and D5 and other suppliers of LCDs sold LCDs to OEMs based in Asia (“Step 1”);(2) Step 1 took place outside the EU;(3) The OEMs sold monitors incorporating LCDs to Corporation (“Step 2”);(4) Step 2 took place outside the EU;(5) Corporation sold monitors to C1 to C5 (“Step 3”);(6) Step 3 took place (presumably) in the EU;(7) C1 to C5 sold monitors to dealers (“Step 4”);(8) Step 4 took place inside the EU.[36]The above simplified version of the supply chain omits matters which might be said to be relevant, on the detailed facts, at any later stage in these proceedings. I refer in particular to:(1) a point which is made by D1 that it did not itself supply LCDs to OEMs; instead it supplied LCDs to a Japanese subsidiary which then sold on to companies described as “independent distributors” which then sold to OEMs; and(2) the point that sales of monitors by Corporation to the Claimants may have involved more than one transaction between C1 to C5.[37]There was a variation (“the first variation”) on the basic supply chain in operation up to 30 April 2006. This variation is said to have involved some 39,136 LCDs/monitors. This variation involved the elimination of the step of sales to OEMs. Instead, Corporation acquired LCDs and used them for the purpose of its own manufacture of monitors at its factory in Japan. As before, there is the point, which may later be relevant, that D1 did not make direct supplies of LCDs to Corporation but made indirect supplies to its Japanese subsidiary which then supplied independent distributors and they then supplied Corporation. Corporation then sold the monitors, incorporating LCD panels, to C1 to C5. As before there may have been more than one transaction between C1 to C5.[38]The basic supply chain on and from 1 May 2006 (accounting for 85% of the purchases of monitors from all OEMs in that period), somewhat simplified (i.e. subject to similar comments to those made in paragraph 35 above), was as follows:(1) D1 and D5 and other suppliers of LCDs sold LCDs to OEMs based in Asia (“Step 1”);(2) Step 1 took place outside the EU;(3) The OEMs sold monitors incorporating LCDs to C6 (“Step 2”);(4) Step 2 took place outside the EU;(5) C6 sold monitors to C1 to C5 (“Step 3”);(6) Step 3 took place (presumably) in the EU;(7) C1 to C5 sold monitors to dealers (“Step 4”);(8) Step 4 took place inside the EU.[39]There was also said to be a variation (“the second variation”) to the basic supply chain on and after 1 May 2006. This variation accounted for 15% of the purchases from all OEMs during that period. This 15% was bought from OEMs in Europe. The Claimants say that C3 (not C6) bought monitors incorporating LCDs from three OEMs operating in Europe. These were BenQ operating in the Czech Republic (which joined the EU in 2004), TPV operating in Poland and Novatech Technology operating in Germany. It seems to be alleged that C3 then sold such monitors to dealers in the EU. The Claimants do not plead that the LCDs for these monitors came from D1 or D5 but assert that the prices for the LCDs were affected by the worldwide cartel. The parties made submissions as to where the LCDs were sold and whether the sales were inside or outside the EU. In particular, the Defendants submitted that BenQ, TPV and Novatech Technology were European subsidiaries of Asian parent companies and that I should infer that the LCDs were bought by the parent companies in Asia and then provided by the parents to their subsidiaries, rather than the LCDs being sold within the EU to the three European subsidiaries.

The territorial scope of Article 101 in relation to the above supply chains

[40]I have set out the steps in the basic supply chains both before and after 1 May 2006 and subject to the first and second variations. I will first discuss the basic supply chains where the only difference is that C6 replaced Corporation as a link in the chain from 1 May 2006. For this purpose, it is helpful to start with the (false) proposition that Article 101 has worldwide scope and then to apply the (correct) proposition that Article 101 is subject to a territorial limitation.[41]On the (false) assumption that Article 101 has worldwide scope, the position would be as follows. When D1/D5 take Step 1, they implement the cartel. They implement it outside the EU. Their purchasers (the OEMs) could claim compensation from D1 and D5, subject to any defence of passing on. Step 2 is the sale of the monitors by the OEMs to Corporation/C6, outside the EU. Step 2 is not the implementation of the cartel even if the OEMs pass on the overcharge to Corporation/C6. However, Corporation/C6 as indirect purchasers could claim compensation from D1/D5, subject to any defence of passing on. Step 3 is the sale by Corporation/C6 to C1 to C5 inside the EU. Step 3 is not the implementation of the cartel even if Corporation/C6 pass on the overcharge to C1 to C5. However, C1 to C5 as indirect purchasers could claim compensation from D1/D5, subject to any defence of passing on. Step 4 is the sale by C1 to C5 to dealers inside the EU. Step 4 is not the implementation of the cartel even if C1 to C5 pass on the overcharge to the dealers. However, the dealers as indirect purchasers could claim compensation from D1/D5, subject to any defence of passing on.[42]I will now seek to apply the territorial limitation on Article 101, in accordance with the test in Woodpulp I, to the basic supply chains as described above. In those chains, the only implementation of the cartel was at Step 1 and that took place outside the EU. Steps 3 and 4 took place within the EU but Steps 3 and 4 did not involve implementation of the cartel. I add for the sake of completeness that C1 to C5 (and, indeed, C6) have not pleaded that they suffered any loss as the result of Step 4. Accordingly, the basic supply chains did not involve any implementation of the cartel within the territorial scope of Article 101.[43]This analysis would suggest that the claims brought by C1 to C6 ought to fail because the supply chains on which they rely did not involve the implementation of the cartel within the EU. However, the basic flaw in this analysis is that it has regard only to the supply chains in this case. It is true that those supply chains did not involve the implementation of the cartel of the EU. However, the Commission has decided that the cartel was implemented in the EU and therefore there was an infringement of Article 101, within the territorial scope of that Article. It is true that the conduct and activity which amounted to implementation within the EU did not involve the supply chains in this case but that does not matter. The real question which needs to be addressed is: can the Claimants show that they suffered harm by reason of the implementation of the cartel in the EU? Based on the above analysis, it is not enough for the Claimants to say that they are indirect purchasers downstream from the implementation of the cartel in Asia, at Step 1 above.[44]I also point out that the application of the test in Gencor as to the territorial scope of Article 101 does not depend upon an analysis of the individual steps in the supply chain and where those steps took place. Instead the test in Gencor focusses upon the foreseeable effect of the cartel and how immediate that effect in the EU will foreseeably be. The findings of the Commission which I have summarised earlier make it clear that there was a foreseeable immediate and substantial effect of the cartel in the EU.[45]In view of the fact that the Commission has held that the worldwide cartel in this case was implemented in the EU, I am not able to accept the Defendants’ submission that I should adopt the approach which was adopted in the United States decisions to which I referred earlier and therefore conclude that the worldwide cartel in this case did not involve an infringement of Article 101 on the grounds that the cartel fell outside the territorial scope of Article 101.[46]In the light of the above analysis, it becomes important to know how the Claimants’ claim is put. Are they claiming as indirect purchasers because earlier purchasers in the supply chain paid an overcharge to the members of the cartel? If the claim is put that way, then without more that would seem to be a claim based on the implementation of the cartel outside the EU. Such a claim would fall outside the territorial scope of Article 101.[47]I have considered the Particulars of Claim and also the draft Amended Particulars of Claim. The Defendants accept that for the purpose of the applications to strike out and/or for summary judgment, I should proceed on the basis of the draft amended pleading. The draft amended pleading goes to considerable lengths to emphasise the connections with the EU arising on the facts of this case. Thus, detailed matters are pleaded as to the Claimants’ position in the EU and there are detailed references to the fact that the Claimants were selling to dealers in the EU. Much of this detail is beside the point being considered at this stage of the analysis.[48]On a fair reading of the original Particulars of Claim and indeed of the draft amended pleading, the focus of the claim appears to be that the Claimants are indirect purchasers where the supply chain can be traced back to overcharges made by the members of the cartel. However, the pleading does not do much to address the fact that the overcharges were made when the cartel was implemented outside the EU. The Claimants put forward an alternative plea that the implementation of the cartel involved a breach of Taiwanese law but the alternative plea serves to illustrate the fact that the focus of the claim is on the overcharge made on implementation of the cartel outside the EU. If this were the only claim made, then it would seem that the claim does not relate to the implementation of the cartel inside the EU.[49]However, one paragraph of the draft amended pleading in particular does identify how the damages are said to flow from the implementation of the cartel within the EU, as the Commission held had occurred. This is paragraph 75 of the draft amended pleading. This follows an earlier plea that the cartel was implemented in, and had a foreseeable immediate and substantial effect in the EU (as the Commission held). It is then said that if the cartel had not been implemented within the EU then LCDs and products incorporating LCDs would have been available within the EU at prices which were not inflated by the worldwide cartel. It is then pleaded that if that had been the situation, purchasers of LCDs and LCD products could have bought the same within the EU at non-cartel prices and would have done so. Accordingly, when the LCDs and LCD products were sold outside the EU at an overcharge, the purchasers and indirect purchasers all suffered loss and damage (subject to any defence of passing on). That way of putting the case is pleadable. There is not much evidence which specifically supports that plea. The furthest the matter is taken in the Claimants’ evidence is that Mr Takeichi, the managing director of C3, has prepared a witness statement in which he refers to the fact that some of the Claimants bought LCD monitors from OEMs in the EU and he adds that if LCD panels had been offered for sale in the EU at prices below those fixed by the cartelists, then those OEMs in the EU would have purchased LCD panels in the EU at prices below the cartel price. I imagine that the evidential basis for this plea will be closely scrutinised by the Defendants but at this stage the plea does raise an arguable case against D1 and D5. It was also submitted by the Claimants that if the cartel had not been implemented in Europe then it would have collapsed and would have not had effect, or would have ceased to have effect, elsewhere in the world.[50]In the course of argument, the Claimants identified what they said was another way in which they might be able to assert that they had suffered loss and damage by reason of the implementation of the cartel in the EU. It was said that if, for example, D1 had supplied relevant products to D2 but did not charge D2 a cartel price, that would give D2 a competitive advantage as against C1 to C5 who had acquired relevant products at cartel prices. If this had happened, then the competitive disadvantage would result in losses to C1 to C5 either through reduced profit margins or lost sales. The Claimants suggested that this way of putting their case had been pleaded. They referred to the reference to “lost profits” in paragraph 80 of the draft Amended Particulars of Claim but by no stretch of the imagination could one read that reference as being an adequate identification of the point which was raised in the course of argument. There was no application to make further amendments to the pleadings to raise this allegation as to how the Claimants had suffered loss and damage. I consider that the appropriate course is to disregard this suggested way of claiming that a loss had been incurred for the purposes of the present applications.[51]Accordingly, subject to the points which are considered next, I consider that the Claimants have pleaded (in paragraph 75 of the draft Amended Particulars of Claim) that the infringement of Article 101, which was within the territorial scope of Article 101, applying Woodpulp I and Gencor, has caused the Claimants loss and damage of a kind which is recoverable by them for such an infringement. Although the monitors were bought by Corporation or C6 outside the EU, the price paid was said to have been influenced by the fact that there was a worldwide cartel increasing prices throughout the world, including the EU. If the prices in the EU had not been increased by reason of the cartel, then the Claimants say that they would have been able to buy in the EU without paying the overcharge and that on the balance of probabilities they would have done so. Accordingly, they suffered loss and damage by buying outside the EU at a price greater than the price that would have been available in the EU if the cartel had not been implemented in the EU. Further, if the cartel had not been implemented in the EU, then it may very well not have succeeded elsewhere so that Corporation or C6 could have bought in Asia without paying the overcharge.[52]The Defendants argued that even if the court holds that there has been an infringement of Article 101, within its territorial scope, the damages claimed by the Claimants are not recoverable for various reasons. It was submitted that the damages claimed fall outside the scope of the tort, alternatively, the damages claimed fail some test of proximity, possibly a test based on remoteness or foreseeability. It was also said, relying on the United States authorities to which I referred earlier, that any losses in this case were suffered by purchasers of LCD panels in Asia and that the losses claimed by the Claimants as indirect purchasers in the EU were not the immediate loss or the proximate loss and accordingly, should not be recoverable. These submissions are not supported by any EU or domestic authority. As I have earlier stated, the United States legislation and jurisprudence is plainly different from that of the EU in a number of respects and cannot be a reliable guide to the principles to be applied in the present case. I do not say that the Defendants’ arguments will ultimately fail. They seem to me to raise important issues of policy which might require a reference to the CJEU before they are finally resolved.[53]I am not persuaded that I should strike out the Claimants’ claims or give the Defendants summary judgment on the basis that the losses claimed are not sufficiently direct or proximate. The points of law which arise are not suitable for summary disposal. They raise important questions of policy as to the operation of Article 101. They require more thorough exploration than was realistically possible at the hearing of these applications. If there is to be a reference to the CJEU, then the parties will need to agree the facts of the case or the facts will have to be determined before the reference is made. Further, the Claimants suggested in argument different ways of putting their case on causation but those matters have not yet been adequately pleaded.[54]Having reached the above conclusions in relation to the basic supply chains before and after 1 May 2006, it is not necessary to consider in any detail the two variations to those supply chains. As to the first variation, that does not seem to bring about any change in the appropriate analysis in relation to the basic supply chain up to 1 May 2006. As to the second variation, this suggests the possibility that there were direct sales to OEMs in the EU and C3 would say that this amounted to an implementation of the cartel in the EU, which implementation caused C3 loss and damage.

The case against D1 and D5

[55]Having analysed the way in which the claim is pleaded in the draft Amended Particulars of Claim, I have reached the conclusion that the Claimants have shown that they have an arguable case that they have suffered recoverable loss and damage by reason of D1 and D5’s infringement of Article 101, within the territorial scope of that Article.[56]As will be seen, one of the thresholds which the Claimants must cross for the purpose of obtaining the permission of the court to serve the claim on D1 and D5 out of the jurisdiction is that the Claimants can show a serious issue to be tried so that there is a real prospect of success on the claim. For the reasons given earlier, I conclude that the Claimants can cross that threshold.

The case against D2 to D4

[57]I will now consider the case against D2 to D4 which are domiciled in England and Wales. D2 to D4 contend that the case against them should be struck out and/or they should be awarded summary judgment.[58]The draft amended Particulars of Claim assert the following:(1) D2 is a wholly owned and controlled subsidiary of D1;(2) D3 is a wholly owned and controlled subsidiary of D1;(3) D4 is a wholly owned and controlled subsidiary of D3 which is a wholly owned and controlled subsidiary of D1;(4) D1 to D4 were a single economic undertaking for the purposes of Article 101;(5) the conduct of D2 to D4 was in accordance with policies set by D1;(6) D2 to D4 were aware of the cartel throughout the period it operated and participated in and implemented the cartel arrangements;(7) the Commission took account of the turnover of D2 to D4 when setting the fine for D1 (although D1 was in the event granted immunity);(8) (based on D4’s own evidence) D4 sold LCD panels to customers (based in Europe) of “Samsung” (meaning the single economic undertaking referred to above);(9) (based on D4’s own evidence) the prices at which D4 sold LCD panels were determined by D1, were set out in Samsung pricing guidelines and local sales managers of D4 had no authority in relation to pricing of sales to customers;(10) D2 and D3 had not served evidence as to price setting but it was to be assumed that the position in relation to D2 and D3 was the same as for D4;(11) as regards pricing, D2 to D4 were under the complete control of D1;(12) as to D2 to D4’s knowledge of the cartel, since they delegated all decisions in relation to pricing to D1, the knowledge of the individuals within D1 who dealt with pricing (which individuals must have had knowledge of the cartel) is to be attributed to D2 to D4; the Claimants relied for this purpose on D4’s evidence as to its position;(13) representatives of D1 (who would have known of the cartel) were employed by or seconded to D4 in the United Kingdom;(14) during the period of operation of the cartel, certain directors of D4 were also directors of D2 and D3;(15) the Claimants have not yet had disclosure of documents relevant to these allegations.[59]On 28 June 2015, after service of the Particulars of Claim but before service of the draft amended Particulars of Claim, D2 to D4 served a request for further information in relation to the allegations of D2 to D4’s participation in the cartel but further information was not provided except to the extent that the draft amended pleading puts forward matters not alleged in the original pleading.[60]The position on the evidence as to any relevant conduct by D2 to D4 is as follows:(1) it is not alleged that any one of D2 to D4 was itself involved in any of the meetings, between members of the cartel, which were concerned with price fixing;(2) D2 did not at any relevant time sell any LCD panels; D2 undertook a small amount of repair work, under warranty, in respect of products containing LCDs, for no charge for UK customers; D2 bought and sold various Samsung products; it is not wholly clear from the evidence whether D2 bought and sold Samsung products which incorporated LCD panels; D2 owned a subsidiary, Samsung Electronics Manufacturing (UK) Ltd, which manufactured some LCD-containing products; the Claimants make no specific allegation as to Samsung Electronics Manufacturing (UK) Ltd; from the unclear way in which the matter is described on behalf of D2, I am unable to say whether D2 denies that it sold products which incorporated LCD panels; however, the case was argued before me on the assumption that D2 did sell Samsung products which incorporated LCD panels;(3) D2 became dormant on 1 April 2005; from that date, D3 took over D2’s role including ownership of the subsidiary, Samsung Electronics Manufacturing (UK) Ltd;(4) D4 did not manufacture LCD panels or LCD-containing products at any time; D4 sold LCD panels in the EU market; D4 did not sell any LCD panels to any of the Claimants, either directly or indirectly; as to pricing, D4 acted in accordance with D1’s pricing guidelines; local sales managers of D4 were not permitted to go below these guidelines without D1’s permission;(5) D4 carried out work of repairs or replacement of LCD panels for some of the Claimants for no charge;[61]The position on the evidence is that there is no specific evidence of actual knowledge on the part of D2 to D4 of the fact that the prices for LCD panels and monitors were the subject of price fixing. The Claimants stress that the evidence as to D4 shows that D4 abrogated to D1 all involvement as to setting the price. This might suggest that D4 did not actually know and was not expected actually to know how prices were to be established or that they had been achieved as the result of a price-fixing cartel.[62]No one of D2 to D4 is an addressee of the Commission Decision. The Commission did investigate to some extent the position of D4 but did not make it an addressee of the decision. However, that fact does not mean that the Commission has held that D4 did not participate in any relevant sense in the infringement. The approach taken by the Commission will not prevent the Claimants seeking to establish on the evidence in this case that D4 did participate in the infringement. The Defendants say that D1 obtained immunity because it had made a voluntary confession of its involvement and had provided relevant documents to the Commission. However, the case which the Claimants wish to advance against D4, in particular, is not that it was an active member of the cartel but that it was a subsidiary of an active member of the cartel (D1) which did D1’s bidding in giving effect to D1’s price fixing. In the light of the way in which the Claimants put their case, it does not seem to me to be very significant that the Commission did not pursue D4 in addition to D1.[63]The above findings show that the Claimants have at least an arguable case for the following propositions:(1) D1 and others were parties to the relevant cartel;(2) D4 was a wholly owned subsidiary of D1;(3) D4 was under the control of D1;(4) D1 directed D4 as to the prices to be charged by D4 on its sales of LCD monitors and D4 complied with that direction;(5) the prices charged by D4 were cartel prices.[64]The law is not wholly settled as to what a claimant needs to allege and prove to establish liability under Article 101 on the part of a subsidiary company such as D4. If D1 is a party to the relevant cartel and causes the cartel to be implemented by directing its wholly-owned subsidiary, D4, to charge cartel prices, it seems fairly clear that D1 is liable for that implementation: see KME Yorkshire Ltd v Toshiba Carrier UK Ltd [2012] EWCA Civ 1190 at [38] and Sainsbury’s Supermarkets Ltd v Mastercard Inc [2016] CAT 11 at [363(7)]. The Sainsbury’s case contains a full review of the relevant authorities both European and domestic. What is perhaps not established is what is needed to establish liability on the part of D4. Are the facts stated above sufficient to render D4 liable for infringement of Article 101 or must it be shown in addition that D4 charged cartel prices with knowledge of the existence of the cartel? However, what is not in doubt is the proposition that D4 will be liable if it does charge cartel prices under the direction of its parent, a member of the cartel, and D4 knows of the existence of the cartel: see KME Yorkshire Ltd v Toshiba Carrier UK Ltd [2012] EWCA Civ 1190 at [20].[65]In the present case, the Claimants contend that, in law even if not in fact, D4 did know of the existence of the cartel at the time that it charged cartel prices. It is said that D4 had the requisite knowledge as a matter of law because the knowledge of D1 as to the existence of the cartel is to be attributed to D4 under the ordinary English law principles as to attribution of knowledge. In particular, it is said that D4 wholly delegated to D1 the decision which D4 would otherwise have to make for itself as to the prices it charged for the relevant goods. Accordingly, the knowledge of the person to whom the decision was delegated is to be attributed to the person who delegated the decision. I consider that as a matter of English law, that proposition is at least arguable.[66]It follows that the Claimants have an arguable case that D4 is liable for its participation in the infringement of Article 101. Therefore, it is not appropriate to strike out the claim against D4 nor to give D4 summary judgment dismissing the claim against it.[67]I take the same view in relation to the claims against D2 and D3. I have already drawn attention to the unclear position on the evidence as to whether D2 and D3 did sell products incorporating LCD panels. However, the case was argued before me on the assumption that D2 and D3 did sell such products. As to the relationship between D1 on the one hand and D2 and/or D3 on the other and the way in which D2 and D3 set their prices for such products, the evidence at present is not as clear as in the case of D1 and D4. However, on the material at present available, it is inherently likely that the position in relation to D2 and D3 was much the same as in relation to D4. Accordingly, as I have indicated, I will treat D2 and D3 in the same way as I have treated D4. The claims against D2 and D3 will not be struck out and I will not give D2 and D3 summary judgment dismissing the claims against them.

Jurisdiction

[68]There is no dispute that the court has jurisdiction in relation to the claims against D2 to D4, companies incorporated in England and Wales. It is also not in dispute that it is not open to the court to decline jurisdiction in relation to the claims against D2 to D4 on any alleged forum non conveniens grounds.[69]What is in dispute is whether the court has jurisdiction and, if so, whether it should exercise it, in relation to D1 and/or D5. The applicable legal principles are settled. They were summarised by Lord Collins of Mapesbury in Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 at [71] and were recently applied in Erste Group Bank AG v JSC “VMZ Red October” [2015] EWCA Civ 379. I need to consider whether:(1) the Claimants can show a serious issue to be tried on the merits so that they have a real prospect of success on the claim;(2) the Claimants have a good arguable case that their claim falls within a relevant gateway to the court’s jurisdiction, in the sense that the Claimants have much the better of the argument on the relevant issues than D1 and/or D5; and(3) England and Wales is clearly or distinctly the most appropriate forum in which the claims can be tried most suitably for the interests of all the parties and for the ends of justice and in all the circumstances the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction.[70]Based on my earlier findings, I consider that the Claimants have raised a serious issue to be tried with a real prospect of success in relation to their claim against D1 and D5.[71]The principal gateway for jurisdiction relied on by the Claimants is the gateway in paragraph 3.1(3) of CPR PD 6B (“Gateway 3”). This gateway requires the Claimants to show a sufficiently arguable case that:(1) they have made a claim against other Defendants (usually called “the anchor defendants”) within the jurisdiction of the court;(2) there is a real issue between the Claimants and the anchor Defendants which it is reasonable for the court to try; and(3) D1 and/or D5 is a necessary or proper party to that claim.[72]As to Gateway 3, the Claimants have made a claim against D2 to D4 within the jurisdiction of the court. On the authority of Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 at [76]-[79], it is not appropriate at this stage of the analysis to inquire into the motive of the Claimants in suing the anchor defendants, although the Claimants’ motive may have to be considered as a factor in the exercise of the court’s discretion whether to give permission to serve D1 and/or D5 out of the jurisdiction. I must consider whether it is reasonable for the court to try that claim. The Claimants have a worthwhile claim on the merits against D2 to D4. I have already held that it would not be right to strike out the claim against D2 to D4 or to grant them summary judgment dismissing the claim. There are no other reasons why it would not be reasonable for the court to try the claim against D2 to D4.[73]D1 and D5 are not necessary parties to that claim but the Claimants say that they are proper parties. I consider that D1 and D5 are proper parties to be joined to the existing claims against D2 to D4 for the following reasons, in particular:(1) the Claimants are entitled to take their claims to trial in this jurisdiction against D2 to D4;(2) the claims against D2 to D4 will involve the same or substantially the same issues as would be raised in a trial elsewhere of the Claimants’ claims against D1 and/or D5, based on infringement of Article 101;(3) the trial of the same or substantially the same issues will involve the same witnesses and expert witnesses (if any);(4) it is undesirable to require the parties to litigate the claims against D2 to D4 in this jurisdiction and the claims against D1 and/or D5 elsewhere;(5) as the claims against D1 and D5 are based on alleged infringement of Article 101, the position of D1 and/or D5 in relation to their jurisdiction challenge is not helped by them showing that they would have a limitation defence if sued in Taiwan or Japan under Taiwanese or Japanese law respectively.[74]Having regard to the above conclusions based on Gateway 3, it is strictly not necessary to consider the alternative gateway relied upon by C1 alone (but not the other Claimants). C1 relies on paragraphs 3.1(9) of CPR PD 6B (“Gateway 9”). This gateway applies where the claim is made in tort. C1’s claim is a claim in tort for breach of statutory duty. For Gateway 9, C1 needs to show either that the damage it relies upon was sustained within the jurisdiction or that the damage it relies upon results from an act committed within the jurisdiction. C1 says that it can establish the first of these alternatives as it acquired, within the jurisdiction, products incorporating LCD panels at cartel prices. I consider that C1 has the better of the argument on this point and has therefore established Gateway 9.[75]The next question is whether England and Wales is the more appropriate forum for the Claimants to advance their claims against D1 and D5. It is important to note that D1 and D5 do not contend that England and Wales is inappropriate because the courts of another EU member state would be more appropriate. It is not said, for example, that C2 as a company incorporated in Germany, should sue D1 and D5 in the German courts. What D1 and D5 appear to say is that the Claimants should sue them in Taiwan or Japan where there was arguably an infringement of Taiwanese or Japanese law. D1 and D5 go on to argue that, in fact, a claim based on Taiwanese law or Japanese law would fail as they have a limitation defence to such a claim, which defence would be given effect in Taiwan or Japan.[76]The primary claim which the Claimants wish to advance against D1 and D5 in these proceedings is a claim for infringement of Article 101. Although, the Claimants claim in the alternative under Taiwanese law, these claims are not the primary way in which the Claimants’ case is put. Article 101 has direct effect in all the member states in which C1 to C5 are incorporated. The Claimants’ case is for damages for breach of statutory duty and the Claimants will have to show that they have suffered damage. The Claimants contend that they have suffered damage by purchasing LCD panels or products incorporating LCD panels in the country of that Claimant’s incorporation. Prima facie therefore, C1 to C5 have suffered damage in their respective countries of incorporation, which are all member states of the EU. Accordingly, C1 to C5’s claims can be brought under EU law which has direct effect in their countries of incorporation. C6 is incorporated in Japan but I was not asked to strike out the claim by C6 if the claims by the other Claimants were allowed to continue to trial in this jurisdiction.[77]I was addressed in detail on sections 11 and 12 of the Private International Law (Miscellaneous Provisions) Act 1995. I would apply those provisions to this case in the following way. The tort of infringement of Article 101 occurred in the EU, when the worldwide cartel was implemented in the EU. The damage resulting from that tort, which is a necessary part of the cause of action arising under Article 101, was suffered by the Claimants in their respective countries of incorporation. In relation to C1, a company incorporated in England and Wales, its cause of action will be based on Article 101 having direct effect in England and Wales and the legal principles as to causation of loss will be English law principles (although overlaid by EU law as to the principles of effectiveness and equivalence). I provisionally conclude, not having been addressed on this point, in relation to the other Claimants, that the legal principles as to causation of loss will be the law of their countries of incorporation. Accordingly, for example in the case of C2, a company incorporated in Germany, its cause of action will be based on Article 101 having direct effect in Germany and the legal principles as to causation of loss will be German law principles (overlaid by EU law).[78]As C1 to C5’s primary claim is for breach of Article 101, it would appear to be far more appropriate for such a claim to be litigated in England and Wales instead of Taiwan or Japan. It will not be necessary in this jurisdiction to have expert evidence as to foreign law in relation to liability as EU law has direct effect; it may be necessary to have evidence of foreign law in relation to causation of loss. Further, if it became necessary to have a reference to the CJEU on any point of EU law, for example, the Defendants’ argument that the way in which the Claimants assert causation of loss is impermissible, such a reference would be possible if the proceedings were in England and Wales. The fact that the Claimants might have a claim under Taiwanese or Japanese law (assuming no limitation defence was available) does not alter this conclusion. In so far as D1 and D5 would wish to submit that the Claimants should sue under Taiwanese law or Japanese law that would not be a submission that Taiwan or Japan is a more appropriate forum but a submission that the Claimants should not assert their cause of action for breach of Article 101 but should instead assert a breach of Taiwanese law or Japanese law. Such a submission is plainly not open to D1 and D5. If anything, D1 and D5’s case in this respect would not be assisted by the fact that D1 and D5 assert that they have a limitation defence to a claim based on Taiwanese or Japanese law.[79]D1 and D5 naturally stress that the cartel arrangements did not take place in the EU. They also stress that many of the steps in the supply chains leading to the Claimants took place outside the EU. They further emphasise that if there are disputes about these matters, it will be necessary to call evidence from witnesses based in Asia, who do not have English as their first language, and to consider documents not written in English. As against that, it remains to be seen how much of the factual background to the cartel will be in dispute in view of the very detailed findings made by the Commission. Counsel for the Defendants appeared to me to accept that the question of liability would be largely, if not wholly, determined by the findings made in the Commission Decision. Further, it remains to be seen to what extent there will be an evidential dispute as to the effect of the cartel on trade in the EU; if that were in dispute then some of the evidence would have to come from the EU rather than all of the evidence coming from Asia. There is a further consideration. In view of the evidence and/or inferences that D1 was at all material times in total control of D2 to D4 and determined their pricing policies, it seems likely that even if D2 to D4 were the only defendants in England and Wales it would be necessary for D1 to be closely involved in defending the proceedings (unless it was prepared to allow them to go undefended). This consideration substantially reduces the weight of D1’s point that, if it were made a party to these proceedings, the case against it would involve evidence from its representatives who are based outside the EU and the consideration of documents which are not in English.[80]It is plainly not satisfactory for the Claimants to sue D2 to D4 in England and Wales and to sue D1 and D5 in Taiwan or Japan (for breach of Article 101). The Claimants would have to try to prove their case at two different trials. There would be the risk of inconsistent findings. The courts in Taiwan or Japan would have to apply EU law.[81]I remind myself that I should exercise caution before deciding that it is appropriate to permit foreign defendants to be sued in this jurisdiction. It must never become the practice to bring foreign defendants into this jurisdiction as a matter of course on the ground that the only alternative requires more than one suit in more than one different jurisdiction: see Golden Ocean Assurance Ltd v Martin (The Goldean Mariner) [1990] 2 Lloyd’s Rep 215 at 222, Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 at [73] and Erste Group Bank AG v JSC “VMZ Red October” [2015] EWCA Civ 379 at [139].[82]Taking all of the above considerations into account, I conclude that as regards D1, England and Wales is clearly and distinctly the appropriate forum for the trial of this claim, based as it is on Article 101, which claim has been properly brought against D2 to D4 and that the court ought to exercise its discretion to permit service of the proceedings on D1.[83]The position of D5 is argued to be different from that of D1. There is no claim against a subsidiary of D5. D5 did not control the anchor defendants, D2 to D4. However, in view of my decision that D1 is a proper party to this claim and that permission to serve D1 out of the jurisdiction ought to be granted, I consider that the same result should apply in relation to D5 also. D1 and D5 are both addressees of the Commission Decision as centrally important parties to the cartel. It is inappropriate for the Claimants to sue D1 to D4 in this jurisdiction but to be required to sue D5 for a breach of Article 101 in another jurisdiction. That would involve the Claimants litigating substantially the same issues twice with the risk of inconsistent findings and in circumstances where it would be much less appropriate for a court outside the EU to determine a claim under Article 101.

Non-disclosure

[84]The Defendants contend that the Claimants were guilty of material non-disclosure in relation to their application to the Master for permission to serve D1 and D5 out of the jurisdiction. The Defendants say that the appropriate response from the court is now two-fold:(1) it is said that the court should set aside the Master’s order for service out; and(2) it is said that the court should now refuse to grant permission to serve out. Submissions on this part of the case were put forward by counsel for D5 but, as I understood it, counsel for D1 adopted those submissions.[85]The principles as to the requirement for full and frank disclosure on an ex parte application for permission to serve out of the jurisdiction and as to the appropriate response to any non-disclosure are well established. I was taken to the summary of the position in the decision of the Competition Appeal Tribunal (Roth J, President) in DSG Retail Ltd v Mastercard Inc [2015] CAT 7 where it was said at [44]:
“This application was heard without notice, as is usually the case for an application for permission to serve out. As on any application without notice, the applicant is under a duty to make full and frank disclosure of matters material to the application. That means not only that care needs to be taken in setting out the factual basis for the application, but also that the Tribunal's attention should be drawn to any significant objections to the application that the defendants could reasonably be expected to raise if they were before the Tribunal. The duty does not require disclosure to the same degree as on an application for a without notice injunction, such as a freezing order, where granting the application has immediate and potentially serious consequences for the defendant. The factors relevant to an application to serve out are only those which relate to the limited inquiry the Tribunal carries out in determining whether to grant such permission. Nonetheless, within the limited scope of that inquiry, if the claimant is aware of such factors as might cause the Tribunal to doubt whether permission should be granted, they should be clearly disclosed. This approach is well established on the authorities: see, eg, MRG (Japan) Ltd v Engelhard Metals Japan Ltd [2003] EWHC 3418 (Comm), [2004] 1 Lloyd's Rep 731, per Toulson J at [23]-[29]; Konamaneni v Rolls Royce Industrial Power (India) Ltd[2002] 1 WLR 1269, per Lawrence Collins J at [180]-[182].”
[86]In Konamaneni v Rolls Royce Industrial Power (India) Ltd[2002] 1 WLR 1269, it was said at [180] – [183]:
“180 On an application without notice the duty of the applicant is to make a full and fair disclosure of all the material facts, i e those which it is material (in the objective sense) for the judge to know in dealing with the application as made: materiality is to be decided by the court and not by the assessment of the applicant or his legal advisers; the duty is a strict one and includes not merely material facts known to the applicant but also additional facts which he would have known if he had made proper enquiries: Brink's Mat Ltd v Elcombe [1988] 1 WLR 1350, 1356–1357. But an applicant does not have a duty to disclose points against him which have not been raised by the other side and in respect of which there is no reason to anticipate that the other side would raise such points if it were present. 181 These principles have long been applied to applications for permission to serve out of the jurisdiction: see e g The Hagen [1908] P 189, 201. In that context it has been held that it would not be reasonable to expect an applicant for permission to serve out to anticipate all the arguments or points which might be raised against his case: see Electric Furnace Co v Selas Corpn of America [1987] RPC 23, 29. A failure to refer to arguments on the merits which the defendant might raise at trial should not generally be characterised as a “failure to make full and fair disclosure”, unless they are of such weight that their omission may mislead the court in exercising its jurisdiction under the rule and its discretion whether or not to grant permission: BP Exploration Co (Libya) Ltd v Hunt [1976] 1 WLR 788, 788–789, approved in the Electric Furnace case [1987] RPC 23, 29. 182 In BP Exploration v Hunt [1976] 3 All ER 879, 894 Kerr J warned that: “the court should not consider the supporting affidavit as though it were marking an examination paper, deciding one way or the other merely on the basis of the extent to which the affidavit could have been improved. The primary question should be whether in all the circumstances the effect of the affidavit is such as to mislead the court in any material respect concerning its jurisdiction and the discretion under the rule” 183 I do not consider that, subject to one point, there is any case for setting aside for non-disclosure. The witness statements may have been somewhat partial and over-zealous, but the criticism made by the defendants amounts to no more than that the evidence did not fully anticipate all the points on the exercise of the discretion which they have now made.”
[87]I was also taken to the decision of Mann J in iiyama Benelux SA v Schott AG [2016] EWHC 1207 (Ch), to which I have earlier referred. In that case, Mann J held that the defendants were entitled to have the claims against them struck out, or to have summary judgment in their favour, or to have service out of the jurisdiction set aside on the basis of the absence of a good arguable case: see at [154]. However, the judge went on to consider submissions made by the defendants in that case that the earlier permission to serve out should be set aside on the grounds of material non-disclosure. Mann J cited the decision of Burton J in Masri v Consolidated Contractors [2011] EWHC 1780 (Comm) which summarised the principles and referred to a number of authorities. In the Masri case, the judge held that there had been non-disclosure of a “plainly material” fact but he did not discharge the order granting permission to serve out. He also referred to the decision in The Hida Maru [1981] 2 Lloyd’s Rep 510 as an example of a case where the court decided not to set aside an earlier permission to serve out, even where there had been material non-disclosure, where it would have been appropriate to have given leave, even if the full facts had been communicated to the court. In the earlier iiyama case, Mann J held that there had been material non-disclosure and that it would be appropriate to set aside the earlier permission to serve out.[88]The first suggestion that there had been material non-disclosure appeared in a witness statement of Ms Jinhee Kim, served on behalf of D5. Ms Kim did not assert that there had been any material non-disclosure in relation to the arguments about the territorial scope of Article 101. Instead, Ms Kim set out seven reasons why, she said, England and Wales was not the appropriate forum for the claim against D5. She then submitted that the Claimant had failed to give full and fair disclosure of these matters.[89]At the hearing, counsel for D5 put forward two suggested non-disclosures. These did not appear to have been included in the list of non-disclosures asserted by Ms Kim. Instead, counsel submitted that there had been non-disclosure in relation to points as to the territorial scope of Article 101. It was said that the Claimants had failed to disclose:(1) the fact that they had not made any purchases of monitors containing LCDs made or sold in the EU; and(2) “obvious defences” that D5 would be likely to raise “in light of that fact”.[90]As to the non-disclosures suggested by counsel for D5, in the period from 1 May 2006, the Claimants had bought some 15% of their overall purchases from OEMs in Europe. This fact was stated in the witness statement in support of the application for permission to serve out. Strictly therefore, the submission that the Claimants should have admitted that they had not bought “any” monitors in the EU is not well founded. Also strictly speaking, the alleged failure to identify “obvious defences” in the light of “that fact” is also not made out. In submissions in reply, counsel for D5 submitted that the fact which was not disclosed was that the monitors which formed the basis of the claim contained LCDs which had first been put on the market in Asia.[91]The Particulars of Claim which were before the Master on the application for permission to serve out pleaded that:(1) D1 and D5 had sold LCDs into the EU;(2) that D1 and D5 were parties to a price-fixing cartel;(3) the cartel affected prices in the EU; and(4) the effect of the cartel was that the prices at which the Claimants purchased from OEMs were inflated above the level which would have prevailed in the absence of a cartel. Those are the essentials of the claim which I consider (in the absence of the present point as to non-disclosure) should be granted permission to serve out on D1 and D5.[92]It is right to say that the witness statements in support of the application for permission to serve out do not address possible arguments or possible complications which the various defendants might be able to raise in relation to the territorial scope of Article 101. However, having now considered the Defendants’ arguments, I have reached the conclusion that it is open to the Claimants to assert an infringement of Article 101, within the established territorial scope of that provision and based on the Commission Decision, and that the principal question which remains open to argument relates to the Claimants’ case as to causation of loss resulting from that infringement.[93]In all the circumstances, I do not consider that the Claimants were in breach of their duty of full and frank disclosure. There is an important distinction between disclosing material facts known to a claimant and disclosing arguable defences known to a claimant on the one hand and anticipating all of the points that might be raised in opposition to the claim: see the distinction made in Konamaneni v Rolls Royce Industrial Power (India) Ltd at [181]. I consider that the Defendants’ arguments in opposition in this case fall into the second category. Whilst I note Mann J’s decision in the other iiyama case, the facts of that case were different and the judge made his decision on non-disclosure after holding that the claims should be struck out or dismissed and permission to serve out should be refused (quite apart from the argument as to non-disclosure).[94]If the Claimants had foreseen the arguments which the Defendants put forward at the hearing before me and if they had described those arguments in the evidence in support of their application to serve out, then I feel sure that the Master would have considered that the case would be liable to be more complicated than the relatively simple case presented to him by the Claimants. However, if the matter had been put to the Master in this way, I think it likely that the Master would have given permission to serve out in the same way as I am persuaded to do following a detailed hearing of the matter. I consider that, even if the Claimants ought to have foreseen the Defendants’ arguments about the territorial scope of Article 101 and ought to have described them to the Master, it would not be an appropriate response to set aside the Master’s permission to serve out and, much less, to refuse to grant that permission afresh.

The pleadings

[95]During the hearing, I considered that the Claimants’ pleadings and, in particular, the draft Amended Particulars of Claim were unclear as to the precise way in which they put their case. I still consider that the pleadings are unclear and not conducive to a ready grasp of the essentials of the claim. At all times, the Claimants appear to be stressing that they sold into the EU whereas for the purposes of their claim the essentials are that the worldwide cartel was implemented in the EU and the fact of implementation in the EU has caused loss and damage to the Claimants as purchasers of monitors incorporating LCDs. If they can establish those matters, then it will not matter what they later did with the monitors. If they cannot establish those matters, then there is no explanation in the pleadings as to how their sales into the EU will enable them to establish that Defendants’ infringement of Article 101 caused loss to the Claimants. In the course of the hearing, counsel for the Claimants suggested other ways of putting the damages claim by reference to the Claimants being at a competitive disadvantage in the EU as against the Defendants. If such a case could be pleaded, and were to be pleaded, then perhaps sales by the Claimants into the EU would be material. However, I cannot see that that case is pleaded at present.[96]During the hearing, I considered whether to require the Claimants to re-plead their case before deciding the Defendants’ applications and so that I would only come to a final decision on those applications in the light of that re-pleaded case. In the event, I have decided to come to my decision on the Defendants’ applications by reference to the draft Amended Particulars of Claim. I will not require the Claimants to clarify and improve their pleading as a condition of the disposal of those applications although I remain of the view that the present pleading leaves a great deal to be desired.[97]The Claimants have applied (on 4 May 2016) for permission to amend in accordance with the draft Amended Particulars of Claim. As I have explained, and as agreed by all parties, I have considered the various applications by the Defendants by reference to this draft. However, I will not at this stage give the Claimants permission to amend in accordance with that draft. I consider that it would be preferable for the Claimants to consider their position in the light of this judgment with a view to producing a different, clearer and more focussed draft pleading which accepts the territorial limitations on what the Claimants are able to claim. I will therefore adjourn the present application for permission to amend to give the Claimants time for reflection in this respect.[98]I have referred above to the fact that, in their draft Amended Particulars of Claim, the Claimants have pleaded an alternative claim for breach of Taiwanese law as to price-fixing cartels. I have not been asked to refuse permission to amend to make that alternative plea if I allowed the Claimants to pursue their claim under Article 101. In these circumstances, I will say no more about that alternative claim.

The result

[99]Although I am not making an order which strikes out the claim in its entirety or gives the Defendants summary judgment dismissing the claim, I consider that I have decided something about the territorial scope of Article 101 which should continue to bind the parties as the case progresses. In other words, I am allowing the Claimants to continue with their claim to damages on the basis on which I consider it can be put forward but I would wish the order which is made to give effect to this judgment to preclude the Claimants from contending that the sales by the cartelists outside the EU amounted to an infringement of Article 101 or an implementation of the cartel within the territorial scope of Article 101. I will not at this stage draft an appropriate declaration or other order to give effect to my conclusions but I will hear counsel for the parties as to the form of such a declaration or other order.[100]The result is that, subject to the declaration or other order I have referred to above, the applications by D1 and D5 in relation to the jurisdiction of the court and as to permission to serve out of the jurisdiction are dismissed.[101]Further, the result is that, subject to the declaration or other order I have referred to above, the applications by D2 to D4 to strike out the claim against them and/or for summary judgment dismissing the claim are dismissed.[102]I will adjourn the Claimants’ application for permission to amend the Particulars of Claim.

Cited in 1 later judgment