Vodafone Group Services Ltd & Anor v Infineon Technologies AG & Ors [2017] EWHC 1383 (Ch)

[2017] EWHC 1383 (Ch)Case No HC-2014-001969
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 8 th June 2017
Before
Mr Justice Birss
Between
Vodafone Group Services Limited & OtherClaimantInfineon Technologies AG & OthersDefendant
Mark Hoskins QC, Tony Singla, David Heaton (instructed by Norton Rose Fulbright) for ClaimantMark Brealey QC, Sarah Ford QC, Emily Mackenzie (instructed by Freshfields Bruckhaus Deringer) for Infineon DefendantsDaniel Jowell QC, David Bailey (instructed by Travers Smith) for Renesas DefendantsRobert O’Donoghue QC, Tom Pascoe (instructed by Covington & Burling) for Samsung Named Third PartiesHearing Hearing dates: 7-8 th June 2017
JUDGMENTMr Justice Birss
[1]This is an action about a cartel concerning smart card chips. The European Commission found that a cartel existed in the period 2003 to 2005. The Commission’s decision is addressed to Renesas, Infineon, Samsung and Philips.[2]A major use of smart card chips is in SIM cards. Vodafone, the claimant, sues the defendants, Renesas and Infineon, for follow-on damages for the period found by the Commission to be the period the cartel existed and stand-alone damages for a further period, both before the cartel, as found by the Commission, and afterwards, including what has been called a Phase Out Period, i.e. a period after the cartel itself had ended but, Vodafone contend, the effect on prices had not finished.[3]The claim relates to a number of European countries including United Kingdom, Germany, Spain, Italy, the Netherlands, the Czech Republic, Hungary and some others. A key aspect of the claim is that there was only an indirect link between Vodafone and the defendants. Vodafone was buying SIM cards from intermediaries such as Giesecke and Devrient, Gemalto and I think ST Micro and others, who were in turn buying smart card chips from the defendants, among others.[4]Vodafone was a major purchaser of SIM cards for use in its mobile telephones and other mobile devices and services. In the relevant period, it purchased 650 million units which represents about £1.1 billion worth of SIM cards.[5]The damages claimed are essentially the increase in prices Vodafone contends it had to pay for the SIM cards due to an overcharge in the price of smart card chips paid by the intermediaries. Vodafone claims damages on a joint and several basis from the defendants for all the damage caused by the cartel.[6]The defendants claim contributions or an indemnity from each other, and at the start of the proceedings the defendants also added as third parties Samsung and Philips. Recently Vodafone have settled with Philips and in March 2017 Philips dropped out of the proceedings. So calculations at the end, to the extent that liability and causation are established, must exclude Philips.[7]There was an appeal by Infineon and Philips against the Commission's decision before the General Court. That failed at the end of last year, and now both those parties are appealing to the CJEU.[8]For the rest of this judgment, when I use the word "defendants" I intend to include Samsung although, strictly speaking, they are a third party, unless there is a reason to distinguish between them and Infineon and Renesas.[9]Broadly speaking, the issues are as follows. On the stand-alone claim with respect to the period outside the two-year cartel found by the Commission, Vodafone has to prove the existence of the cartel. Then for both the follow-on claim and the stand-alone claim there are issues of causation and quantum. Of particular relevance to causation is whether the defendants did in fact overcharge the intermediaries for the smart card chips, whether the intermediaries passed on any or all of that overcharge to Vodafone, and whether Vodafone passed on any or all of that overcharge to its customers.[10]Assuming all the relevant links in the chain are established, there then has to be an exercise in quantifying these various aspects.[11]Among all of this, one of the key issues is how many and what sort of smart card chips did Vodafone obtain which came from the defendants in the first place? I should say that not all the smart card chips in Vodafone SIM cards came from the cartel.[12]It is clear that a trial cannot take place until the CJEU process has finished and I will return to that later.[13]At a Case Management Conference last year I expressed a concern about proportionality in relation to disclosure. At that stage the claim had not yet been quantified at all. I directed sequential disclosure whereby Vodafone would start by identifying the details of the chips in the SIM cards it had purchased and the defendants would then disclose sales data for those chips. The parties did so, however each side blames the other for taking an unreasonable position in relation to that exercise.[14]It is said that there was not enough purchase data from Vodafone and it is said that there is not enough sales data produced by the defendants. What is clear is that the matching done by the defendants of the purchases to the sales only covers a fraction of the purchases by Vodafone. It is a minority although the precise estimate of the proportion varies.[15]The matching done by the defendants is at the level of something called the mask code, that is the mask code for the relevant chip. However, as the claimant points out, at a higher level of generality, such as the model of the chip, the defendants can at least sometimes identify which model of smart card chip went to Vodafone. However they have not given disclosure on that basis.[16]To use a car analogy, the defendant can identify that Vodafone bought a Ford Escort but not whether it had a 1.1 litre or a 0.9 litre engine. One question I will need to deal with in due course is how much that matters.[17]This Case Management Conference takes place a year later and the main issue is disclosure. There has been a large measure of agreement. The defendants will provide sales data for all sales of a much wider class, not limited to mask code matching, but equally not as wide as all the smart card chips there could be. It is intended to encapsulate all the smart card chips which could have gone into the relevant SIM cards and is defined on the basis of the memory size of the relevant smart card chips. Memory size is a wider level of generality than the model I mentioned above and wider still than mask code. Therefore this will inevitably include sales which did not end up with Vodafone.[18]There are two outstanding issues I need to deal with. The main point, as I have said, is certain detailed disclosure questions and then finally I need to consider the trial timetable. The main issue there is whether or not to set a date now for the trial. I will return to that.

Disclosure

[19]As before, last year, a major concern with this exercise is one of proportionality. It is obvious that this is a major claim, but in making the arguments in writing in their evidence and in the skeletons for this hearing the parties had not addressed what the actual scale of these proceedings was, neither in terms of the costs incurred or likely to be incurred in future or in terms of the sums actually at stake.[20]Just as last year, so before this hearing was called on, Vodafone had not quantified its claim. Essentially Vodafone's position is the reason that is the case is because it has not been provided with sufficient information for it to do so.[21]It seemed to me, given the significance of proportionality in relation to disclosure, and that it was a point that was being relied on by all parties, it was legitimate to probe a little further. Therefore, before the hearing I asked the parties to provide information about their costs. That is to say, a statement of what costs they had incurred so far and an estimate of how much it would take to bring the matter to the end of the trial.[22]The answers were these. For Vodafone: they have spent £5 million in costs so far and estimate a further £5 million to bring this to the end of trial. For Infineon: something of the order of £3 to £4 million has been spent so far and an estimate of £5 to £10 million to the end the trial. For Renesas: about £2 million has been spent so far, and approximately another £3 million is estimated to trial, but counsel wished to emphasise that it could be much more depending on the scope of the further disclosure and the effort required in future. Samsung's costs so far are about £1.5 million, and for future, Samsung was reluctant to be drawn in detail but essentially was taking the same position as Renesas, which I have already explained is something like £3 million or so but could be more.[23]So looking overall, it appears that the total cost incurred by all the relevant parties to bring this case to trial will be of the order of £30 million. It is unlikely to be less and it may be more. These are very high costs. They are only rational if the sums at stake are very substantial. But as I think I mentioned already, nothing has been drawn to my attention in the papers for the hearing which give any indication of the size of the claim.[24]So in order to get a feel for possible kinds of numbers I performed a simple calculation simply to gauge the likely magnitude. We know the scale of Vodafone’s purchases of SIM cards. For example, for the United Kingdom, they are approximately £120 million for the relevant period. Using a simple fraction of 60/40 in favour of Vodafone as a way of making shares for each of the key steps: the share of the SIM card price which is attributable to the smart card, the share of the smart card price which is an overcharge by the cartel to the intermediaries, the share of the overcharge passed to Vodafone, and the share of the overcharge not passed on by Vodafone to Vodafone's customers; one gets to a figure of roughly 12 per cent of the turnover in smart cards. That is about £15 million for the UK. This is simply a guess, not an estimate of quantum itself, but it allows one to begin to take a view about what is at stake in terms of the magnitude of this litigation. It allows one to begin to gauge what may or may not be appropriate.[25]Notably in the course oral submissions Vodafone explained what their current and very approximate estimate for the claim is. On the whole turnover of £1.1 billion, which of course is more than the United Kingdom, they estimate the quantum of their claim to be approximately £150 million, it could be more or it could be less as counsel appropriately emphasised. Nevertheless, it is notable that it is similar to the extremely rough guess I made. £150 million is about 13 per cent of £1.1 billion. Armed with this information, one can get a feel for an appropriate way forward.[26]The claimant referred in argument to the familiar principle that in assessing quantum of damages one can adopt a "broad axe" and "sound imagination". Those phrases come from the judgment of Lord Shaw in a patent case, Watson, Laidlaw v Pott, Cassels (1914) 31 RPC 104, in the House of Lords. They have been followed subsequently in many other cases, including in the competition law sphere in Devenish v Sanofi-Aventis [2009] Ch. 390, both in the judgment of Lewison J at first instance and then the judgments of Arden and Tuckey LJJ in the Court of Appeal.[27]These ideas are certainly applicable and they are familiar, but as Mr Jowell for Renesas explained they are not the whole story. Causation is a different question from quantum. For causation, for example, it must be proved that the overcharge was passed on from, say, the intermediary to Vodafone. Mr Jowell submitted that it may be regarded as a different kind of question from the sort of question to which a broad axe is applied. If the overcharge was found to have been passed on, then no doubt assessing the value of that overcharge is the kind of question for which the “broad axe” is appropriate.[28]No doubt, when you get into the detail, there may well not be a clear distinction on the facts of a case. Nevertheless, in my judgment, Mr Jowell was right at least to this extent, that when assessing what has to be disclosed the “broad axe” is neither an excuse for inadequate disclosure and nor is it an excuse to order irrelevant disclosure.[29]This raises a wider point that is applicable in this case. The disclosure in issue on this application serves two different purposes. One is to identify what is in effect illustrative evidence. For example, in a given negotiation there might be instances of things taking place which are relevant, such as possible movements in a price because of a change in a given cost or conversely non-movement of that price in the same circumstances. That may be highly relevant to pass-on. The negotiations on one contract may reveal an episode which is illustrative of a wider point that one side or the other wishes to make, but then again it may not. For this sort of disclosure it is not obvious to me that more disclosure is necessarily better, other than as an instance of Micawberism, in other words, that something might turn.[30]But the other purpose for this disclosure in this case is to help work out quantum directly based on actual numbers. For that sort of question, more data is indeed likely to be better, so that more disclosure may produce a more accurate estimate. But even then, while at some level it is true, nevertheless one needs to be aware of its beguiling logic. The point requires examination.[31]At the end, the estimation of quantum in this case is always just that, an estimate. It is not always worthwhile or proportionate to improve the accuracy of an estimate. If an estimate is good to plus or minus £10 million, then improving the accuracy of the estimate to plus or minus £5 million sounds sensible. But if it costs £30 million to achieve that end then it is highly questionable whether that would be a rational exercise at all. In other words, while of course more can be better, especially when one is dealing with an issue of quantum, it is relevant to ask how much more would it be and how much better would it make the result.[32]Very little of this has been explored in detail. Both sides in many instances in this case have always assumed that the best evidence is what is required. But that is not correct, even in a claim which may be worth £150 million.[33]With that introduction I will turn to the categories themselves. The first group of categories relate to disclosure from Vodafone which relates essentially to the issue of pass-on by Vodafone to its customers of any overcharge, in other words to “downstream” pass-on by Vodafone to its customers. One of the issues, for example, is to look and see if there is evidence that if or when the price for SIM card paid by Vodafone went up, for example because of the cartel, that increase in the SIM price was just passed on by Vodafone to its customers. If that was so then Vodafone may not have lost anything as a result of the cartel's unlawful behaviour. The loser was Vodafone’s customer.[34]The first relevant category is number 20. Category 20 was defined as:
"Documents evidencing how pricing decisions of companies within the claimant group accounted for costs during the period of the claim during but not limited to (1) how different cost categories, e.g. costs of goods sold (COGS), marketing and distribution network et cetera are accounted for in pricing decisions, and (2) descriptions of the components of each cost category at all levels of aggregation (e.g. for specific options or tariffs, tariff families, segment revenues)."
[35]One of the issues raised by this category is the question of the customer’s mobile phone tariffs. The debate is about which tariffs the documents should relate to. That is a general issue which I will call the tariff issue and is one of two major policy decisions I have to resolve in this judgment. It is common ground between the parties that, since there are so many tariffs, disclosure relative to tariffs should be focused on “significant” tariffs rather than all tariffs. However there is a dispute about how to define appropriately “significant” tariffs. I will return to that.[36]A second point arising on category 20 is the definition of the category itself. Vodafone proposed a narrower category defining what it so be disclosed, namely:
"... policy documents which explain the claimants' tariff-setting process together with any business cases and associated documents which show the internal decision-making for setting tariffs."
[37]Vodafone has explained the intent of this narrower category is that it will enable the defendants to identify into which cost categories SIM cards fit and will include documents setting out pricing decisions for significant tariffs. Before me the defendants explained that they will accept Vodafone's proposed category on the footing that it should enable them to achieve what Vodafone has explained it is intended to achieve. They may need to come back on it if it does not. That is a pragmatic approach. I will say that I agree that it makes sense that the documents should enable that result to be achieved and so if it does not the defendants will be entitled to come back.[38]The next category is four categories, 41A to D. They are:
“(41A) Documents identifying each Claimant’s highest revenue tariffs jointly accounting for at least 80% of total tariff revenue in each year from 1999-2012 in each national market on which each Claimant was active (the Significant Tariffs). (41B) Documents showing for each Significant Tariff: (i) corresponding average revenues per user (ARPU); (ii) total revenue (at the level of voice and other services, SMS and data); (iii) corresponding usage data (i.e. the average number of minutes used for each category); and (iv) the development of these measures over time, in each case for the lifetime of the Significant Tariff. This category of documents should include, but not be limited to, documents which break down items (i)-(iv) by voice, SMS and data services provided under the Significant Tariffs. (41BA) Documents corresponding to the request in 41B relevant to all national wholesale markets (e.g. concerning business relations with Mobile Virtual Network Operators, service providers, or retails) on which the Claimants were active during the Period of the Claim. (41C) Documents showing the price components (e.g. monthly fixed fee, fee for additional minutes, etc.) and their development over time, for each Significant Tariff over the lifetime of the Significant Tariff. (41CA) Documents corresponding to the request in 41C relevant to all national wholesale markets (e.g. concerning business relations with Mobile Virtual Network Operators, service providers, or retails), on which the Claimants were active during the Period of the Claim. (41D) Documents showing, for each Significant Tariff, all available breakdowns by cost category including (but not limited to) SIM card costs, costs of goods sold (COGS), cost of customer acquisition, hardware/handset cost of sales, hardware/handset subsidies (or hardware/handset revenues, such that the subsidies can be calculated), marketing and distribution costs, network costs, etc.”
[39]Again, these categories of documents go to the downstream pass-on question. The parties are agreed this disclosure should be given on the basis of significant tariffs, and as I mentioned before the issue is how to define "significant tariffs". The problem is, for example, that in one operating company in one country it may have something like 200 tariffs in a given year. Tariffs can vary. Are they business or private tariffs? Are they pay as you go or monthly tariffs? Are they bundled with a phone or SIM-only tariffs? And no doubt there may be many other types.[40]Vodafone propose the following definition for "significant tariffs":
“The highest revenue tariffs jointly accounting for at least 80 per cent of total tariff revenue for each of Vodafone Limited, Vodafone GmbH, Vodafone Espana S.A.U and Vodafone Omnitel B.V. in each year from 1999-2006. To the extent that the ten tariffs together accounting for the largest share of the relevant Claimant entity’s tariff revenue do not together account for 80 per cent of the relevant Claimant entity’s tariff revenue, the Claimants will only disclose information in relation to those ten tariffs, provided those ten tariffs together account for at least 50 per cent of the relevant Claimant entity’s tariff revenue. If the ten tariffs together accounting for the largest share of the relevant Claimant entity’s tariff revenue do not together account for at least 50 per cent of the relevant Claimant entity’s tariff revenue, the Claimants will disclose information in respect of all tariffs which together account for at least 50 per cent of the relevant Claimant entity’s tariff revenue.”
[41]This definition has two notable features. First, by being limited to four particular operating companies, it is limited to four countries whereas the claim is for eleven European states. As to this, Vodafone says that the four states (UK, Germany, Spain and the Netherlands) represent 75 to 80 per cent of Vodafone's overall commerce in practice. And they submit that the four states done in that way are representative of the whole. So, as Mr Hoskins for Vodafone explains, Vodafone can hardly come to trial and argue that that information could not be said to be representative of the states which are not covered. The defendants say this is not an appropriate approach and I should order disclosure for all states on the same basis. They contend that that is the only appropriate way forward.[42]The second notable feature of the definition is that the way the relationship between 80 per cent, 50 per cent, and the ten tariffs mentioned actually works. If the top ten tariffs do not account for 80 per cent of the revenue in a given year in a given state, then Vodafone will limit the disclosure to those ten as long as those ten tariffs are more than 50 per cent of the revenue. The defendants contend that this is not appropriate either because in effect it is likely to mean that Vodafone are only giving disclosure relative to the tariffs which represent 50 per cent of the revenues. And since the four countries represent only about 75 per cent of the overall revenues, in practice that means that they are only getting disclosure relative to half of 75 per cent, which is 37.5 per cent, of the overall revenue, which is too small.[43]The defendants' alternative approach to the definition of "significant tariffs" is that what should be done is disclosure should be given for all countries of all tariffs that make up 80 per cent of the revenue for each state, taking the highest revenue tariffs first.[44]In argument Mr Brealey for Infineon submitted that a value of 80 per cent is taken as common practice in competition law as a representative sample. I did not find that a very convincing submission. It sounds to me like the Pareto principle which is so general as to be not useful. In terms of a sample as representative, 80 per cent is not a sample, it is most of what is being looked at.[45]The problem here is to do with trying to get a sense of how variable the universe of material from which the sample is to be selected actually is. If the tariffs all operate in the same way then relatively few are needed, probably even far less than Vodafone is offering.[46]Mr Hoskins submits that the definition that has been proposed by his clients, has been carefully thought through and is based on judgment being exercised by the disclosing party. He submits disclosure always involves exercises of judgment by the disclosing party and his clients have made a judgment in good faith and there is no reason to doubt it and the court should take that into account.[47]In my judgment, to decide what to do, the decisive factors are these: first, it is not correct in principle to say that here disclosure must cover all the countries or all the tariffs. The principle is the overriding objective to deal with cases justly and at proportionate cost. That allows for and demands an appropriately nuanced approach to the facts of any given case.[48]Second, Mr Hoskins' point about Vodafone's exercise of judgment is relevant but not determinative. I am quite satisfied on the evidence Vodafone has attempted to make a sensible judgment about how best to go about it, and that is a factor I can take into account, but only on the basis that I have just mentioned.[49]Third, the homogeneity of the population of tariffs in relation to which disclosure is to be given is relevant. If you know all the balls in a bag are the same colour then you only need take out one ball to find out what the colour is no matter how many balls are in there. If you know all the colours of the balls are all different from each other then the only way to find out for sure is to look at them all. Otherwise sampling is required, which is a well-established statistical method. No one is suggesting this exercise is to be conducted on some kind of a rigorous statistical basis, the point I am making is simply to illustrate the problem.[50]It seems to me there is no proper basis for requiring disclosure to cover 80 per cent of the revenue from all the states. Clearly that will require many, many more tariffs than the proposal by Vodafone. No convincing case has been made before me that there is any real risk that Vodafone's proposal will be so materially less representative than the defendant’s 80 per cent blanket approach, that the defendant’s proposal would be worth the cost of the extra work which it would require. I return to my observation before that the fact that more is better is not always enough.[51]The question is whether I should simply choose either side's approach or whether I have any basis for introducing some modification. Thinking about it, it seems to me that the right approach is one based on Vodafone's approach but with two modifications. First, while I accept the point of Vodafone's proposal being to focus effort on the four large states and a large proportion of value, because that is likely to have the biggest impact on quantum, I am not convinced it is fair to exclude any disclosure of any kind from all other states. I will require that in addition, for each of the other states apart from the four big ones, Vodafone must give disclosure relating to the single largest tariff in that state for each year. That will undoubtedly require more work but it will allow some basis for looking at each state. I do not believe the increase in work will be significant enough to undermine the utility of that exercise.[52]Second of all, bearing in mind the nature of the issue is about the effect SIM card pricing may have in driving customer charges, inherently it seems to me it is most likely that if there is to be an effect it will be in SIM-only tariffs. So for each country I will also require Vodafone to include the single highest revenue SIM-only tariff for each period. If that tariff is already covered on the other bases then there is no reason to do anything extra but for some cases it will require an extra tariff. That seems to me to reflect the most likely source of inhomogeneity in the information required.[53]Taking this modified approach recognises Vodafone's good faith judgment of the best approach but has some adjustments to cater for the difficulties raised by the defendants. As I have said, in my judgment the extra burden will be not so significant and will be a fair trade-off to produce a good picture for the court and for the parties. That will apply to categories 41A to D and 20.[54]The next categories are 25 and 38. They are:
“(25) Documents created by the Claimants that were used in setting their respective budgets during the Period of the Claim, for example documents recording the Claimants’ strategic or corporate plans, capital expenditure predictions and/or expected sales/income. (38) The Claimants’ budgets and draft budgets during the Period of the Claim.”
[55]This relates to budget setting documents in category 25 and actual budgets in category 38. Again, the issue to which this is relevant is downstream pass-on. Vodafone submits that draft budgets should not be included and the defendants did not press that point.[56]The debate was about the scope of the category and broadly the point is whether the disclosure should be limited to SIM costs (whether directly identifiable as SIM costs or costs categories which include SIMs), or to other costs. The defendants submit I should include disclosure relative to other costs because it may well be relevant as the following example is intended to show. If one wants to correlate the changes in SIM costs and price to customers, it may be that other costs information shows that even if one finds a correlation between these two variables, that correlation is not indicative of causation because another driver from another cost was in fact the true cause of the change. This explanation may be more relevant to the upstream position from the defendants' point of view but that doesn't matter. It explains why non-SIM costs could be relevant.[57]Vodafone propose a method to take this into account. What they propose is that for the budgets identified in category 38, which will include SIM costs or costs categories should include SIM costs, the disclosed budget should not be redacted for relevance. So by that process the defendants will see other costs in those budgets which are not SIM costs. The advantage of this from Vodafone's point of view is that there are thousands of other budgets in the operating companies which, Vodafone contends it seems to me with some justification, are not relevant on any view. They would be caught by the category as defined by the defendants and so Vodafone’s approach avoids that problem. However, on the other hand, by providing information about these other costs in the budgets which are disclosed, that gives the defendants information about them which they can use and which may put them on a train of appropriate inquiry (I should say a focused inquiry) which may justify further material if really necessary.[58]Infineon have accepted this approach for category 38. In my judgment they are right to do so and I will apply it to that category for all the defendants.[59]Returning to category 25, Vodafone propose to limit it again to SIM costs or costs including SIM. Infineon's position in the light of that is given their position on 38, they are prepared to accept Vodafone's proposal now but may come back. Again, in my judgment, that is a sensible approach and applies to all the defendants. There is no reason at this stage to order wider disclosure beyond that proposed by Vodafone.[60]I now turn to the requested disclosure from the defendants. This relates to, first, categories 63 and 65 and I would be grateful if they could be included. “(63) Contracts between the Defendants/Part 20 Defendant and SIM card manufacturers for the period 1999 to April 2006. (65) Documents relating to negotiations between SIM card manufacturers and each of the Defendants/Part 20 Defendants (including but not limited to procurement processes) for the sale of Chips during the Period of the Claim that provide any indication of how prices are determined between SIM card manufacturers and the Defendants and Part 20 Defendant.”[61]The issue that this disclosure relates to is the question of the overcharge to the SIM card maker intermediaries from the cartel and the pass-on by those intermediaries to Vodafone. One aspect is that if one can correlate movements in the price of the smart card chips to movements in the price of the SIM cards one may be able to say that the overcharge, if it exists, has been passed on.[62]Category 63 is essentially contracts, and category 65 is negotiations. The question is whether this disclosure should be provided only for smart card chips which have been mask code matched, which is the defendants' proposal, or whether it should apply to all sales data on the basis of the wider disclosure of sales data in general which the defendants have been prepared to give, as I have mentioned already, and that is Vodafone's proposal.[63]Before dealing with it, I should mention the other categories to which this applies which are categories 67, 68 and 69. They relate to chip production capacity and utilisation:
“67. Documents relating to costs of smart card chip production in the period 1 January 1999 to December 2012. 68. Documents showing smart card chip production capacity in the period 1 January 1999 to December 2012, subject to category 71 below. 69. Documents showing smart card chip production utilisation in the period 1 January 1999 to December 2012.”
[64]In relation to these categories there are differences between the defendants. Infineon are prepared to disclose categories 67 to 69 on the wider wholesale basis sought by Vodafone. Renesas submit that all three categories should be limited to mask code matching, and Samsung submit that the disclosure should be limited to mask code matching for categories 68 and 69.[65]On these variations, Renesas' submission is that its position is different from that of Infineon. Renesas submits that today it is only a legacy business, that is to say Renesas is no longer trading in this business although it obviously was in the past.[66]Renesas, the organisation, was produced by the merger of NEC, Hitachi and Mitsubishi, in two steps. The various mergers over the years and the nature of the business means there are servers all over Europe and Japan, including but not limited to two useful sources of documents, one held on a server by VBB, who were lawyers for Renesas in the Commission's investigation, and other large server in Japan. But as I said, there are other servers too. The material is difficult to search, particularly bearing in mind among other things the language(s) that need to be catered for and the different formats of the documents having come from three different original sources. Counsel described this as "a perfect disclosure storm". That is Renesas' reason why it should be treated differently from Infineon on this topic, the difficulty of producing the documents.[67]In relation to this, Samsung submits its position is different for a different reason. As best one can tell, its chips represent only 3 per cent of the sales to Vodafone, that is on the basis of the mask code matching approach, but there is no reason not to see that as representative of the whole. So given that at the worst case it is likely to be liable for a very small fraction of the claim, it is not proportionate to require it to give disclosure on a wider basis bearing in mind the costs that that would entail.[68]I will look at this matter in general terms to start with and then consider the special factors later.[69]In general terms, the question is should disclosure of these sorts of issues be on the wider wholesale basis or the mask code match basis? The defendants submit the mask code matching is the only basis on which an actual connection through of a chip from them to Vodafone has been established. They submit Vodafone has to establish its case as to what smart card chips were ultimately sold to it, and since it can only do that for mask code matched smart card chips their disclosure should be limited to that.[70]I do not accept that submission. The problem, as I mentioned before, is about levels of generality. As I have mentioned before, one can look at this in different levels of generality and classify smart card chips in different ways, such as by the model, and I refer to a letter from Infineon's solicitors dated 2nd December 2016 and in particular paragraph 12B. In that letter, Infineon are explaining that they can identify models of smart card chips which went to Vodafone but just not down to the level of mask code. The letter also explains that Infineon have not given disclosure on a model basis but only on a mask code basis.[71]I have no doubt that the precise details of how these generalities work in different companies varies but I infer that the same general concept applies to everyone.[72]So it is not a complete statement of the position to say that the only smart card chips which can be traced through to Vodafone are the ones for which there is a mask code match. To repeat the car analogy I mentioned before, the defendants can say they sold Ford Escorts which ended up the Vodafone, they just cannot say whether they had 1.1 litre or 0.9 litre engines but they are refusing to give any disclosure in relation to those sales as a result.[73]In my judgment the defendants' stance is wrong in principle. Since they can say what models of smart card chips have found their way to Vodafone, in principle documents relating to those models are relevant and should be disclosed.[74]A further aspect of the matter at least as regards categories 67 to 69 and also, it seems to me, category 63 (the contracts), is that for these categories more disclosure is likely to lead proportionately to a better result. This is not only sought as illustrative evidence, it is sought at least in part to generate numerical data to be used by the economics experts in modelling.[75]The extra costs of including that wider class are not trivial but they are likely to be worth the effort in order to improve the economic modelling, given the small fraction of sales which are covered by the mask code matching approach. The question is what level of generality should the court select especially bearing in mind proportionality. Should I select the wholesale approach or mask code matching or some intermediate position?[76]Unlike the case for the tariffs, I am in no position to identify an intermediate. If the defendants had wished to suggest one they could have done but they did not. Therefore, bearing in mind the overriding objective it seems to me the disclosure of categories 63 and 67 to 69 should be on the wholesale basis.[77]One factor which I haven't mentioned so far which was a point made by the defendants is whether it is relevant to take into account the fact that Vodafone do not appear to have sought disclosure from the intermediaries themselves. In the course of argument, Mr Hoskins submitted that the defendants are "the bad guys". In other words, they have been found to be part of a cartel for the relevant two years. Of course, as the defendants pointed out, while that is true that they have been found to be part of a cartel for the relevant two years, Infineon are still appealing, and secondly, the claim also includes a stand-alone claim for other periods.[78]I am not going to place weight on this "bad guys" point save for the following. It does seem to me that since the defendants have been found to have been part of a cartel it is legitimate for the claimants to seek disclosure from them in the first instance rather than bothering the intermediaries who may themselves also have been victims of the price-fixing which has been found. So I do not accept the submission that the fact that Vodafone have not sought disclosure from the intermediaries is a factor which bears any significant weight on the issues I am deciding now.[79]Does this application of the wider class apply also to category 65 which is the negotiations relative to the sales of smart card chips to the intermediaries? I am not convinced that it does. The primary purpose of the disclosure in category 65 is to find illustrative evidence rather than quantitative data. The mask code matching group is a fraction of overall, and it is a small fraction, but nevertheless the mask code matched group is still a large volume of sales. The defendants will be giving relevant disclosure relating to that substantial number of negotiations and I am not convinced that disclosure on a blanket wholesale basis of the negotiations is sensible or necessary. It is not obvious to me that the very large amount of extra material which would require to be searched and produced is likely to produce useful information which would not emerge anyway.[80]Furthermore, Vodafone will be receiving disclosure of the contracts themselves and other information on this wider basis and that may allow for the identification of particular instances of contracts for which negotiations or part of them can be shown to have some specific likely relevance. If that occurs, a focused request for disclosure is always possible.[81]Does the legacy nature of Renesas' business mean that I should make a different order for them from the one that I will make covering Infineon? In my judgment, the answer is no. Renesas emphasised that in searching on a wholesale basis, that will require them to do more work than the mask code matched basis, and I am sure that is true, but I am not persuaded that the marginal increase in effort required by Renesas is sufficiently great to justify not doing it, especially given the fact that the mask code matching category is too narrow.[82]What about Samsung? Does the fact that they are only likely to be liable for something of the order of 3 per cent overall make a difference? It is notable that 3 per cent of £150 million, which is £5 million, is comparable to the amount of money that it is likely Samsung will spend on these proceedings. In my judgment, given that disclosure is going to come from Renesas and Infineon on a wider basis, there is no reason to require a wider disclosure from Samsung, and therefore I will make a different order for Samsung in relation to the relevant categories where they were proposing only to give disclosure on a mask code matching basis.[83]The final category I need to deal with is category 66 which is market share:
“66. All documents and data held by the Defendants/Part 20 Defendants which show their share of the smart card chip market during the period from January 1999 to December 2012 including documents and data which is relevant to establishing the Defendants’/Part 20 Defendant’s share of supply to: (i) SIM card manufacturers as a whole; and (ii) individual SIM card manufacturers”
[84]This is sought by Vodafone. The retort from the defendants is that there is lots of public information and inferences can be drawn from the data which will be disclosed. Therefore they resist giving distinct wide disclosure on this basis.[85]Renesas have explained that they are prepared to give the material which provided the basis for the information which was given to the European Commission relating to market share, and I will require them to do so. But should I require the defendants to do any more than they have explained to me they are prepared to do?[86]I am not persuaded this extra category is worth the effort bearing in mind what is going to be available anyway. Market share is a rather second order factor which is only going to have to be used, if nothing better can be found, to assess relevant contributions. It may turn out to be the only approach available but even if that is so it will inevitably remain broadbrush. I very much doubt that spending time to find more information about market share, when there will already be information both publicly available and available to be derived from the information which is going to be disclosed, will make any worthwhile improvement in the accuracy bearing in mind the costs involved, so I will not make an order in relation to 66.[87]That deals with all the categories of disclosure.

Trial Timetable

[88]I turn to deal with the question of the trial timetable. Vodafone submit that the court can and should today set out a full timetable to trial. The trial must come on after the CJEU's decision on Infineon's appeal, see Masterfoods (Case C-344/98), and National Grid v ABB [2009] EWHC 1326, to avoid any risk of inconsistent decisions between the national courts and the CJEU.[89]But apart from that important principle, Vodafone submit there is every reason to fix the date now and no good reason not to. Vodafone says that by setting the date now, the parties will know when this dispute will be decided. They argue that that in itself is likely to promote settlement as compared to a case where there is no end in sight. They also argue that it will also act, at least to some extent, to limit costs because the more time any proceedings actually take inevitably the more they are likely to cost. Open ended proceedings just increase the costs. They also emphasise an important point, that the first level of appeal from the Commission's decision has now been dismissed by the General Court and what is out standing is the appeal to the CJEU.[90]The defendants emphasise that one must avoid inconsistent decisions. I was referred to the decision in the Air Cargo case in the Court of Appeal [2015] EWCA Civ at 1024, and in particular paragraph 70 of the judgment of the court which was given by Lord Justice Elias which emphasises that only when there is "scarcely any risk of an inconsistent decision should the national court proceed".[91]As Vodafone submitted, as applied to this case, that import statement is concerned with ensuring that the trial itself takes place after the CJEU process is complete. If, as Vodafone propose, the trial date was fixed now but it turned out by the time that date arrived the CJEU decision had not been given then the trial would have to be vacated. In my judgment, the Air Cargo judgment does not go any further than that.[92]The defendants submit, doing their best with the information available from the Court of Justice and from the way in which cases tend to go, that the decision of the Court of Justice could be some time in 2018, but of course the actual date is very hard to predict.[93]The evidence before me is fairly clear. What can be said is that a reasonable worst case for the latest when the CJEU decision would occur is about February 2019. So Vodafone submitted that I should fix a trial for April 2019.[94]At one stage in argument there seemed to be a suggestion that the disclosure issues which I have addressed might mean that a trial in April 2019 was not feasible or practical. If that was suggested, I reject it. There is plainly enough time between now and two years from now to get this case ready for trial. It is a case which has already been going on since 2014.[95]The defendants say that I should not fix the trial now at all. They say fixing it is premature and I should wait until either October of this year, when some of the disclosure is done but not all, or December, when all of the disclosure should be done and the economists can have had a significant amount of time to digest the information. Also, and I am sure this is right, we will know a bit more about how the timing in the Court of Justice is going by that later stage in the year. They contend that that would be the appropriate time to fix the trial date.[96]Vodafone's fear is that, by waiting until that sort of time to fix the date, it is likely that the date that will be arrived at will be pushed back even further. In other words, if we do the fixing in December 2017, it is likely that the trial date will be much later than the date which one could fix now. I agree with Vodafone about that. A date found when fixing in December is always likely to be later than the date found fixing it in June of the same year.[97]The defendants take another point. Having a trial two months after the Court of Justice leaves no time to deal with the outcome if Infineon win their appeal. The point is, and I agree, that, if Infineon do win the appeal, then that is likely to have a significant impact on the trial; there may need to be new pleadings and evidence. Vodafone's case is it is not likely, given that Infineon have lost in the General Court but I am in no position to assess that likelihood. It seems to me that, if I am going to fix the trial now, and I accept Vodafone's points as to why that is a good idea, I need to take a conservative approach. It would be a real disaster to be faced in February 2019 with having to vacate a trial date in April 2019 fixed now in 2017 because Infineon win their appeal in February 2019 and there is not enough time for the case to be re-organised.[98]In my judgment it is generally better to have a certain trial date as early as is practicable. The parties will know where they stand, it does put a ceiling on the likely costs and it is something which is likely to promote settlement. The way to deal with that is to fix the trial now for a first convenient date after 1st October 2019. That means the parties will know when this case will be decided but it is far enough away from a reasonable worst case backstop date for the CJEU in February 2019 to be as sure as one can be that it will not disrupted, whatever the outcome in the CJEU is. At worst and the CJEU decision comes much earlier than anticipated, it might have been possible to try this case earlier but by then I very much doubt those sorts of dates would have been available.[99]I will make the directions in the general form proposed by Vodafone. The parties can liaise to discuss the details. That is my judgment.

Cited in 3 later judgments