“… all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply; (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts”
“...where the court is compelled to use a broad brush in the absence of precision in the evidence of the harm suffered by a claimant, it should err on the side of under- compensation so as (a) to reflect the uncertainty as to the loss actually suffered and (b) to give the defendant the benefit of any doubts in the calculation”
“Regression analysis therefore makes it possible to assess whether, and by how much, observable factors other than the infringement have contributed to the difference between the value of the variable of interest observed on the infringement market during the infringement period and the value observed in a comparator market or during a comparator time period.”
“… a good understanding of the industry concerned, in the first place, to formulate the right hypotheses when constructing the regression equation and to make the right choice as to the factors that are likely to have significantly influenced the variable of interest (and which should therefore be included in the analysis).”
“On the basis of a cycle of just over two years, the Cartel Period would have covered a period of two Crystal Cycles. This implies that one can estimate the variables at the end of the Cartel Period using the values for the same variables at the beginning of the Cartel Period taking into account and extrapolating the trend from previous Crystal Cycles.”
“… as a starting point, it is useful to refer to the median overcharge of (comparable) worldwide cartels. The median overcharge is the overcharge that is most often encountered for global cartels. On the basis of the study of Conner (2014), this median overcharge is 30.4%. However, the average (mean) overcharge figure of 65.6% illustrates that it would not be surprising if there were a significantly higher overcharge.”
“… based on the two largest datasets, which result in a price trend line which has a high R-squared (i.e. a good fit with the Pre-Cartel Period price observations) (12.1” and 13.1” panels), I calculate an average overcharge of 71% and 99%. These values correspond closely to the estimated overcharges halfway through the Cartel Period of 79% and 98% respectively. The average overcharge on the basis of these two panel sizes is therefore 85%. A conservative estimate of the overcharge for all panel sizes, using the lowest of these two figures is 71%.”
“ … there are also some doubts around that, but if we assume that in the pre-cartel period there is -- there is competition, then prices would be reflective of costs to that extent…”
“Q. That trend line incorporates the balance of supply/demand, and so he’s making a simple but robust inference as to where that trend line goes which incorporates the actual cost data. A. He is making a simple assumption, I wouldn’t say it’s robust, and it doesn’t incorporate the actual cost data which we have and which my model does.”
“… the application of two methods produces apparently contradictory results (especially when two opposing parties each rely on a different method), it is normally not appropriate to simply take the average of the two results, nor would it be appropriate to consider that the contradictory results cancel each other out in the sense that both methods should be disregarded. In such a scenario it would rather be appropriate to examine the reasons for the diverging results and to carefully consider the strengths and weaknesses of each method and its implementation in the case at hand.”
“ … regression analysis performed in the study is very likely to suffer from severe endogeneity bias. That is due to the fact that measures of quantities and price are simultaneously determined in the market and thus can not appear in the same (reduced form) regression model as explanatory and dependent variables respectively.. In other words, a reduced form model is incapable to capture a unidirectional causality link between quantity and price unless appropriate instrumental variables are used to correct for the endogeneity bias. … In presence of endogeneity bias, no reliable result can be inferred from the estimation: the estimated coefficients are biased and they bear no information about the investigated hypothesis. Indeed, the direction and the magnitude of the bias on the estimated coefficient cannot be known a priori. This directly invalidates any conclusion which could be drawn from the study.”
“… the most appropriate control as a proxy for the level of demand for TFT-LCD Panels. This variable was previously used in the expert report of Dr Leffler (acting against Participants in the Infringement on behalf of the U.S. Department of Justice (“the DoJ”)), as a proxy for the level of demand for TFT-LCD Panels, as its value is related to the level of use of Notebooks and computer Monitors.I agree with Dr Leffler that semiconductor billings could be considered a useful proxy for demand in that it satisfies the key criteria of being correlated with LCD demand (economic relevance) as well as being unaffected by LCD price (exogeneity).”
“5.8.7 Mr Parker does not appear to consider the mechanism through which changes in LCD panel prices could induce a change in semiconductor billings. Monitor and notebook panels are inputs into the production of PC units. When viewed at a market-wide level, an increase in the price of LCD panels might lead to an increase in the price of PC units. The reason for this is that an increase in the price of LCD panels represents an increase in the costs of producing PC units, which would induce an increase in the price of PC units. An increase in the price of PC units would, all other factors being equal, induce a decrease in the demand for PC units. A decrease in the demand of PC units induces a decrease in the production of PC units, which in turn induces a decrease in demand for inputs into the production of PC units such as semiconductors … 5.8.9 Accordingly, a shock in the price of LCD panels that induces an increase in the price of PC units is likely to have an effect on the level of demand for semiconductors through the mechanism described above. As such, it is likely that the exogeneity assumption of Mr Parker’s econometric methodology is violated by the inclusion of the semiconductor billings variable in his regression analysis. The implication of this is that Mr Parker’s estimate of the overcharge is unreliable, and it is both biased and inconsistent. I note that it is not possible to carry out formal statistical testing for endogeneity. 5.8.10 Thus, the use of semiconductor sales as an indicator of demand does not solve the issue of endogeneity: one cannot use a computer without a monitor and all notebooks of course have a screen included. I assume that the very large majority of PC packages will have a monitor included. 5.8.11 I consider that the use of the more general measure of welfare, income or buying power would be at least as good if not a superior proxy for demand. Furthermore, this sort of measure would not suffer from the issue of endogeneity.”
“Q. Even if there were some effect on semi-conductor demand from an increase in LCD panel prices, it's unlikely to be a meaningful impact, isn't it? A. I can't really -- I can't really -- I can't really comment on whether that is meaningful, yes or no because I -- I've not looked at the facts of the downstream market. Q. So your -- your concern is about the theoretical risk, is it? A. No, it is a real risk, I just -- it's not a theoretical risk, it's a real risk, only I'm not able to quantify exactly to what extent it is a risk. Q. So you're not able to say whether it's a material risk or not? A. No, I don't know if it's a material risk or no.However, I therefore choose not to take the risk at all and therefore I propose the other indicators for the amounts”
“It's one of the many factors that I consider. Again, here I'm not proposing that the amended Parker model or the Parker model is my preferred model, I'm only showing that with some variations in the Parker model, and in this case actually taking a different demand indicator already assessed and proposed by Mr Parker, which rejected, that it will result in different results of the overcharge estimate. So I'm not saying here that I have a strong preference for one or the other, I'm not saying I like GDP better than I like semi-conductors, I'm only saying that if you want to have a model and you want to have a -- a conservative approach, then I think that you should have presented with GDP growth and business confidence. And yes, actually -- I mean, let me just -- just to correct myself on the last sentence, I think that GDP growth and business confidence are better indicators than semi-conductors simply because they don't have the endogeneity problem, so why take a demand indicator that has a certain risk versus two other demand indicators that don't have a risk” [Emphasis supplied]
“Q. You mentioned several times that you started from using the alternative demand indicators that Mr Parker had considered in his report? A. Yes. Q. And did you conduct any further independent analysis of appropriate demand indicators? A. No, I did not. Q. So your views on demand indicators are focused on testing Mr Parker's alternatives in his report? A. Yes, they are …”
“… in this case the R-squared of the model increases quite significantly, which shows there's a much better fit by introducing the additional factors, in this case the lag for the price. So it's not only -- this is -- again this may be a potential concern, but given that the R-squared increases by so much I think it would -- it's very plausible interpretation is that lagged prices price persistence is relevant in this model.”
“Q: … you haven't presented any meaningful evidence of price persistence -- that there would have been price persistence in the counterfactual here? A. In the counterfactual there would -- there would be no reason to assume that price persistence would be different in the counterfactual period or in the counterfactual without the cartel, because the level of uncertainty would be exactly the same”
“I have seen no evidence which indicates that the Infringement impacted on the level of capacity in the market either within the Infringement Period or subsequently, and as a result there is no reason to expect the Infringement to have had an effect beyond the Infringement Period. Moreover, changes of a month in the end date of period treated by my model as part of the Infringement Period results in a minimal change in the estimated Overcharge. ”
“If Post-Cartel Period data are affected by the Cartel (with both LCD panels costs and prices being higher than the competitive level absent the Infringement), and if these Post-Cartel Period data are used as an indication of the competitive level (a benchmark) to estimate the overcharge, then the model will result in estimate of the overcharge that is too low”
“Whether the Infringement impacted capacity is an empirical issue to be addressed via suitable analysis, with the relevant issue being whether there was a reduction in growth in capacity by the Participants compared to what might have been expected in the counterfactual. As I have set out above, I do not consider that there is any such evidence, as capacity grew faster during the Infringement Period than pre-Infringement Period, and Participants grew their capacity faster than non-Participants”
“… in respect of the Cartel, there are strong indications that anticompetitive conduct continued past the end of the Cartel Period and so I do not consider that it is safe to assume that unrestricted competition returned to the market for LCD panels immediately following the end of the Cartel Period. ”
“Accordingly, the effects of the Infringement could have lasted much longer than the Cartel Period and the time taken to return to competitive pricing (the run-off period) is likely to have been considerably longer than might be expected for a cartel covering pricing alone”
“These results indicate that the effects of the Cartel will likely have persisted in both LGD’s monitor and notebook panel prices for at least 6 months after the end of the Cartel Period. The implication of this is that Mr Parker's model will provide an underestimate of the overcharge”
“An overcharge during the Cartel Period in combination with price persistence implies that prices during the immediate Post-Cartel Period were affected by the Cartel: it would have taken time for prices to return to the competitive level.”
“I do not consider that Dr Van der Laan has demonstrated price persistence for 9 months in his analysis in Van der Laan 2. His analysis shows effects for months 1 and 2, but no significant effects for monitors in months 3, 4, 5, 6, or 8, with month 7 being significant but incorrectly signed (that is, a higher price 7 months previously actually reduced current month prices). For notebook panels, Dr Van der Laan finds significant effects in months 1, 2, and 3, but after that largely a mix of insignificant and incorrectly signed lags. It is not economically plausible that prices 4 months previously have no impact, but prices 9 months previously do have an impact, as I would expect the impact to reduce over time. I therefore consider that Dr Van der Laan’s analysis is consistent with price persistence for at most 2-3 months.” [Emphasis supplied]
“18 What's happened, Mr Parker, is you subsequently realised the implications of price persistence for the overcharge estimates; that's the cause of the change?”
“… it is inappropriate to include invoice evidence from October 2001 in the estimate of affected purchase volumes. Given the relevant lead times, I consider it is more appropriate to start from November 2001 (recognising that this is also an approximation).”
“a) There is a risk that not all purchase invoices were retained by Granville or OTC prior to administration, particularly given the historic nature of the Cartel and the fact that most records at that time were hard copy rather than electronic; b) It appears inevitable that not all invoice records will have been retained by the Liquidators. The Claimants’ disclosure statement highlights that the majority of OTC records were destroyed in 2009 and there are certain Granville records which are no longer available due to a small number of boxes containing company records which were inadvertently destroyed in 2017; and c) There is a risk that not all invoices have been identified during the disclosure process or for inclusion in the Invoice Spreadsheet by paralegals or OC, given that hundreds of boxes of hard copy documents have had to be searched manually. … not all records retained by the Liquidators have been reviewed, for the reasons explained in the Claimants' Disclosure Statement.”
“Q. Therefore if management accounts are the right things to use, you essentially agree with Mr Augustin's figure that we've seen in the skeleton? A. Yes.”
“… it's obvious, isn't it, that the management account inferences is the better way of getting to the result? A. I think that may be the case... It is possible that management accounts plus adjustments might be a better way… Mr Augustin's approach is the best way to make those adjustments that's available, but it may be that there is no good way ultimately of making those adjustments…”
“…once the defendants have raised the issue of mitigation, in the form of pass on, there is a heavy evidential burden on the merchants to provide evidence as to how they have dealt with the recovery of their costs in their business. Most of the relevant information about what a merchant actually has done to cover its costs, … will be exclusively in the hands of the merchant itself. The merchant must therefore produce that evidence in order to forestall adverse inferences being taken against it by the court which seeks to apply the compensatory principle.”
“The power to estimate “requires national courts to, firstly, base their assessment on the information reasonably available and, secondly, strive for an approximation of the amount or share of passing-on which is plausible” (para 34). The 2019 Guidelines note that several member states already have rules which correspond to the power to estimate which the Damages Directive envisages and (in footnote 39) refer to Lord Shaw’s statement in Watson, Laidlaw & Co Ltd … that harm may be quantified “by the exercise of a sound imagination and the practice of the broad axe”, and to the application of that statement by the Court of Appeal in Devenish Nutrition Ltd (above), para 110.”
“The loss caused by the overcharge included in the MSC was an increased cost which the merchants would in all probability not address as an individual cost but would take into account along with a multiplicity of other costs when developing their annual budgets. The extent to which a merchant utilised each of the four options, which the CAT identified and we described in para 205 above, can only be a matter of estimation. In accordance with the compensatory principle and the principle of proportionality, the law does not require unreasonable precision in the proof of the amount of the prima facie loss which the merchants have passed on to suppliers and customers.”
“Q. You accept that even if one cannot trace changes in LCD panel prices through to the claimants’ sale prices to customers in the way proposed, downstream pass-on may still have occurred? A. Yes. Q. Your chosen method of analysis is not necessarily informing you about the rate of downstream pass-on in this case? A. No, it doesn’t. Q. And you’re specifically not offering the view that there was zero downstream pass-on in this case? A. Yes, I am not expressing the view. I just – when I was unable to trace things through, I decided to assume a particular zero per cent downstream pass-on for the sake of my calculation.”
“I have not drawn the conclusion that -- I don't think I have at least now -- that Mr Parker is wrong or that Mr Augustin is wrong or -- I'm just saying, look, if you look at these very general economic effects, then there may be other elements in there and that may actually point to -- because Mr Parker already addressed the economic effects -- that may actually point to -- that the truth is more in the direction of Mr [Augustin], like I said, without quantifying it or attaching a percentage to that.”
“Q. You're picking faults with Mr Parker's analysis without providing a constructive alternative yourself, aren't you? A. That's true. That's mostly for the reasons, what I said is, basically, the time pressure, et cetera, and it's also because it wasn't in my instructions to look at it, therefore I had very limited knowledge -- and still have very limited knowledge -- on the downstream market…”
“Worldwide Memory Prices have increase over 400% over the past week. 512MB of memory has increased by almost£100 inc. VAT and further rises are imminent.”
“(4) Magazine advert Price increases - Important Due to the memory price increases and the fact that we do our magazine adverts so far in advance we are having to increase the prices of all the systems that are being offered in the magazines. You will have to explain the current situation to customers and if needed you will have to point out that prices are subject to change. The following blanket rule applies. All 128mb models are being increased by -£10 ex vat =£11.75 All 256+384mb pc’s are being increased by -£20 ex vat =£23.50 All 512mb pc’s are being increased by -£50 ex vat =£58.75 … 10) Memory price increases With immediate effect memory pricing is going up as follows: 0999-060-00001 128mb SDRAM PC133 Now£49.99 0999-060-00004 256mb SDRAM PC133 Now£79.99 Sales of these products must also be limited to 2 per customer. This is to prevent traders from buying up the stock.”
““Following some aggressive price reductions from our competitors, We [sic] are now forced to reduce the retail price of the above product. Ultimately [sic] resulting in the need for a lower cost price. Please can you give this your urgent attention and come back to me with your proposal”
“I consider that economic reasoning, coupled with evidence of internal policies and approaches, can demonstrate pass-on even where there is insufficient data to allow other methods such as a forensic accounting analysis or econometric or statistical evidence of pass-on.”
“Mr Augustin’s conclusion on downstream pass-on is not based on economic theory. Mr Augustin is not an economist. Mr Parker has introduced new evidence he relies on which was not quoted in his reports. Mr Augustin has not had time to respond to this new evidence but reserves the right to do so at a future date.”
“competitive pressure drives prices down towards marginal costs. In the event of a fall in costs, competitive pressure will lead firms to decrease prices to match competitors’ pricing. This effect is symmetrical in the event of a cost increase – firms will need to increase prices to maintain their viability on the market and will similarly react in the same way as competitors. Whether up or down, pass-on of a market-wide variable cost shock is expected to be around 100% in a competitive market.”
“As a matter of economic theory, all variable costs, however small, will need to be passed on to consumers by firms in competitive markets, otherwise those firms will go out of business. However, cost components which are an extremely small proportion of the downstream product price may be passed on at a lower rate than those which are a large proportion, at least if there are price adjustment costs”
“The brand of a monitor was not important to consumers (Parker 1, 8.26-8.32). In any case, for components where branding was important (such as the CPU or GPU), it was not Granville’s brands which were the attraction but rather the component manufacturer brands. These were also sold by Granville’s competitors. … Mr Augustin appears to have misunderstood the relevance of differentiation in relation to the assessment of pass-on. The relevant issue relates to whether Granville was differentiated from its competitors (for example, by access to proprietary components not available to other producers), not whether Granville sold multiple different products.”
“I note that the specific margins on individual bundles vary within a range. I have calculated that the average margin across all of the retail price calculators is 9.4%, with 39 of the 49 products having margins between 0% and 20%, six of the 49 products showing negative margins on the basis of list costs of labour, overheads, licences and delivery, and the remaining four of the 49 products showing margins in excess of 20%. Again, I consider that this is consistent with broadly cost-plus pricing. In every instance, the core approach to pricing is to calculate the costs of constructing the product bundle, with the margin over costs then depending upon commercial considerations, and that margin generally remaining in a fairly narrow range.”
“(177) At a given level of the supply chain, competition between firms can be more or less intense. At one extreme, when a firm is a monopolist at its level of the supply chain, there is no competition. At the other extreme, competition between firms can be very intense (e.g. when many firms sell rather homogeneous products in a market with low barriers to entry), such that each firm acts as a price-taker and does not influence market prices which will be at or very close to the marginal costs of production. This latter case is referred to as perfect competition. In between these two extreme cases lies a broad range of intermediary scenarios, where competition could be more or less intense, depending e.g. on the number of firms in the industry or whether products sold by different firms are close substitutes or not.”
“(178) Such market competitiveness directly impacts passing-on. In the benchmark case of perfect competition, industry-wide cost shocks are passed on at a rate of 100 percent to direct customers. Such stylised market structure of perfect competition may function as a benchmark for the court when assessing passing-on effects (even though in real world markets it is less often observed). By contrast, in monopoly or various intermediary scenarios, the passing-on of an overcharge may not amount to a rate of 100 percent, but instead can lie above or below this threshold, including a passing-on rate of zero percent. (179) One example of market structures characterised by imperfect competition is a market with differentiated products. Differentiation can arise either in terms of product characteristics or geography. For instance, the direct purchasers may offer products which differ from each other in their actual quality, or the quality perceived by the customers of the product. Alternatively, due to different locations of the direct purchasers, the transportation costs of the goods offered may vary in relation to different customers (whose location might also differ). Differentiation can make products less than perfect substitutes of each other. Customers might not view all products as perfectly interchangeable. (180) This less than perfect substitutability might result in reduced competitive pressure on suppliers who may not face competitors offering closely interchangeable products. In other words, according to economic theory, the intensity of competition will be reduced when product differentiation increases. As explained in paragraphs 177 et seq. above, weaker competition will decrease the passing-on rate of an industry-wide overcharge, i.e. as the differentiation of the direct purchasers' products increases, and the passing-on rate of the industry-wide overcharge they were subject to will approach the rate where each direct purchaser is a monopolist. Conversely, when the product differentiation is limited, the passing-on rate of an industry-wide overcharge will be larger.”
“Q. But it also doesn't follow necessarily in the opposite direction, does it? The fact that cover sales are being made alongside the sale of a main product bundle doesn't necessarily mean that pass-on rates are being reduced, does it? A. Well, it might do. If -- if Granville was thinking that the cover sales are very important and they are making good margins on them, there's more incentive not to pass-on an increase because they -- if they don't -- sorry -- if they lose volumes, they won't make the margin on the cover sales. So I think -- I think (inaudible) might think differently about that.”
“The Foncel and Ivaldi paper estimates price elasticities for the UK home PC market. The estimate they provide is for all types of home PCs, which include notebooks and desktop PCs…. As the Foncel and Ivaldi estimate covers all home PCs, it includes those that do not include an LCD screen. As a result, an elasticity estimate for the part of the market that covers PCs with LCD screens would be higher…[because] (e)conomic theory states that the more narrowly defined the market, the more elastic the demand because there are more substitutes. Therefore demand is likely to be more elastic for a subsection of the PC market that consists of PCs with LCD screen only”
“… the Claimants appear to have had a combined market share of only 7% of the market (see Parker 1, §3.36). This implies that the total number of customers for which the first option was a PC package supplied by [Claimants], for which the second option (after being faced with an unexpected higher cost) was a computer package supplied by the [Claimants], et cetera was only 7%. This implies that the remaining 93% of the customers for whom the first choice was a PC package supplied by another supplier, for whom the second-best option (after being faced with an unexpected higher cost), et cetera, opted for an alternative PC retailer… Customers who faced an increase in the price of the Claimants' PC packages were, on the basis of limited market share of the Defendants and the higher joint market share of competitors to the Claimants, very likely to select their second-best option from a supplier who was part of the remaining 93% market share not provided by the Claimants. The random 50% “diversion ratio” applied by Mr Parker (selected as the average between 0% and 100% options for switching) does not appear plausible given the Claimants' market share of 7%. Absent information on the extent to which the Claimants retained their customers by offering an alternative product, in my view 7% would be the best estimate of the potential customers who would purchase a second-best option also provided by the Claimants.”
“Q. But you've got to change that assumption, haven't you,because a 50 per cent diversion ratio, even if it was plausible on the basis of going back and purchasing something with an LCD, does not make any sense when the only thing you might be logically going back and buying is a CRT, there's got to be a lower diversion ratio form that, got to be. A. Well, this is something on which we don't know the answer, so I was putting out some possible mechanisms. I agree with you that one of those mechanisms probably should be considered as within the market, but 50 per cent, as you know, is quite broad brush at that point. Q. Well, it's worse than broad brush, Mr Parker. If one was using 50 per cent for recapture on the basis of a group of options, which included all the LCD options, and if you narrow down the logically possible diversion that isn't captured by the elasticity only to CRToptions, then you must accept starting from 50 per cent that the diversion ratio is going to be well below50 per cent when any looking at CRT diversion. “A. Well, if 50 per cent was the right number in the first place, and it covered all these factors and now you agree one of these factors should not be included, then yes, it would be somewhere lower than 50 per cent. Q. But I think you accepted that your best guess is now less than 50. A. Well, I've accepted if 50 was the right number on the original and now one of the options is lower, then yes, that would be right. But the ultimate question is: what proportion of customers are likely to pick up a CRT? We don't really know, and it's somewhere between 0 and 100 -- if it was really 50, it could be somewhere lower than 50 now that we've ruled out trading down to other LCDs.”
“I think the margin that should be applied should take account of -- should not be 100 per cent but should take account of the cost of warranties, which should take account of commissions paid to sales staff for making these warranties, and probably also any costs of interchange fees if the – if you are making payments by a credit card. And therefore I don't think a 100 per cent margin rate is appropriate. I would think a rate of more likely around 70 per cent is more likely to be correct”
“Once the claimant knows objectively that a cartel has been concealed, it does not need to have certainty about its existence or about the details of that cartel. That is why the Supreme Court made clear that the claimant needs only sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence. … A claim in respect of a concealed event would not be a worthwhile one if it were pure speculation, but it would be if, as in this case, an authoritative regulator had thought it sufficiently serious, having investigated all the evidence available, to lay charges or issue a Statement of Objections. 50 … One can embark on the preliminaries to the issue of a writ once one knows that there may have been a cartel without knowing chapter and verse about the details.”
“The claimant can embark on the preliminaries to the issue of a writ (and therefore the limitation has begun) once it knows that there may have been a cartel and the identity of the participants, without knowing chapter and verse about the details.”
“… the limitation period starts to run under FII when the claimant can embark on the preliminaries to the issue of a writ. That is when it knows that there may have been a cartel and the identity of the participants, without knowing chapter and verse about the details.”
“In a cartel case it is the agreement or concerted practice to which the putative defendant was a party that is concealed. It is therefore the revelation of sufficient facts about the cartel and its parties that matter. The other ingredients of the cause of action (effect on trade, and object or effect on competition) are consequences of the existence of the cartel, not discrete facts that are, in a practical sense, capable of being independently concealed. Once revealed that a defendant was party to a cartel these matters are consequential.”
“The European Commission can confirm that in May 2009 it sent a Statement of Objections under EU antitrust rules to a number of companies active in the supply of liquid crystal display (LCD) panels, concerning their alleged participation in a cartel in violation of EC Treaty rules on restrictive business practices (Article 81 of the EC Treaty and Article 53 of the Agreement on the European Economic Area). The product under investigation is the main component of thin, flat monitors used for example in mobile phones, televisions, computers, digital watches and pocket calculators. … A Statement of Objections is a formal step in Commission antitrust investigations in which the Commission informs the parties concerned in writing of the objections raised against them. The addressee of a Statement of Objections can reply in writing to the Statement of Objections, setting out all facts known to it which are relevant to its defence against the objections raised by the Commission. The party may also request an oral hearing to present its comments on the case. The Commission may then take a decision on whether the conduct addressed in the Statement of Objections is compatible or not with the EC Treaty's antitrust rules. Sending a Statement of Objections does not prejudge the final outcome of the procedure.”
“Dutch electronics maker Philips PHG.AS and South Korea's LG Display 034220.KSLPL.N said on Monday they had received a charge sheet from the EU's executive arm about suspected price-fixing on LCD panels…. Philips said it received the charge sheet as a former shareholder of LG Display and this did not mean it was directly involved. LG Display, the world’s No. 2 maker of LCD panels, said it was reviewing the statement of objections but declined to comment further. … In a separate case, LG Display in November pleaded guilty to LCD price-fixing in the United States, along with Japan's Sharp Corp 6753.T and Taiwan's Chunghwa Picture Tubes 2475.TW. LG Display paid$400 million in fines then. A spokesman at Samsung Electronics 005930.KS, the world's No. 1 LCD maker and LG's home rival, declined to comment on the latest development but said it had been fully cooperating with the EU investigation, which started in 2006.”
“The European Commission did not identify the suspected cartel members, but Philips, the Dutch electronics company, acknowledged that it had received the formal statement of objections in respect to LG Display, a jointly owned business in which it has since sold its remaining stake. … The Commission’s charges – which were delivered to the companies two months ago but which came to light only on Monday – come three years after it was revealed that authorities in the US, Japan, South Korea and Europe had launched an international investigation into alleged price-fixing by LCD screen manufacturers. … In late 2006, when the industry was struggling with falling prices and oversupply, LG Philips said that it was – along with a number of other companies – being investigated by international regulators for “possible anti-competitive conduct”
“LCD flat screen makers charged with price fixing LG and Philips among electronic groups accused by European Commission of operating a cartel” in these terms: “European regulators have charged several of the world's biggest technology companies, including LG and Philips, with fixing the price of flat LCD screens in a move that could lead to fines running into hundreds of millions of pounds. The European Commission said today that it has sent a formal statement of objections to a number of companies alleging that they operated a price-fixing cartel. ,,, The commission did not reveal who had received its letter – part of an investigation launched three years ago – but Philips later admitted that it had been charged and it would "vigorously oppose" the allegations. LG added that it had also received the statement of objections, which it was reviewing. … In a separate case, LG Display pleaded guilty to price-fixing charges in the US last November after an investigation by the American competition authorities. Also pleading guilty at the time were Sharp, Hitachi and Taiwan's Chunghwa Picture Tubes. Together they paid some$600m in fines for fixing the price of screens sold to gadget manufacturers. That investigation followed scrutiny by the authorities in Japan and South Korea.”
“Prices for the flat screens in televisions, personal computers and cell phones have plummeted in recent years — but the decline would have been even faster if it hadn’t been for an international price-fixing cartel, the Justice Department said on Wednesday. Three leading flat-screen producers — LG Display of South Korea, Sharp of Japan and Chunghwa Picture Tubes of Taiwan — pleaded guilty and agreed to pay a total of$585 million in criminal fines for their role in fixing the price of liquid-crystal display panels. LG is paying the most: a$400 million fine, the second-highest criminal fine ever imposed by the Justice Department’s antitrust division. … ”
“11.— Choice of applicable law: the general rule. (1) The general rule is that the applicable law is the law of the country in which the events constituting the tort or delict in question occur. (2) Where elements of those events occur in different countries, the applicable law under the general rule is to be taken as being— … (c) in any other case, the law of the country in which the most significant element or elements of those events occurred. … 12.— Choice of applicable law: displacement of general rule. (1) If it appears, in all the circumstances, from a comparison of— (a) the significance of the factors which connect a tort or delict with the country whose law would be the applicable law under the general rule; and (b) the significance of any factors connecting the tort or delict with another country, that it is substantially more appropriate for the applicable law for determining the issues arising in the case, or any of those issues, to be the law of the other country, the general rule is displaced and the applicable law for determining those issues or that issue (as the case may be) is the law of that other country. (2) The factors that may be taken into account as connecting a tort or delict with a country for the purposes of this section include, in particular, factors relating to the parties, to any of the events which constitute the tort or delict in question or to any of the circumstances or consequences of those events.”
“ … the tort in question is infringement of Article 101, which is a creature of EU law and has direct effect throughout the EU. Against that background, the fact that the pleaded damage has all occurred within the EU and the internal market may well give that factor more weight in the value judgment which has to be performed than it would have in relation to other economic torts with no EU law dimension. Indeed, although we do not say it could never happen, we have some difficulty in imagining a case where a private law claim for damages for breach of Article 101, brought by a claimant domiciled within the EU in respect of loss allegedly suffered in the EU as a consequence of a worldwide cartel, could properly be prevented from going forward to trial on the basis that the applicable law of the claim was clearly a foreign law.”
“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.” [Emphasis supplied]
“Woodpulp I is therefore authority for at least three key propositions. First, the territorial scope of Article 101 is not confined to anti-competitive agreements made within the EU. Secondly, wherever such an agreement is made, it falls within the scope of Article 101 if it is implemented in the EU. Thirdly, it accords with the territorial principles of public international law to apply the competition rules of EU law to the implementation within the EU of anti-competitive agreements, wherever they are made. The implementation within the EU took the form of direct sales by members of the cartel to customers in the EU, at inflated prices.”
“it must be borne in mind that, as the Advocate General noted in point 288 of his Opinion, the EU competition rules set out in arts 101 and 102 TFEU are intended to prevent collective or unilateral conduct of undertakings limiting competition within the internal market … Thus, the court has held, as regards the application of art.101 TFEU, that the fact that an undertaking participating in an agreement is situated in a third country does not prevent the application of that provision if that agreement is operative on the territory of the internal market… Moreover, it must be noted that, in order to justify the application of the implementation test, the court has emphasised that 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 qualified effects test pursues the same objective, namely preventing conduct which, while not adopted within the EU, has anti-competitive effects liable to have an impact on the EU market… The argument put forward by Intel, supported by ACT, that the qualified effects test cannot serve as a basis for the Commission’s jurisdiction is therefore incorrect… Accordingly, that argument must be rejected as unfounded… it is necessary to examine the argument put forward in the alternative by Intel, according to which, even if the qualified effects test were applicable in the present case, the General Court wrongly considered that the agreements concluded with Lenovo in 2006 and 2007 would have foreseeable, immediate and substantial effects in the EEA… it is necessary to examine the conduct of the undertaking or undertakings in question, viewed as a whole, in order to determine whether the Commission has the necessary jurisdiction to apply, in each case, EU competition law… insofar as Intel criticises the General Court for considering that it was foreseeable that the agreements concluded with Lenovo concerning CPUs for delivery in China would have an immediate effect in the EEA, it must be pointed out, first, that the General Court rightly held, in [251], [252] and [257] of the judgment under appeal, that it is sufficient to take account of the probable effects of conduct on competition in order for the foreseeability criterion to be satisfied… Secondly, since in [255] of the judgment under appeal, the General Court found, in essence, that Intel’s conduct vis-à-vis Lenovo formed part of an overall strategy intended to ensure that no Lenovo notebook equipped with an AMD CPU would be available on the market, including in the EEA, the General Court did not err in considering, in [277] of the judgment under appeal, that Intel’s conduct was capable of producing an immediate effect in the EEA… That argument must therefore be rejected as unfounded…. Lastly, Intel submits that the General Court wrongly considered that the agreements concluded with Lenovo concerning CPUs for delivery in China could have a substantial effect on the EEA market even though the effects of those agreements were negligible… It suffices, in that respect, to note that the General Court held that Intel’s conduct vis-à-vis Lenovo formed part of an overall strategy aimed at foreclosing AMD’s access to the most important sales channels, which, moreover, Intel does not dispute in its appeal… Accordingly, in view of the considerations set out in [50] above, the General Court did not err in law in holding that, faced with a strategy such as that adopted by Intel, it was appropriate to take into consideration the conduct of the undertaking viewed as a whole in order to assess the substantial nature of its effects on the market of the EU and of the EEA.”
“As the Commission emphasises, to do otherwise would lead to an artificial fragmentation of comprehensive anti-competitive conduct, capable of affecting the market structure within the EEA, into a collection of separate forms of conduct which might escape the EU’s jurisdiction.”
“provides substantial support for the argument that a worldwide cartel which was intended to produce substantial indirect effects on the EU internal market may satisfy the qualified effects test for jurisdiction. Whether or not the test is satisfied will depend on a full examination of the intended and actual operation of the cartel as a whole.”
“… the European case law which we have reviewed shows it to be at least arguable with a real prospect of success that intended effects within the EU internal market of a worldwide cartel fall within the scope of Article 101, and that the production of such effects on the EU market, if substantial and of a systemic nature, may properly be characterised as immediate effects of the offending agreements. The test is one of substance rather than terminology, and in the context of the qualified effects test we do not consider that directness of effect should be treated as an additional requirement to immediacy of effect. The relevant criterion is that the effects produced in the EU should be immediate, and the European Court has now given authoritative guidance on how that concept should be understood. We are unable to accept the proposition that the mere existence of even one prior sale to an innocent third party outside the EU at an early stage of the supply chain must, without more, lead to the conclusion that the test of immediacy cannot be satisfied. Like the other criteria, it requires an overall assessment in light of the offending conduct viewed as a whole.”
“What matters is that the cartel was always intended to have worldwide effect, including in the EU, and it must have been contemplated that the supply chains whereby cartelised goods ended up being purchased within the EU might include intra-group transactions. The important point is that purchases are ultimately made, at an inflated cartel price, within the territory of the EU. The existence of such purchases, on any substantial scale, must therefore have an effect on the operation of the internal market.”
“… LCD panels produced by the addressees may also be purchased by customers in the EEA as part of IT and TV final products sold in the EEA by third parties (hereinafter referred to as "Indirect Sales"). These indirect sales were of significant magnitude as more than 16 million LCD TVs were sold in Europe during the infringement period. With their joint world-wide market share of around 75% in large LCD panels (see recital 43), the sales of TVs manufactured with the incorporation of LCD panels of the parties could be estimated at more than 12 million units, while LCD Monitors incorporating the parties' products and sold in Europe, the Middle East and Africa ("EMEA") amounted to around 200 million pieces. Europe represented a significant share of the world-wide market of final LCD products. Sales of LCD TVs to Europe went from 7.8% of total world-wide sales in the last quarter of 2001 to 40.5% by the end of 2005. Sales of LCD Monitors to Europe went from 37.1% of world-wide sales at the end of 2001 to 26.9% by the third quarter of 2003. Monitor sales to the EMEA represented 35% of the world-wide market in the third quarter of 2004, increasing to 38,7% by the end of 2005.”
“… it can be concluded that the cartel arrangements had an appreciable effect on trade between Member States and Contracting Parties to the EEA Agreement. In this connection, it is not relevant that the market situation with respect to LCD panels was not identical to the one at stake in the Woodpulp case. In any event, the Court of Justice held in Woodpulp that even if there were no trade between Member States in the intermediary product concerned by the cartel arrangements, where the product constitutes the raw material for another product marketed elsewhere in the Union, the agreement whose object or effect is to restrict competition by fixing prices for the intermediate product is capable of affecting trade. It is not disputed that there is significant trade between Member States of finalised products incorporating LCD panels.”
“But an unparticularised and unproved claim simply for “damages” will not suffice. General damages are not recoverable. The common law does not assume that delay in payment of a debt will of itself cause damage. Loss must be proved.” and at [97] that “(i)f a party chooses not to prove his interest losses the remedy provided by the law is to be found in the statutory provisions.”
“61. The Claimants are entitled to complete compensation for all of their losses, including for … additional financing costs and/or for interest losses incurred as a result of having to pay unlawful Overcharge amounts in respect of LCD Panels and LCD Products throughout the Relevant Period and having been kept out of and denied the commercial use of monies. 62 Throughout the Relevant Period the Claimants and each of them borrowed money from banks and other creditors, on which interest was payable at prevailing rates. In the absence of the Overcharges to which the Claimants were subjected throughout the Relevant Period, the Claimants would have offset such savings against their respective borrowings and/or would have borrowed less and/or would have reinvested the amounts in their respective businesses. 63. In the premises, and/or in view of the facts and matters pleaded herein, the First and Second Claimants are entitled to and do claim interest whether under common law and/or under the court's equitable jurisdiction on a compound basis during the Relevant Period. Compound interest is claimed at a rate of 2.5% per annum above the Bank of England Base Rate ("Base Rate") as it stood from time to time, alternatively at such rate and for such period up to the date of judgment as the Court thinks fit. The Third Claimant claims simple interest under theSenior Courts Act 1981 during the Relevant Period at the rate of 2.5% per annum above Base Rate, or such other rate as the court thinks fit. 64. At trial, the Claimants will adduce evidence of their respective borrowings and/or investments, as appropriate.”
“…recognise that a claimant or plaintiff› kept out of his or her money in a commercial context is as a norm entitled to claim and receive as damages for breach of contract interest on the withheld sums that is calculated by reference to the cost of borrowing such sums at a conventional rate without evidence from which such a loss can be inferred” and that “… such claims are for actual or real damages, not theoretical and non-existent loss…”
“A plaintiff seeking interest as damages where the defendant has withheld money in breach of contract must plead and prove its loss. If a plaintiff pleads that it has incurred loss by having to borrow replacement funds, what it must prove are facts and circumstances from which a court may properly infer on the balance of probability that it has borrowed funds to replace that which has been withheld from it. What evidence will suffice to enable such an inference to be made will depend upon the facts of the particular case.”
“…the most likely use of that extra cash would have been to reduce debt (either by paying off existing debt earlier or by taking on lower amounts of new debt). This is because, in my experience, businesses that take on significant debt to help fund their business operations will seek to repay that debt at the earliest opportunity and save the interest on that debt (which is effectively a guaranteed saving) unless they have other ways in which they can use cash available in the business to generate financial returns in excess of the cost of debt. Furthermore, I would generally assume that a business would apply funds so as to reduce its most expensive (or otherwise onerous) debt first, where it has outstanding debt with different interest rates (or other onerous terms).”
“… primarily in order to compensate for any additional financing costs the Claimants may have faced as a result of having suffered a loss of profits. Additional financing costs could have been incurred if, for example, the loss of profits resulted in increased debt levels compared to the counterfactual, assuming the Claimants would have paid interest on that debt. Equally, additional financing costs could have been incurred if the loss of profits resulted in lower levels of investment in the business or if they created a need for additional shareholders’ funds to be raised.”