The Court of Appeal of England and Wales ruled last week that electronics company iiyama’s cartel damages actions against the members of the cathode ray tube (“CRT”) and liquid crystal display (“LCD”) cartels may proceed to trial.
CRTs are components that were incorporated in TV and computer screens before the use of LCD screens became widespread. On 8 December 2010, the European Commission fined six undertakings 648 million Euros for participating in anticompetitive practices in the LCD sector. Two years later, on 5 December 2012, it fined seven undertakings a total of 1.47 billion Euros for their participation in similar conduct in the CRT market.
Last week’s judgment is the result of iiyama’s follow-on claims in respect of the alleged damages suffered as a result of the two cartels. Through it, the Court of Appeal overturned the High Court’s finding that iiyama’s indirect purchases from these global cartels fell outside the territorial scope of EU competition law, meaning that iiyama’s claims can go to trial.
A key part of the High Court’s reasoning at first instance was that, as the goods were sold by the defendants to purchasers in Asia, and then sold on by those third-party purchasers to iiyama in the EEA, this lengthy supply chain could not amount to implementation of the cartel in the EEA. In light of this, the High Court held that the claims lacked a sufficient territorial connection with the EU and, thus, fell outside the territorial scope of EU competition law.
In its judgment, the Court of Appeal ruled that, according to the case law of the European Court of Justice (“ECJ”), it is at least arguable that Article 101 TFEU is applicable when global cartels cause intended effects within the EU. According to the Court of Appeal, the recent judgment of the ECJ in the Intel Case, where the ECJ applied the “qualified effects” test (“when it is foreseeable that the conduct in question will have an immediate and substantial effect in the European Union”) to decide on the Commission’s jurisdiction, supports this argument. As such, a worldwide cartel, which was intended to produce substantial effects on the EU internal market may satisfy the qualified effects test for jurisdiction.
The Court of Appeal stressed that whether or not the test is satisfied in this case will depend on a full examination of the intended and actual operation of the CRT and LCD cartels as a whole, which assessment will be made at trial.