Short Reads

UK High Court held that territorial limits apply to EU cartel damages claims

UK High Court held that territorial limits apply to EU cartel damages claims

UK High Court held that territorial limits apply to EU cartel damages claims

02.06.2016 EU law

On 23 May 2016, the High Court of Justice of England and Wales ("High Court") delivered its judgment in the damages case against six defendants that had participated in two cartels involving cathode ray tubes. The High Court found that the claimants' damages, based on purchases of the cartelised products in Asia fell outside the territorial scope of the cartel prohibition of Article 101 of the Treaty on the Functioning of the European Union ("TFEU"). Accordingly, the High Court dismissed the claim in full.

Cathode ray tubes ("CRT") are components that used to be incorporated in television and computer screens before the widespread use of LCD screens. On 19 October 2011, the European Commission issued a decision in which it found that several producers of CRTs had formed a cartel in the downstream CRT market in breach of Article 101 TFEU. Subsequently, on 5 December 2012, the Commission issued a decision in which it found that several producers of CRTs had formed a cartel in the downstream CRT market in breach of Article 101 TFEU.

In proceedings before the High Court, claimant Iiyama Group ("Iiyama"), a seller and distributor of computer monitors, sought compensation from the participants of both cartels for the alleged damages it had suffered as a result thereof. Iiyama had indirectly purchased the CRT and CRT glass incorporated in those monitors in Asia, therefore outside of the EEA.

Iiyama argued that because it had sold the monitors containing the CRT and CRT glass into the European Economic Area ("EEA"), there was a sufficient connection between its indirect purchases of CRT and CRT glass outside of the EEA and the damages allegedly suffered from the breach of EU competition law.

The High Court dismissed these arguments. It ruled that sales outside of the EEA fell outside of the territorial scope of Article 101 TFEU. Furthermore, the sales forming the basis of Iiyama's claim were insufficiently connected to the EEA. They could not be viewed as the "implementation" in the EEA of an alleged non-EEA cartel, as they were effected outside the EEA and incorporated in products sold outside the EEA. The High Court also held that the sales had no immediate, substantial and foreseeable effect on any EEA markets.

The judgment is important as it confirms that the territorial limit of Article 101 TFEU applies to damages claims based on violations of EU competition law as well. The High Court’s ruling will make it more difficult for claimants to achieve compensation in Europe for damages in relation to non-EEA sales.

This article was published in the Competition Law Newsletter of June 2016. Other articles in this newsletter:

  1. General Court rejects Trioplast's action for annulment of a Commission notice to pay interest
  2. Commission blocked Hutchison's proposed acquisition of Telefónica UK
  3. General Court confirmed that German law on renewable energy amounts to State aid
  4. European Commission publishes guidance on the notion of State aid
  5. District Court of Rotterdam upheld the ACM's unconditional clearance decision in telecoms merger KPN/Reggefiber
  6. Rotterdam District Court considered "franchise agreements" in breach of competition law in launderette cartel case

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