Short Reads

Court of Justice upholds fine imposed on Philips and LG in the cathode ray tubes cartel

Court of Justice upholds fine imposed on Philips and LG in the cathod

Court of Justice upholds fine imposed on Philips and LG in the cathode ray tubes cartel

02.10.2017 NL law

On 14 September 2017, the European Court of Justice dismissed the appeals brought by LG Electronics Inc. (LG) and Koninklijke Philips Electronics NV (Philips) against the General Court's (GC) judgment in the cathode ray tubes (CRT) cartel [see our October 2015 Newsletter]. The Court of Justice confirmed that the relevant "value of sales" in the EEA includes sales of finished products incorporating the cartelised products in the EEA, even if those cartelised products were first sold to entities outside the EEA by means of intragroup sales.

The European Commission had held Philips and LG liable, both as direct participants in the cartel and as the parent companies of their joint venture, the LPD group. Firstly, Philips and LG claimed that their rights of defence had been breached because the Commission did not send a statement of objections (SO) to their joint venture. The Court confirmed that "the sending of a statement of objections to a given company seeks to ensure that the rights of defence of that company are respected, rather than those of a third party". Since the Commission had decided not to go after the joint venture, it was not required to send an SO.

Secondly, Philips and LG challenged the Commission's method of calculating the fine, in particular how it established the relevant turnover (the "value of sales" in the EEA) which is used as an important parameter in the fine calculation.

Philips and LG submitted that their joint venture sold cartelised CRTs to Philips and LG, which in turn incorporated these CRTs in monitors (the "transformed products") that were sold in the EEA. Philips and LG argued that the Commission should not have included the sales of these "transformed products", incorporating the cartelised CRT sales, in the relevant value of sales for the purposes of calculating the fine. According to Philips and LG, the sales by the LPD group to LG and Philips should not be considered "intragroup sales", but as sales from one independent entity to another.

The Court rejected these arguments and ruled that the LPD group and its parent companies formed a vertically integrated undertaking, and as such constituted a single undertaking "only as regards competition law and the relevant market for the infringement". Therefore, the sales of transformed products in the EEA by the economic unit consisting of the LPD group and its parent companies had to be included in the relevant value of sales. The Court added that vertically integrated participants to a cartel could not, solely because they incorporated the "cartel goods" into products finished outside the EEA and then sold in the EEA, expect that those sales of finished goods are excluded from the calculation of the fine.

This article was published in the Competition Law Newsletter of October 2017. Other articles in this newsletter:

  1. Court of Justice landmark judgment: Intel's EUR 1.06 billion fine is sent back to the General Court
  2. Court of Justice clarifies that a change from sole to joint control requires EU clearance only if the joint venture is "full-function"
  3. Court of Justice provides guidance on examining excessive prices as abuse of a dominant position
  4. Curaçao Competition Act entered into force on 1 September 2017
  5. District Court of Rotterdam dismisses Vodafone claims of abuse of dominance by KPN

Team

Related news

30.04.2019 EU law
Climate goals and energy targets: legal perspectives

Seminar - On Tuesday April 30th, Stibbe organizes a seminar on climate goals and energy targets. Climate change has incited different international and supranational institutions to issue climate goals and renewable energy targets. Both the UN and the EU have led this movement with various legal instruments.

Read more

21.03.2019 NL law
15 aspects of Brexit you did not know

Short Reads - A Brexit without a deal, or with a deal that does not cover all relevant aspects, is still a potential scenario. We have highlighted a number of unexpected legal consequences of Brexit in such a no deal or incomplete deal scenario.

Read more

15.03.2019 EU law
European Court of Justice issues landmark ruling on parental liability

Short Reads - On 14 March the European Court of Justice issued a landmark judgment in the Skanska case. In this ruling, the Court of Justice held that parent companies can be held liable for the damage caused by a competition infringement committed by their subsidiary if the parent company (that holds all the shares in the subsidiary) has dissolved the subsidiary but continued its economic activity.

Read more

01.03.2019 NL law
Does selling a phone on an online marketplace make you a "trader" under the Unfair Commercial Practices Directive and the Consumer Rights Directive?

Short Reads - Online marketplaces provide sales channels not only for professional traders but also for individuals selling second-hand goods. For buyers, online advertisements do not always make it clear whether the seller is a professional trader or an individual. This distinction is important because consumers buying from a professional trader can benefit from EU consumer laws, while these protections do not apply in consumer-to-consumer sales.

Read more

Our website uses cookies: third party analytics cookies to best adapt our website to your needs & cookies to enable social media functionalities. For more information on the use of cookies, please check our Privacy and Cookie Policy. Please note that you can change your cookie opt-ins at any time via your browser settings.

Privacy – en cookieverklaring