Stand-alone cartel damages held to be arguable
25 June 2019
The proceedings followed a European Commission decision1 that a worldwide cartel had fixed prices and other selling conditions in respect of colour picture tubes (CPTs) used in computer monitors and certain TVs2 (the Cartel Decision). The claimants submitted that they had been overcharged for TVs containing CPTs (which represent around 40% of a TV’s value) (the EU law claims). They also alleged unlawful means conspiracy and unlawful interference with business in that the cartel had “targeted” them and intended to cause them loss (the economic tort claims).
None of the defendants was an addressee of the Cartel Decision which held only their parent companies liable. The claims were “stand-alone” rather than “follow-on” actions and the Cartel Decision was not binding on the High Court, as it would have been had they been addressees. The liability of the defendants, therefore, had to be established.
The EU law claims
The claimants brought a “factual case” against the defendants, alleging that they participated in and/or knowingly implemented the cartel. In the alternative, they brought a “legal case” alleging that the defendants should be treated as having participated in and/or knowingly implemented the cartel, as members of the same undertakings that were addressees of the Cartel Decision.
The “legal case” had two separate but related grounds:
- The Provimi Ground3: a company can be liable for an infringement, regardless of whether it had actual knowledge of that infringement, where it is part of the same “undertaking” or “single economic unit” as the infringing company and has implemented the cartel.
- The Decisive Influence Ground: where company X (usually, but not necessarily, the parent company) has “decisive influence” over company Y, so that the two companies are members of the same “undertaking” or “economic unit”, X will be liable for an Article 101 infringement carried out by Y. In EU law there is a rebuttable presumption of “decisive influence” where X owns all or most of the shares in Y.
The defendants’ applications for summary judgment/strike-out
The defendants applied for summary judgment or striking out of the EU law claims, contending that:
- there was no arguable case on the facts that they participated in the infringement (in the sense of having had anti-competitive dealings with competitors), implemented or had knowledge of it; and
- in light of the grounds in Sainsbury’s v Mastercard4, they could not be held liable on an imputation basis on the Provimi Ground, as the liability of their parent companies could not be imputed down the corporate chain.
The defendants also applied for strike-out and/or summary judgment of the economic tort claims on the basis they were not arguable.
The EU law claims were arguable and should not therefore be struck out
The court held that what matters is whether the “participant” or “knowing implementer” is substituting coordination or cooperation with competitors for competitive conduct. For the purposes of these applications, the question was whether the claimants’ claims had no realistic prospect of success.
The court held that the claimants’ claims – both “factual” and “legal” – were arguable and dismissed the defendants’ applications.
The “factual case”
The court held that, on the facts, the first Toshiba defendant (TIS) had been involved in activities that were important to the operation of the cartel, including the manufacture of TVs using the cartelised product acquired from an associated company which was an established cartelist, and the onward sale of the transformed product. TIS had also had direct commercial dealings with the claimants. These activities arguably amounted to the actus reus of cartel participation and/or implementation and so the case against TIS was not suitable for summary disposal.
The court also held it was arguable that the fourth Panasonic defendant (PE) had been actively and knowingly involved in the cartel through its invoicing and marketing services and by controlling and overseeing subsidiaries selling cartelised products, with whom it shared directors, and so the factual case against PE also could similarly not be summarily disposed of.
The “legal case” – the Provimi Ground
It was not necessary to decide whether knowledge and liability could be attributed to TIS on the Provimi Ground given that the factual case was arguable. However, the court held that provided (i) there is an arguable case that an “undertaking” existed; (ii) the entity in question (TIS) was a member of it; and (iii) there was some participation in or implementation of the cartel by TIS then the case was not bound to fail. The first two elements were conceded by the defendants and the court held that the third was arguable on the basis of the facts of TIS’s role and activities.
The court held that PE’s self-characterisation as a mere holding company was to be treated with “considerable caution” as, on the facts, it was arguable that PE was a “significant cog in the implementation of the cartel in Europe on the part of the Panasonic group” and was therefore part of a “single economic unit” with other subsidiaries alleged to have participated in the cartel.
The court considered PE’s submission that the liability of its parent company could not be attributed down the corporate chain to PE was based on a false analysis of the Provimi Ground. Where there is a “single economic unit” which has committed an infringement, each member of the unit which has participated in and/or implemented the cartel bears responsibility for it, even without knowledge of the cartel.
There was an arguable case that PE was a member of an infringing “single economic unit” and that it had itself participated in and/or implemented the cartel, whether or not in a subordinate manner or with knowledge of the cartel.
The “legal case” – the Decisive Influence Ground
The claim against PE relied on the Decisive Influence Ground, as well as the Provimi Ground as, unlike TIS, PE was a 100% owner of a number of subsidiaries alleged to have participated in the cartel. PE accepted it had “decisive influence” over its wholly-owned subsidiaries, but submitted that there was no arguable case of participation by them in the cartel for which it could be liable. This was rejected by the court.
Economic tort claims dismissed
The court concluded there was no requisite intention to injure the claimants and that, therefore, the economic tort claims would be struck out.5
The judgment considers a number of important issues which are relevant to cartel damages cases including what sort of conduct constitutes “participation in” or “implementation of” a cartel and what level of knowledge is required to constitute “knowing implementation”. It is also a reminder that a claimant can claim damages caused by a cartel even if it has not bought the product directly from the addressee of a cartel decision but has purchased downstream products containing the cartelised product, so long as it is sufficiently arguable that the defendant participated in, or knowingly implemented, the cartel.
1 Case COMP/39437.
2 In breach of Article 101(1) TFEU and Article 53 EEA.
3 Provimi Limited v Aventis Animal Nutrition SA & ors  ECC 29.
4 Sainsbury’s v Mastercard  CAT 11.
5 WH Newson Holdings Ltd v IMI Plc and others  EWCA Civ 1377 and Emerald Supplies v British Airways  EWCA Civ 1024 applied.
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