European Union Court Upholds €116 Million in Fines Against Seven Electronics Companies for Participating in Cartel in Optical Disk Drive Market

On July 12, the General Court of the European Union announced that it had upheld a 2015 decision by the European Commission finding that a total of seven leading electronics companies had participated in a cartel  in the optical disk drives (ODD) market, and imposing a total of €116 million in fines against those companies.  Those companies — Sony Corporation and Sony Electronics Inc., Sony Optiarc Inc., Quanta Storage Inc., Hitachi-LG Data Storage Inc., Hitachi-LG Data Storage Korea Inc., Toshiba Samsung Storage Technology Corp., and Toshiba Samsung Storage Technology Korea Corp. – had brought actions before the General Court seeking annulment of the Commission’s decision or a reduction of the fines imposed on them.

In a total of five separate judgments covering the seven companies, the General Court made four principal findings.  First, it determined that “some of the ODDs covered by the cartel were sold in EU Member States to entities owned by Dell and HP or shipped to those states for operators acting on behalf of Dell and HP.”  As a result, the Court stated, “the Commission was correct to find that the geographic scope of the cartel at issue covered the entire EU and therefore that the EU competition law rules were applicable in the present case.” (Emphasis in original)

Second, the Court found that

the prohibition on economic operators exchanging with their competitors information on their market conduct is all the more relevant in a situation, such as that at issue, which was characterised by the presence of a limited number of competitors.” In that context, after examining a series of contacts between the cartel participants by reference to the sales that they made to Dell and HP, the Court observes that most of those contacts reveal practices which, by their object, were capable of distorting competition on the relevant market.  (Emphasis in original)

Third, the Court stated that it considers that the Commission was entitled to find, in this respect (i) that the anticompetitive practices at issue constituted a single and continuous infringement, and (ii) that they consisted of a series of instances of individual anticompetitive conduct.” (Emphasis in original) In that regard, the Court stated that it

recalls that the very concept of a single and continuous infringement presupposes a complex of practices adopted by the different parties in pursuit of a single economic anticompetitive aim. Moreover, the Court finds that the cartel participants intentionally took part in an overall network of parallel contacts pursuing a common objective of undermining the mechanisms for selecting suppliers set up by Dell and HP in order to intensify competition on the relevant market.

Finally, the Court rejected the companies’ arguments that the amounts of the fines that the Commission imposed on them were calculated incorrectly. In particular, the Court stated that it

considers that the Commission did not err in not derogating from the general method set out in the 2006 Guidelines on the method of setting fines in order to reduce the amount of the fine imposed on Hitachi-LG Data Storage and Hitachi-LG Data Storage Korea in the light of the particular circumstances on which those companies relied.  (Footnote omitted)

“In those circumstances,” the Court concluded, it “dismisses the appeals in their entirety.”

Note:  This decision by the General Court constitutes both a strong affirmation of the Commission’s 2015 decision and a strong reproof – as the Court’s deliberate highlighting of certain findings in bold indicated – of the companies’ arguments.  The companies now have two months and ten days after notification of the decision to file an appeal of the General Court’s decision with the European Court of Justice.  Such an appeal, however, must be limited to points of law only, and the General Court’s findings do not appear to give the companies much of an opportunity to prevail on legal issues.

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