Granville Technology Group Ltd ((in Liquidation)) and Others v Chunghwa Picture Tubes Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Pelling |
| Judgment Date | 08 February 2024 |
| Neutral Citation | [2024] EWHC 13 (Comm) |
| Year | 2024 |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2016-000758 |
[2024] EWHC 13 (Comm)
HIS HONOUR JUDGE Pelling KC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: CL-2016-000758
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Thomas Raphael KC and Stefan Kuppen (instructed by Osborne Clarke LLP) for the Claimants
The Second Defendant did not appear and was not represented.
Hanif Mussa KC and Sarah O'Keeffe (instructed by Cleary Gottlieb Steen & Hamilton LLP) for the Third and Fourth Defendants
Hearing dates: 26, 30 and 31 October, 1, 2, 6, 7, 8, 9, 15 and 16 November 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 8 February 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Contents
| Introduction | 3 |
| The Claim | 3 |
| The Parties | 4 |
| The Decision and its effect in these Proceedings | 6 |
| Framework Principles Applicable to Competition Law Infringement Claims | 8 |
| The Issues Between the Parties | 12 |
| Econometric modelling | 16 |
| The Overcharge Issue | 19 |
| Dr Van Der Laan's Modelling | 20 |
| Mr Parker's Modelling | 30 |
| The Demand Variable Issue | 32 |
| The Time Lag Issue | 38 |
| Post Infringement Effects | 41 |
| Conclusions Concerning the Overcharge | 50 |
| The Upstream Pass On Issue | 50 |
| The Issue in General | 50 |
| Umbrella Effects | 52 |
| The Volume of Commerce Issue | 52 |
| Notebooks – Granville and VMT | 53 |
| Monitors — Granville and VMT | 53 |
| TVs — Granville | 56 |
| The OTC Issue | 57 |
| The Downstream Pass On Issue | 59 |
| Loss of Profit on Lost Sales | 85 |
| Elasticity of Demand | 85 |
| Diversion Ratio | 87 |
| Extended Warranty Sale Margins | 90 |
| The Margin Uplift Point | 92 |
| Limitation | 92 |
| The Foreign Law issue | 100 |
| Interest | 111 |
| The Compound Interest Claim | 111 |
| Interest rates post Insolvency | 115 |
| OTC | 117 |
HH Judge Pelling KC:
Introduction
The Claim
This is the trial of a “follow on” claim for damages for losses allegedly caused by the infringement by the second, third and fourth defendants (amongst others) of the prohibition imposed by Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) and Article 53 of the Agreement on the European Economic Area (“AEEA”) by their participation in a price fixing cartel that I describe in more detail below. Such claims are characterised in English law as tortious claims for breach of statutory duty – see Garden Cottage Foods Ltd v Milk Marketing Board [1984] A.C. 130 per Lord Diplock at page 141E and Cooper Tire & Rubber Company Europe Ltd v Dow Deutschland Inc [2010] EWCA Civ 864 per Longmore LJ at paragraph 17.
TFEU, Article 101 prohibits:
“… all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production, markets, technical development, or investment;
(c) share markets or sources of supply;
(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts”
AEEA, Article 53 is in similar terms to TFEU, Article 101.
The claim arises out of a cartel, that was found by the EU Commission (“Commission”) to have existed between 5 October 2001 and 1 February 2006 (“Relevant Period”) in the world-wide market for thin film transistor-liquid crystal display (“LCD”) panels (“LCD panels”) for personal computer (“PC”) monitor (“monitor”), notebook PC (“notebook”) and television receiver (“TV”) applications. LCD panels consist of a lower glass plate (a thin-film transistor or “TFT”), an upper glass plate (colour filter formation) and an injected liquid crystal between the two glass plates, which is placed in front of a light source to serve as a screen on electronic devices including monitors, notebooks and TVs.
The relevant findings concerning the existence of the cartel and the defendants' participation in it are contained in Commission Decision of 8 December 2010 relating to a proceeding under Article 101 Treaty on the Functioning of the European Union and Article 53 of the Agreement on the European Economic Area (COMP/39.309-LCD — Liquid Crystal Displays) (“Decision”). The subject matter of the Decision and these proceedings is concerned exclusively with the use of LCD panels in the manufacture of monitors, notebooks and TVs. In summary, the Commission found that all the defendants were participants in the cartel throughout the Relevant Period. The Commission found that the participants including the defendants gave effect to the cartel by entering into agreements concerning future prices, price ranges and minimum prices, on pricing and commercial matters for specific accounts, on future production planning and future capacity utilisation and by exchanging information on pricing, price coordination and other commercial aspects including sales volumes or capacity plans. By reason of these conclusions, the Commission decided that various undertakings, including the second to fourth defendants, had infringed Article 101 and Article 53 by participating, during the relevant period “… in a single and continuous agreement and concerted practice in the sector of Liquid Crystal Display panels for TV, notebook and monitor application” – see Article 1 of the Decision. It is a measure of the seriousness of the findings made (to which I refer in more detail below) that the Commission fined the second defendant €9,025,000 and the third and fourth defendants €215,000,000.
The Parties
At all material times the claimants were English registered companies carrying on business in England and Wales in the manufacture and/or sale primarily of desk top PCs sold with monitors and notebooks. They sold their products primarily to retail end user customers but some products were sold commercially to business and educational end users. At all material times the claimants purchased (from suppliers located either in the UK or elsewhere) monitors and notebooks that had been manufactured using LCD panels and also LCD panels for use by them in the manufacture of notebooks. From 2003, the first claimant (“Granville”) also sold TVs that incorporated screens manufactured using LCD panels.
Granville and the second claimant (“VMT”) are part of the same group. Granville sold its products using the brand “ Time” and later “ Tiny”. It sold its products directly to end users either from its own shops or online. VMT assembled and repaired products for Granville. The third defendant (“OTC”) also traded using the “ Tiny” brand but was not part of the same group as Granville and VMT. Most of the claimants' relevant purchases during the Relevant Period were made from intermediaries in the supply chain down stream from the defendants. This can create an added layer of evidential difficulty for claims such as this which however does not arise in this case because it is common ground that all suppliers upstream of the claimants passed on the whole of all price increases to their customers, including the claimants. A number of the claimants' upstream suppliers were located in jurisdictions other than England and Wales or the EEA or sourced LCD screens from such suppliers. This factor is relied on by the defendants for the purpose of contending that any claim in respect of such products is governed by laws other than that of England and Wales and must fail because no attempt has been made by the claimants to prove such laws and/or on the basis that claims based on such sales falls outwith the territorial scope of EU law and therefore of a claim for damages for breach of statutory duty. I return to these issues later in this judgment.
The claimants allege that (a) as a result of the cartel, the prices they paid for LCD panels and products incorporating LCD Panels were higher throughout the Relevant Period than they would have been but for the existence of the cartel (“Overcharge”); (b) they claim to be entitled to recover the Overcharge as damages for breach of statutory duty; (c) to the extent that the Overcharge was passed on by them to their downstream customers and so not suffered by them as a loss, it resulted or is to be inferred to have resulted in reduced sales and therefore caused them to suffer lost profits (“Loss of Profits”) for which they also claim to be entitled to recover damages and (d) they are entitled to recover interest including compound interest on the Overcharge and on any damages to compensate them for lost sales.
It is not disputed that VMT passed on 100% of any Overcharge it suffered to Granville. The defendants maintain that both Granville and OTC passed on the whole of the Overcharge to its retail customers and on this basis deny that they have suffered any loss by reason of the imposition of an Overcharge. They also deny that the claimants have proved the alleged or any...
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