European Union: Court Of Justice Dismisses LG Appeal In LCD Panels Case

On 23 April 2015, the Court of Justice of the European Union ("ECJ") dismissed an appeal lodged by LG Display Co. Ltd and LG Display Taiwan Co. Ltd ("LG") against a General Court ("GC") judgment which upheld, for the most part, the European Commission's 2010 decision in the LCD panels cartel case (see VBB on Competition Law, Volume 2014, No. 2, available at www.vbb.com).

In late 2010, the Commission issued its decision finding a cartel among six major international manufacturers of LCD panels, including LG and Samsung, which related to two categories of LCD panels ("cartelised LCD panels") in the form of a single and continuous infringement under Article 101 TFEU and Article 53 of the EEA Agreement, extending from October 2001 to February 2006 (see VBB on Competition Law, Volume 2010, No. 12, available at www.vbb.com).

In setting the basic amount of the fine imposed on LG, the Commission relied on point 13 of the 2006 Fining Guidelines and concluded that LG's sales to its parent companies (LGE and Philips) had to be taken into account in calculating the value of the sales of products to which the infringement directly or indirectly related, for the following reasons: (i) the sales of cartelised LCD panels to LG's parent companies were also covered by the discussions between the cartel participants; and (ii) the prices of those sales were influenced by the cartel.

The Commission relied on the Leniency Notice to grant total immunity to Samsung and to reduce the amount of LG's fine by 50%, since the evidence that LG had provided was of significant added value in relation to the evidence already in its possession. Although the Commission had granted LG partial immunity for 2006 because LG provided information which constituted evidence of facts of which the Commission was previously unaware, the Commission refused LG's request for partial immunity with respect to 2005 because the evidence submitted by Samsung already extended into 2005. The Commission thus imposed on LG a fine of € 215 million.

The GC rejected LG's appeal against the Commission's decision for the most part, although it reduced the fine to € 210 million, finding that the Commission had erred in taking account of the value of LG's sales for the month of January 2006 when calculating the fine.

In its appeal before the ECJ, LG relied on two grounds. First, it contested the inclusion of the sales of cartelised LCD panels to its parent companies in the value of sales taken into account for the calculation of the fine, since – according to LG – those sales were not affected by the infringement. Second, LG claimed that the refusal by the GC to grant it partial immunity for the year 2005 constituted an error of law; a failure to provide adequate reasoning; and a manifest distortion of the sense of the evidence.

As regards the first ground, the ECJ highlighted that it was undisputed that LG did not form a single undertaking with its parent companies within the meaning of Article 101 TFEU, and therefore that LG's sales to such companies could not be considered internal sales. Referring to its previous case law, the ECJ then held that interpreting point 13 of the 2006 Fining Guidelines as applying only to turnover related to sales established as having been affected by the cartel would be contrary to the goal pursued by that provision, namely adopting a fining amount which reflects both the economic significance of the infringement and the relative size of the undertaking's contribution to it. Accordingly, the ECJ confirmed that the Commission was entitled to take account of LG's sales to its parent companies, irrespective of whether the parents actually paid LG higher prices because of the cartel. The ECJ added that ignoring sales made to third parties, on the ground that the undertaking participating in the infringement has structural links with those third parties, would give an unjustified advantage to such an undertaking, by allowing it to avoid the imposition of a fine proportionate to its importance on the relevant product market.

As regards the second ground of appeal, LG first claimed that the GC had failed to demonstrate that the information submitted by Samsung in relation to 2005 constituted a sufficient basis for the Commission to establish that the infringement continued throughout 2005. According to LG, the evidence submitted by Samsung was very limited in time and scope and would therefore not have enabled the Commission to investigate and penalise the cartel with respect to the year 2005, while LG's contribution was of much greater value as it related to the entire duration of the infringement until February 2006; the main multilateral meetings; the participants in full; and the various categories of products. However, the ECJ held that the GC's statement that "the Commission knew, because of the evidence provided by Samsung, that bilateral contacts between certain cartel participants had continued in 2005" was sufficient to conclude that the information provided by LG concerned facts not previously unknown to the Commission and to therefore reject the request for partial immunity for the year 2005. According to the ECJ, the GC was thus not required to examine whether the information was such as to enable the Commission to make new findings. The ECJ noted that, although an undertaking providing information to the Commission under the Leniency Notice cannot be certain that it meets the conditions to be granted partial immunity, the Leniency Notice is designed to create a climate of uncertainty within cartels so as to encourage their reporting.

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