Summary: The Court of Appeal has ruled that iiyama's 1bn EUR cartel damages claims, against the participants of the cathode ray tube ("CRT") market and liquid crystal display ('LCD') cartels, may proceed to trial, overturning the High Court's finding that indirect purchases made outside the EEA do not fall within the territorial scope of EU competition law.
As reported in our articles, "Lights Out? Territorial limits in EU cartel damages claims" and "Update on iiyama Cartel Damages Proceedings", iiyama's claim against cartelists in the CRT and CRT glass market was struck out by the High Court. The judge at that hearing considered that the claimants' lengthy supply chain (where the cartelised goods were sold by the Defendants to purchasers in Asia, and then sold on by those innocent third party purchasers to the claimants in the EEA) could not amount to implementation of the cartel in the EEA - the claim therefore fell outside the territorial scope of EU competition law.
In a separate strike out application in relation to iiyama's claim against the LCD cartelists, the High Court agreed with the previous ruling that such a lengthy indirect supply chain could not amount to implementation of the cartel in the EEA. iiyama's claim survived, however, as they argued that 'but for' the LCD cartel being implemented in the EEA, LCD products would have been available at a non-cartelised price which the claimant could (and would) have bought.
iiyama appealed these decisions, asking the Court of Appeal to clarify whether indirect purchases of products outside the EEA that were subsequently re-sold in the EEA could amount to implementation of the cartel in the EEA, and/or whether a claim based on such circumstances fell within the territorial scope of EU competition law.
In answering this question, the Court of Appeal considered the Court of Justice of the European Union's recent decision in Intel. This judgment addressed whether the European Commission had jurisdiction to enforce Article 102 TFEU in connection with rebates made to companies outside the EEA. The rebate agreements concerned the sale of goods manufactured and sold outside the EEA, which were incorporated (outside the EEA) into computers. The court in that case considered that the Commission could have jurisdiction in such cases, where the anticompetitive behaviour had an "immediate, substantial and foreseeable effect in the EU" (referred to as the “Qualified Effects doctrine”).
The Court of Appeal considered that Intel supported the Claimants' arguments that a worldwide cartel (such as the CRT and LCD cartels) which was intended to significantly affect the market for those products in the EU could, subject to full examination of the intended and actual operation of the cartel, satisfy the Qualified Effects doctrine. It was therefore inappropriate for the High Court to have made a strike out ruling before a fuller examination of the facts, including through disclosure, which may shed light on the intended and actual operation of the cartel. As such, the Court of Appeal overturned the High Court's earlier rulings, allowing iiyama's actions for damages to proceed towards trial.
The Court of Appeal's judgment will provide encouragement to claimants seeking damages in the English courts for losses suffered as a result of indirect sales of cartelised products into the EEA.