The UK High Court has struck out a €1 billion cartel damages claim against participants of the two cathode ray tube cartels, including Samsung, LG Electronics and Phillips, as the claim lacked a sufficient territorial connection with the EU. The judgment sets out the challenges victims of cartels face when claiming damages arising outside the EU and the territorial limits of seeking redress under Article 101.

The claimants, predominantly EEA based members of the iiyama group, brought a claim at the end of 2014 in respect of the damages they had suffered as a result of two European Commission cartel decisions relating to cathode ray tubes (“CRT”) and glass for CRT (“CRT Glass”).

The claimant sought to rely on those decisions in support of its claim arguing that it had paid too much for CRT and CRT Glass which were incorporated into iiyama’s computer monitors.

An important aspect of the case, and ultimately the influencing factor for striking out the claim, was that no claimants had purchased either the CRT or CRT Glass directly from the cartelists or in the EEA.

Instead, a group company of iiyama had acquired the products from a manufacturer or supplier unrelated to the cartelists and outside of the EU, and then sold the products on to the claimant based in the EU. The claimants argued that the ultimate sales into Europe were sufficient to establish a link between the cartel and the EU.

Last month, the High Court handed down its judgment. It disagreed with this analysis. The sales of the cartelised products, even if they ultimately formed part of products that ended up in the EEA, were made in Asia. Further, the claimants had made no direct purchase from the cartelists. As Mr Justice Mann summarised in his judgment:

“no glass which ended up in iiyama products sold in the EEA was made in the EEA, or was sold by the cartelists in or into the EEA; no CRT’s which ended up in iiyama monitors in the EEA were made or sold by the cartelists in or into the EEA. In each case there were intervening sales.”

There was therefore not a sufficient connection with the EU to be able to establish a breach of EU competition law.

Further, the CRT Glass claim had been brought as a follow-on damages action, one that relied on the decision of the European Commission. No anti-competitive behaviour outside of the EEA had been alleged. The CRT decision made a finding of a worldwide cartel but only in respect of sales, by the cartelists, into the EEA. The CRT Glass decision did not make a finding of infringement in relation to a worldwide cartel, but only made a finding in respect of an EEA wide infringement. As such it could not be regarded as a follow-on claim and therefore also failed for that reason.

Iiyama was heavily criticised for its handling of the claim and was ordered to pay costs on an indemnity basis. It had resisted disclosing information which ultimately showed that it had never purchased the relevant products in Europe. This, Mr Justice Mann ruled, showed a “cavalier” approach to the pursuit of the litigation.

The supply chain in this case was particularly lengthy: the CRT and CRT glass that was the subject of the cartel was all first purchased by monitor manufacturers before being sold to iiyama (iiyama was thus only ever an indirect purchaser). Further, all the sales of the cartelised products took place in Asia. The link to the EU that iiyama sought to argue only came later, by way of a series of sales (again unrelated to the cartelist defendants) into the EEA. It is perhaps no surprise that, in this instance, the High Court baulked at allowing this claim to proceed to trial. Nonetheless, the decision, the first time a follow-on claim has been struck out because of a lack of connection to the EEA, sends a clear message regarding the territorial limits on damages claims in the EU and the need to establish a sufficient EU link at the outset. Claimants should take care to ensure that early consideration is given to how their claims are formulated, to establish this link before any claim is brought.

Iiyama is currently appealing the judgment but only in relation to the CRT Cartel decision.