Indirectness of sales is no bar to iiyama’s competition claim continuing in England

16/02/18

iiyama v Samsung, Philips & LG [2018] EWCA Civ 220

The Court of Appeal has handed down an important judgment concerning the question of whether losses suffered as a result of indirect sales into the EU at inflated prices by reason of a worldwide cartel are recoverable under Article 101 of the Treaty on the Functioning of the European Union.

The Court of Appeal’s much-awaited judgment relates to two joined appeals – the LCD appeal and the CRT appeal – being appeals from the judgments of Morgan J and Mann J respectively. The Court had to consider whether the claimants (iiyama) had a real prospect of success in claiming damages in England for losses suffered by them as a result of the purchase of products at prices inflated by the operation of worldwide cartel agreements, the products having been first supplied to entities outside the EU/EEA, then to a claimant holding company also outside the EU/EEA, which then supplied the products to claimant subsidiary companies within the EU/EEA, for onward sale and distribution within the EU/EEA.

The Court answered that question in the affirmative, in favour of iiyama.

This is the first English Court judgment considering the effect and application of the CJEU’s decision in C-413/14P Intel v. Commission (given on 6 September 2017). The Court of Appeal accepted iiyama’s argument that Intel provides substantial support for the argument that a worldwide cartel which was intended to produce substantial indirect effects on the EU internal market may satisfy the qualified effects test for jurisdiction. Whether or not the test is satisfied will depend upon a full examination of the intended and actual operation of the cartel as a whole at trial. The Court held that it was at least arguable that intended effects within the EU internal market of a worldwide cartel fall within the scope of Article 101, and that the production of such effects on the EU market, if substantial and of a systemic nature, may properly be characterised as immediate effects of the offending agreements. The mere existence of a prior sale to an innocent third party outside the EU at an early stage of the supply chain does not without more lead to the conclusion that the test of immediacy is not satisfied.

The Court also held that without the further information and wider perspective which full disclosure and trial of the actions will bring, it is impossible to say that the applicable law under section 11 of the Private International Law (Miscellaneous Provisions) Act 1995 must be the law of Japan or Taiwan. The tort in question is infringement of Article 101, which is a creature of EU law and has direct effect throughout the EU. The fact that the pleaded damage all occurred within the EU and the internal market may well give that factor more weight in the value judgment which has to be performed than it would have in relation to other economic torts with no EU law dimension. The Court had some difficulty in imagining a case where a private law claim for damages for breach of Article 101, brought by a claimant domiciled within the EU in respect of loss allegedly suffered in the EU as a consequence of a worldwide cartel, could properly be prevented from going forward to trial on the basis that the applicable law of the claim was clearly a foreign law.

As a result, the Court of Appeal overturned the Judgments of Morgan J and Mann J, and allowed the appeals in full.

The judgment appears here.