ECJ confirms decision of the Commission

The European Court of Justice (“ECJ“) confirmed on 09.07.2015 in its case C-231/14P InnoLux Corp vs. Commission that the turnover of vertically-integrated companies outside of the European economic area (“EEA”) may be taken into account by the European Commission (“Commission”) for the calculation of the fine to be imposed on cartel participants.

The Commission imposed fines in 2010 for a total amount of EUR 649 Mio against participants of a cartel for LCD panels. The highest fine with EUR 300 Mio was imposed on the Taiwanese LCD producer InnoLux Corporation (“InnoLux”). The Court reduced the fine in 2014 in its case T-91/11 InnoLux Corp vs. Commission to EUR 288 Mio.

However, InnoLux appealed the decision seeking for a greater reduction of the fine. The company stated that the Court had erred in the calculation of the fine by including the sales turnover of other end products, which contained built-in LCD panels by subsidiaries outside of the EEA, which constitute a different product market than the LCD panels market, on which the infringement was related to. Thus, InnoLux stated that the sales turnover of the finished products was not related to the turnover for the LCD panels market and should not be included in the calculation of the fine.

The ECJ confirmed that both products constitute two separate product markets. However, it found that the market for finished products incorporating LCD panels was closely related to the market of LCD panels and thus it was affected by the infringement on the latter market. Thus, the ECJ concluded that vertically integrated companies active on the market for the finished product may benefit from the infringement on the other market: Either the price increase of the inputs are passed on to the final price of the finished product or the vertically integrated producer benefits from lower productions costs in comparison to its competitors. The ECJ holds that any other interpretation would artificially reduce the economic significance of the company involved in the infringement.

Moreover the ECJ also confirmed that the Commission had acted within its jurisdiction as the products were sold within the EEA.

Authors:

Dr. Christina Hummer
Ori Kahn