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Landmark European court ruling to open floodgates for EU competition teams

In what will inevitably bring more work for competition lawyers acting for Asian clients in Europe, the EU’s highest court has upheld the European Commission’s €288m fine handed to Taiwanese electronics company Innolux in a ruling that puts the reach of EU competition law at odds with other antitrust regulators worldwide.

The Court of Justice of the European Union (CJEU) today (9 July) decided Innolux, which participated in a cartel of electronics makers inflating the price of LCD panels later installed in laptops and mobile phones sold in Europe, will have to pay the fine levied by the European Commission in 2010.

Innolux appealed to the Luxembourg court, arguing the fine should not cover sales of finished products. The court rejected this argument and found that ‘the effects of the cartelised price’ of the LCD panels used in computers and mobile phones ‘are liable to affect competition on the market’.

The decision sets the European Commission apart from other competition regulators, notably the US Department of Justice, which can only take action on goods sold directly into their jurisdiction, and not on parts that find their way into imported goods. The US Supreme Court last month refused to extend the reach of US antitrust law to penalise foreign defendants for overseas price-fixing activities. Motorola had sought to recover damages from LCD makers linked to the same Taiwanese cartel but the court decided the matter did not belong in US.

Innolux was represented by Jean-François Bellis, the managing partner of heavyweight Brussels competition boutique Van Bael & Bellis, alongside partner Richard Burton.

Peter Camesasca, a Brussels-based competition partner at Covington & Burling, told Legal Business the CJEU ruling ‘hands the EU the power to extend its territorial reach beyond Europe when enforcing its anti-cartel laws’.

The decision has surprised some EU competition lawyers, with some concerned that the decision raises the risk that companies could be fined twice for the same activity now that the Commission can penalise companies for behaviour linked to any product sold into Europe. One Brussels-based partner warned: ‘We now have to accept that sooner or later another country can do exactly the same thing and come after European conglomerates. It will be a new way to wage trade wars.’

Camesasca concluded: ‘We don’t produce much electronics in Europe anymore, so if you’re a big beast in Asia you’re going to scratch your head and increase your compliance. There will be a lot more work now for EU competition lawyers.’