Judgments nº T-1/16 of Tribunal General de la Unión Europea, July 12, 2019

• Resolution Date: July 12, 2019
• Issuing Organization: Tribunal General de la Unión Europea
• Decision Number: T-1/16

(Competition - Agreements, decisions and concerted practices - Market for optical disk drives - Decision finding an infringement of Article 101 TFEU and Article 53 of the EEA Agreement - Collusive agreements relating to procurement events organised by two computer manufacturers - Unlimited jurisdiction -- Infringement of the principle of good administration -- Obligation to state reasons -- Point 37 of the 2006 Guidelines on the method of setting fines -- Particular circumstances -- Error of law)

In Case T-1/16,

Hitachi-LG Data Storage, Inc., established in Tokyo (Japan),

Hitachi-LG Data Storage Korea, Inc., established in Seoul (South Korea),

represented by L. Gyselen and N. Ersbøll, lawyers,

applicants,

v

European Commission, represented initially by A. Biolan, M. Farley, C. Giolito and F. van Schaik, and subsequently by A. Biolan, M. Farley and F. van Schaik, acting as Agents,

defendant,

ACTION under Article 263 TFEU seeking a reduction of the amount of the fine imposed by the European Commission on the applicants in its Decision C(2015) 7135 final of 21 October 2015 relating to a proceeding under Article 101 TFEU and Article 53 of the EEA Agreement (Case AT.39639 - Optical Disk Drives),

THE GENERAL COURT (Fifth Chamber),

composed of D. Gratsias, President, I. Labucka and I. Ulloa Rubio (Rapporteur), Judges,

Registrar: N. Schall, Administrator,

having regard to the written part of the procedure and further to the hearing on 3 May 2018,

gives the following

Judgment

1. Background to the dispute

   1. Applicants and relevant market

      1 The applicants, Hitachi-LG Data Storage, Inc. and its subsidiary Hitachi-LG Data Storage Korea, Inc., are manufacturers and suppliers of optical disk drives (‘ODDs’). In particular, Hitachi-LG Data Storage is a joint venture created by the Japanese company Hitachi, Ltd and by the Korean company LG Electronics Inc. It has operated on the market since 1 July 2001.

      2 The infringement concerns ODDs used in personal computers (desktops and notebooks) (‘PCs’) produced by Dell Inc. and Hewlett Packard (‘HP’). ODDs are also used in a wide range of other consumer appliances such as compact disc (‘CD’) or digital versatile disc (‘DVD’) players, game consoles and other electronic hardware devices (contested decision, recital 28).

      3 ODDs used in PCs differ according to their size, loading mechanisms (slot or tray) and the types of discs that they can read or write. ODDs can be split into two groups: half-height (‘HH’) drives for desktops and slim drives for notebooks. The slim drive group includes drives that vary by size. Both HH and slim drives differ by type depending on their technical functionality (contested decision, recital 29).

      4 Dell and HP are the two most important original equipment manufacturers on the global market for PCs. Those two companies use standard procurement procedures carried out on a global basis which involve, inter alia, quarterly negotiations over a worldwide price and overall purchase volumes with a limited number of pre-qualified ODD suppliers. Generally, regional issues did not play any role in ODD procurement other than that related to forecasted demand from regions affecting overall purchase volumes (contested decision, recital 32).

      5 The procurement procedures included requests for quotations, electronic requests for quotations, internet negotiations, e-auctions and bilateral (offline) negotiations. At the close of a procurement event, customers would allocate volumes to participating ODD suppliers (to all or at least most of them, unless there was an exclusion mechanism in place) depending on their quoted prices. For example, the winning bid would receive 35% to 45% of the total market allocation for the relevant quarter, the second best 25% to 30%, the third 20% and so on. These standardised procurement procedures were used by customers’ procurement teams with the purpose of achieving efficient procurement at competitive prices. To this end, they used all possible practices to stimulate the price competition between the ODD suppliers (contested decision, recital 33).

      6 As regards Dell, it carried out bidding events mainly by internet negotiation. That negotiation could last for a specific period of time or end after a defined period, for example 10 minutes after the last bid, when no ODD supplier continued bidding. In certain circumstances, internet negotiations could last several hours if the bidding was more active or if the duration of the internet negotiation was extended in order to incentivise ODD suppliers to continue bidding. Conversely, even where the length of the internet negotiation was indefinite and depended on the final bid, Dell could announce at some point that the internet negotiation had closed. Dell could decide to change from a ‘rank only’ to a ‘blind’ procedure. Dell could cancel the internet negotiation if the bidding or its result were found to be unsatisfactory and run a bilateral negotiation instead. The internet negotiation process was monitored by Dell’s responsible Global Commodity Managers (contested decision, recitals 34 and 37).

      7 With respect to HP, the main procurement procedures used were requests for quotations and electronic requests for quotations. Both procedures were carried out online using the same platform. As regards (i) the requests for quotations, they were quarterly. They combined online and bilateral offline negotiations spread over a period of time, usually 2 weeks. ODD suppliers were invited to a round of open bidding for a specified period of time to submit their quote to the online platform or by email. Once the first round of bidding had elapsed, HP would meet with each participant and start negotiations based on the ODD supplier’s bid to obtain a better bid from each supplier without disclosing the identity or the bid submitted by any other ODD supplier. As regards (ii) the electronic requests for quotations, they were normally run in the format of a reverse auction. In that format, bidders would log onto the online platform at the specified time and the auction would start at a price set by HP. Bidders entering progressively lower bids would be informed of their own rank each time a new bid was submitted. At the end of the allotted time, the ODD supplier having entered the lowest bid would win the auction and other suppliers would be ranked second and third according to their bids (contested decision, recitals 41 to 44).

   2. Administrative procedure

      8 On 14 January 2009, the European Commission received a request for immunity under its Notice on Immunity from fines and reduction of fines in cartel cases (OJ 2006 C 298, p. 17) (‘the Leniency Notice’) from Koninklijke Philips NV (‘Philips’). On 29 January and 2 March 2009, that request was supplemented in order to include, alongside Philips, Lite-On IT Corporation and their joint venture Philips & Lite-On Digital Solutions Corporation (‘PLDS’).

      9 On 29 June 2009, the Commission sent a request for information to undertakings active in the ODD sector.

      10 On 30 June 2009, the Commission granted conditional immunity to Philips, Lite-On IT and PLDS.

      11 On 4 and 6 August 2009, the applicants submitted an application to the Commission for a reduction of the amount of the fine under the Leniency Notice.

      12 On 18 July 2012, the Commission initiated a proceeding and adopted a statement of objections against 13 ODD suppliers, including the applicants. In that statement of objections, the Commission stated, in essence, that those companies had infringed Article 101 TFEU and Article 53 of the Agreement on the European Economic Area (EEA) by participating in a cartel on ODDs from 5 February 2004 until 29 June 2009, consisting in orchestrating their conduct with respect to invitations to tender organised by two computer manufacturers, Dell and HP.

      13 On the same day the Commission granted conditional immunity to the applicants.

      14 On 29 and 30 November 2012, all the addressees of the statement of objections took part in a hearing before the Commission.

      15 On 14 December 2012, the Commission requested all the parties to provide the relevant documents received from Dell and HP during the infringement period. All the parties replied to those requests and each was granted access to the replies provided by the other ODD suppliers.

      16 On 18 February 2014, the Commission adopted two supplementary statements of objections to supplement, amend and clarify the objections addressed to certain addressees of the statement of objections as regards their liability for the alleged infringement.

      17 On 26 February 2015, the applicants requested the Commission to reduce the amount of the fine because of the ‘particular circumstances’ for the purpose of point 37 of the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Commission Regulation (EC) No 1/2003 (OJ 2006 C 210, p. 2) (‘the Guidelines’).

      18 On 5 March 2015, the applicants and their outside counsel met the Commission in order to present their request for a reduction of the amount of the fine.

      19 On 1 June 2015, the Commission adopted another supplementary statement of objections. The purpose of this new statement of objections was to supplement the earlier statements of objections by addressing the objections set out in those statements to additional legal entities belonging to the groups of undertakings (parent companies or predecessors) which had already been addressees of the original statement of objections.

      20 The addressees of the statements of objections of 18 February 2014 and 1 June 2015 made known their views to the Commission in writing but did not request a hearing.

      21 On 3 June 2015, the Commission issued a letter of facts to all the parties. The addressees of the letter of facts made known their views to the Commission in writing.

      22 On 14 September 2015, the applicants submitted a second request to the Commission for a reduction of the amount of the fine. The purpose...