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From Antitrust Law Daily, October 7, 2016

Manufacturer’s role in CRT conspiracy left it liable for related price fix

By E. Darius Sturmer, J.D.

Thomson Consumer Electronics could have violated federal antitrust law through its participation in a conspiracy to fix the price of cathode display tubes (CDTs), a type of high-resolution cathode ray tube (CRT) used in computer monitors, the federal district court in San Francisco has ruled. Thomson’s motion for summary judgment was therefore denied (In re: Cathode Ray Tube (CRT) Antitrust Litigation, October 6, 2016, Tigar, J.).

Although Thomson never purchased, manufactured, or sold any CDT product directly, it could face liability for the effects of the CDT conspiracy based on its liability for the effects of a related conspiracy to fix prices for all cathode ray tubes, including lower-resolution cathode picture tubes (CPTs) used more commonly in devices like televisions, the court decided. Applying the test laid out by the federal district court in Washington, D.C., in In re Vitamins Antitrust Litigation, 320 F.Supp.2d 1 (2004), the direct action plaintiffs were required only to show that Thomson had knowledge of an "all-CRT" conspiracy, intended to join it, and by joining it, became interdependent upon the other members of that conspiracy, in that their respective benefit depended on the success of the all-CRT venture. The plaintiffs did not need to provide direct evidence of the conspiracy, the court noted.

Evidence offered by the plaintiffs of email exchanges between employees of Thomson and its affiliated entities regarding meetings and discussions with competitors revealed Thomson’s knowledge, intent, and interdependence, in the court’s view. While Thomson was certainly entitled to seek out public information about the glass market, a reasonable construction of evidence concerning a "sourcing dialogue" meeting with Samsung showed that Thomson obtained confidential information from its competitor about their activities in a related product market as a way of gathering that information. Another email containing references to explicit discussions about cooperation with regard to glass production strengthened this conclusion, the court stated.

Another exhibit, an email from one Thomson employee to others in the corporate family that summarized information gathered during a meeting with a Samsung counterpart, further helped satisfy the In re Vitamins test by showing that Thomson SA personnel shared non-public, competitive information with Thomson Consumer regarding both the CPT and CDT markets. In the absence of an all-CRT conspiracy, Samsung had no legitimate reason to discuss CDT sales with Thomson, given Thomson’s absence from the CDT market, the court observed. This suggested improper information sharing between Thomson SA and Samsung, and also that Thomson SA passed that information along to Thomson Consumer.

A memorandum discussing South American market status that made reference to a consortium was also evidence of a collusive relationship among some of the producers of CDTs. The exhibit was clear that Philips anti-competitively bribed Samsung to reduce the latter’s capacity and reduce CPT price pressure. That Thomson received this information helped satisfy the In re Vitamins test by showing knowledge of the all-CRT conspiracy and intent to join it, and by demonstrating the effect on Thomson as it related to glass capacity, the court found.

Viewed as a whole, the evidence submitted by the direct action plaintiffs was sufficient to create a triable issue of material fact regarding whether there was an all-CRT conspiracy, the court concluded.

The case is No. C-07-5944 JST.

Attorneys: Bruce Lee Simon (Pearson Simon & Warshaw, LLP) and Guido Saveri (Saveri & Saveri, Inc.) for Crago, Inc., d/b/a Dash Computers, Inc. Clinton Paul Walker (Damrell, Nelson, Schrimp, Pallios, Pache & Silva) and for Hawel A. Hawel, d/b/a City Electronics. Joseph W. Cotchett (Cotchett, Pitre & McCarthy, LLP) and Randy R. Renick (Hadsell, Stormer & Renick, LLP) for Orion Home Systems, LLC. Joel Steven Sanders (Gibson, Dunn & Crutcher, LLP) and Adam C. Hemlock (Weil, Gotshal, and Manges, LLP) for Chunghwa Picture Tubes, Ltd. and Chunghwa Picture Tubes [Malaysia] Sdn. Bhd. Eliot A. Adelson (Kirkland & Ellis LLP) and Christopher M. Curran (White & Case LLP) for Hitachi, Ltd.

Companies: Crago, Inc.; Hawel A. Hawel, d/b/a City Electronics; Orion Home Systems, LLC; Chunghwa Picture Tubes, Ltd.; Chunghwa Picture Tubes [Malaysia] Sdn. Bhd.; Hitachi, Ltd.; Thai CRT Co., Ltd.

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