Granville Technology Group Limited (in liquidation) & Ors v Chunghwa Picture Tubes Ltd & Ors

In a follow-on competition damages claim, the claimant must prove loss caused by the infringement, but damages need not be quantified with mathematical precision. The court may use expert evidence, sound judgment and a broad brush where the evidence leaves uncertainty.

For cartel overcharge modelling, a method which controls for production costs, supply and demand is generally preferable to an untested extrapolation of historic price trends. Pass-on is a question of fact. The defendant bears the legal burden of proving downstream pass-on, but may rely on economic evidence and reasonable estimation where documentary evidence is incomplete. Insolvency does not prevent recovery of loss based on an unconditional liability incurred before administration or liquidation.

The claimants, companies in liquidation, brought a follow-on claim for damages arising from the worldwide LCD-panel cartel found by the European Commission to infringe Article 101 TFEU and Article 53 AEEA. Summary judgment had previously been entered against the second defendant, leaving quantum and other issues for determination.

The trial concerned the appropriate overcharge, upstream and downstream pass-on, lost profits from reduced sales, limitation, territorial scope and applicable law, and interest. The court also considered whether purchases of LCD panels or products first placed on the market outside the EEA fell outside EU competition law.

1. Framework and assessment. The claim was a tortious claim for breach of statutory duty. The Commission’s operative infringement findings bound the High Court, as did recitals which formed an essential basis for, or were necessary to understand, those findings. The claimants nevertheless had to prove loss caused by the infringement.
2. Overcharge. A counterfactual assessment was required. Multiple regression analysis was preferred in principle to trend-line extrapolation because it attempted to control for production costs, supply and demand. A failed Ramsey RESET test did not automatically invalidate a model. The assessment nevertheless required a broad-brush adjustment for uncertainty, including limited endogeneity and post-cartel price persistence. The probable overcharge was assessed at 8% for monitors, 4% for notebooks and 14% for TVs.
3. Pass-on. Upstream pass-on was established at 100%. The defendants bore the legal burden of proving downstream pass-on, but were not required to trace the cartel price through every transaction. Economic theory, internal pricing material and the available evidence could establish pass-on. The evidence showed likely high but variable pass-on. It was assessed at a blended rate of 65%.
4. Other quantum issues. The court accepted specified volumes of commerce, including management-account evidence for monitors and goods-received reports for OTC. Liability without prior payment could constitute recoverable loss where an unconditional obligation to pay had arisen. For lost sales, elasticity was assessed at 2.7 and the diversion ratio at 25%. An 88% extended-warranty margin, subject to a further 2.5% adjustment, was adopted.
5. Limitation and applicable law. The limitation defence failed. The reasonable-diligence test had to be applied to the actual claimants and, while they were insolvent, to what could reasonably be expected of insolvency practitioners. The claims fell within the territorial scope of EU competition law. Applying the Private International Law (Miscellaneous Provisions) Act 1995, English law, including the relevant EU competition law, governed the claims.
6. Interest. Compound interest as damages required proof of actual loss. The evidence established borrowing costs at base rate plus 2.5%, compounded quarterly before insolvency. Statutory interest after insolvency was also awarded at base rate plus 2.5%.

First-instance judgment determining quantum, limitation, applicable law and interest issues in a follow-on damages claim. The judgment records earlier summary judgment against the second defendant at [2022] EWHC 312 (Comm).