Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: IBM victorious in hodgepodge of TFT-LCD summary judgment motions, (Sep 5, 2014)

By Greg Hammond, J.D.

IBM Corp. and IBM Japan, Ltd. successfully obtained summary judgment over allegations that the companies participated in a global price-fixing conspiracy involving thin-film transistor liquid crystal display (TFT-LCD) panels. The two companies were the only successful ones in a recent string of summary judgment motions. In granting IBM Corp.’s and IBM Japan, Ltd.’s motion for summary judgment, the federal district court in San Francisco determined that the plaintiffs failed to attribute evidence to any individual IBM entity (In re: TFT-LCD (Flat Panel) Antitrust litigation (Non-party co-conspirators), September 4, 2014, Illston, S.); (In re: TFT-LCD (Flat Panel) Antitrust litigation (MARTA), September 4, 2014, Illston, S.); and (In re: TFT LCD (Flat Panel) Antitrust litigation (3rd Party Manufacturer), September 4, 2014, Illston, S.).

IBM. In support of their motion for summary judgment, IBM and IBM Japan argued that (1) plaintiffs provided no evidence that a recipient of various emails had any responsibility for the sale or pricing of LCD panels, and (2) even if some information about shipping quantities was exchanged between IBM and some competitors, the mere exchange of information is insufficient to support an inference of price-fixing activity. Because the court found that the IBM companies demonstrated they could have engaged in “permissible competitive behavior,” the burden shifted to the plaintiffs to show conspiratorial activity. However, the plaintiffs failed to meet their burden, as they did not make any distinction between the two entities, and referred to both IBM Corp. and IBM Japan interchangeably as “IBM.” Consequently, the court could not determine whether either IBM company ever individually engaged in anti-competitive behavior and granted their motion.

NEC entities. NEC LCD Technologies, Ltd. (NEC) and Shanghai SVA-NEC Liquid Crystal Display Co. (SVA-NEC) also moved for summary judgment, but to no avail. The court determined that the NEC entities failed to meet their burden of showing their conduct could justifiably be found to be consistent with legitimate business practices. Because the plaintiffs sufficiently alleged that the NEC entities circulated reports containing confidential information regarding competitors’ pricing and production activities, a genuine issue of material fact in NEC’s and SVA-NEC’s participation in the conspiracy existed, and their motion was thus denied.

MARTA. In a separate motion, defendants moved for summary judgment on federal damages claims involving MARTA Cooperative of America, Inc., alleging that the non-profit company did not have standing under Illinois Brick, 431 U.S. 720, 1977-1 Trade Cases ¶61,460. According to the court, Illinois Brick established an ownership and control exception against standing for indirect purchasers, which encompasses relationships involving “such functional economic or other unity between the direct purchaser and either the defendant or the indirect purchaser, that there effectively has been only one sale.” The term “control” was interpreted as “to exercise restraint or direction over; dominate, regulate, or command,” or to have “the power or authority to guide or manage.”

Ultimately, the court determined that MARTA was the direct purchaser in this case, and that the ownership and control exception does not apply to its members. Specifically, it found that MARTA’s members owned minimal stock in the company, worth only $4,000; an Executive Director—not the members—was the person who negotiated for programs; and MARTA was run by a Board of Directors—not the members. As MARTA was conclusively the direct purchaser of the allegedly price-fixed products, Illinois Brick did not apply, and the motion for summary judgment was denied.

Third party manufacturers. The defendants filed a third motion for summary judgment for all claims in which an original design manufacturer (ODM) was a first purchaser, allegedly comprising 15 percent of the plaintiffs’ total purchases. The court noted that the ODMs: (1) sometimes assembled products themselves; (2) sometimes were unaffiliated with the defendants’ companies; and (3) sometimes purchased the panels from defendants. Consequently, because it was impossible for the court to determine whether the ODMs were purchasers or mere assemblers of defendants’ products, there was a genuine dispute of material fact. The motion for summary judgment was therefore denied.

The case number is M 07-1827 SI.

Attorneys: Anne M. Nardacci (Boies, Schiller & Flexner, LLP) for Marta Cooperative of America, Inc.

Companies: IBM Corp.; IBM Japan, Ltd.; MARTA Cooperative of America, Inc.; NEC LCD Technologies, Ltd.; Shanghai SVA-NEC Liquid Crystal Display Co.

Cases: Antitrust CaliforniaNews