Philips 2009 Annual Report Download - page 196

(“DOJ”) and a similar notice from the Japanese Fair Trade Commission
in connection with inquiries by those regulators into possible
anticompetitive conduct in the LCD industry.
Subsequent to the public announcement of these inquiries, certain
Philips group companies were named as defendants in a number of class
action antitrust complaints filed in the United States courts, seeking,
among other things, damages on behalf of purchasers of products
incorporating thin-film transistor liquid crystal display panels (TFT-LCD
panels), based on alleged anticompetitive conduct by manufacturers of
such panels. Those lawsuits were consolidated in two master actions in
the United States District Court for the Northern District of California:
one, asserting a claim under federal antitrust law, on behalf of direct
purchasers of TFT-LCD panels and products containing such panels,
and another, asserting claims under federal antitrust law, as well as
various state antitrust and unfair competition laws, on behalf of indirect
purchasers of such panels and products. On November 5, 2007 and
September 10, 2008, the Company and certain other companies within
the Philips group companies that were named as defendants in various
of the original complaints entered into agreements with the indirect
purchaser plaintiffs and the direct purchaser plaintiffs, respectively, that
generally toll the statutes of limitations applicable to plaintiffs’ claims,
following which the plaintiffs agreed to dismiss without prejudice the
claims against the Philips defendants. On December 5, 2008, following
the partial grant of motions to dismiss consolidated class action
complaints in the master actions, the plaintiffs filed amended
consolidated class action complaints, asserting essentially the same legal
claims as those alleged in the prior complaints. On December 2, 2009,
the direct purchaser plaintiffs filed a third consolidated class action
complaint under seal. None of the companies within the Philips group of
companies currently is named as a defendant in the pending amended
complaints, although the Company and PENAC are named as co-
conspirators with named defendants in the indirect purchaser case, but
the litigation is continuing. On the basis of current knowledge, the
Company cannot determine whether a loss is probable with respect to
these actions.
In addition, in February 2007, certain plaintiffs filed purported class
actions in a United States court against LG Display and certain current
and former employees and directors of LG Display for damages based
on alleged violations of US federal securities laws. No Philips group
company is named as a defendant in these actions.
In addition, the following plaintiffs have filed five separate, individual
actions alleging essentially the same claims as those asserted in the class
actions: (1) AT&T (and related entities), Bell South, Southwestern Bell
and Pacific Bell; (2) ATS Claim, LLC; (3) Electrograph Systems, Inc. and
Electrograph Technologies, Corp.; (4) Motorola, Inc.; and (5) Nokia
Corporation and Nokia, Inc. No majority-owned Philips entity has been
named as a defendant in any of those actions, except for the Nokia
action, described below. The Company has been named as an unsued
co-conspirator in the Nokia action. In addition, the Company and
PENAC have been named as unsued co-conspirators in the AT&T,
Electrograph, and Motorola actions. Those actions, except for the
Electrograph action, have been designated as related to the
consolidated actions already pending before Judge Illston in the United
States District Court for the Northern District of California and have
been consolidated for pre-trial purposes with the class actions.
On November 25, 2009, Nokia Corporation and Nokia, Inc., filed a
complaint in the United States District Court for the Northern District
of California naming, among others, PENAC as a defendant and the
Company as a co-conspirator based on the same substantive allegations
as in the antitrust class action complaints. This case has been designated
as related to the consolidated action already pending before Judge
Illston in the United States District Court for the Northern District of
California and is expected to be consolidated with those actions. These
matters are in their initial stages and due to the considerable
uncertainty associated with these matters, on the basis of current
knowledge, the Company has concluded that potential losses cannot be
reliably estimated with respect to these matters. An adverse final
resolution of these investigations and litigation could have a materially
adverse effect on the Company’s consolidated financial position, results
of operations and cash flows.
Public investigation
Beginning in November 2008, several manufacturers of TFT-LCD
panels, including LG Display, and certain executives of two of those
companies entered into plea agreements with the United States
Department of Justice (DOJ), pursuant to which those companies and
individuals agreed to plead guilty to participating in a conspiracy to fix
the prices of TFT-LCD panels. On December 15, 2008, LG Display and
its wholly-owned subsidiary, LG Display America Inc., pleaded guilty to
participating in a conspiracy from September 2001 to June 2006 to fix
the prices of TFT-LCD panels sold worldwide. Pursuant to that plea, LG
Display was sentenced to pay in five annual installments a total of USD
400 million in criminal fines. The DOJ has announced that its
investigation is continuing.
On May 28, 2009, the Company received a Statement of Objections
from the European Commission. In this document the European
Commission alleges that the Company is jointly and severally liable for
anticompetitive conduct by LG Display for the period in which the
Company, according to the European Commission, exercised joint
control. The Company vigorously opposes this allegation.
The Company sold its remaining shareholding in LG Display on March
11, 2009 and subsequently no longer holds shares in LG Display.
On March 6, 2009, the Washington State Attorney General’s Office
(the ‘Washington AG’) issued a Civil Investigative Demand (CID) to
PENAC pursuant to which PENAC was requested, among other things,
to produce documents and to provide answers to interrogatories
concerning the sale of TFT-LCD panels and the sale of TFT-LCD
products. PENAC was also requested to provide to the Washington
AG any documents previously produced to the DOJ as part of the
DOJ’s ongoing investigation into the TFT-LCD industry. After
discussions with the Washington AG, the Washington AG agreed to
allow PENAC, instead of responding to the CID, to provide the limited
amount of aggregate sales data and component data that the Company
previously provided to the plaintiffs in the direct purchaser plaintiff’s
class action. On March 27, 2009, PENAC produced that information to
the Washington AG. Thereafter, PENAC provided the same
information to the Missouri Attorney General’s Office and the Illinois
Attorney General’s Office in response to a CID and subpoena issued,
respectively, on March 18, 2009 and April 2, 2009 to PENAC.
Due to the considerable uncertainty associated with these matters, on
the basis of current knowledge, the Company has concluded that
potential losses cannot be reliably estimated with respect to these
matters. An adverse final resolution of these investigations and litigation
could have a materially adverse effect on the Company’s consolidated
financial position, results of operations and cash flows.
CRT Investigations
On November 21, 2007, the Company announced that competition law
authorities in several jurisdictions have commenced investigations into
possible anticompetitive activities in the Cathode-Ray Tubes, or CRT
industry. As one of the companies that formerly was active in the CRT
business, Philips is subject to a number of these ongoing investigations.
The Company has assisted the regulatory authorities in these
investigations. In November 2009, the European Commission sent a
Statement of Objections to Philips, indicating that it intends to hold
Philips liable for antitrust infringements in the CRT industry. In the US,
the Department of Justice has deferred Philips’ obligation to respond to
the grand jury subpoena Philips received in November of 2007.
Subsequent to the public announcement of these investigations in 2007,
certain Philips group companies were named as defendants in over 50
class action antitrust complaints filed in various federal district courts in
the United States. These actions allege anticompetitive conduct by
manufacturers of CRTs and seek treble damages on behalf of direct and
indirect purchasers of CRTs and products incorporating CRTs. These
complaints assert claims under federal antitrust law, as well as various
state antitrust and unfair competition laws and may involve joint and
several liability among the named defendants. These actions have been
consolidated by the Judicial Panel for Multidistrict Litigation for pre-trial
proceedings in the United States District Court for the Northern
District of California.
Consolidated amended complaints were filed by the direct and indirect
purchasers on March 16, 2009. On May 19, 2009, motions to dismiss
were filed on behalf of all Philips entities in response to both the direct
and indirect purchaser actions in the federal class actions pending in the
Northern District of California. The motions seek to dismiss all claims
against all Philips defendants on various grounds. A separate motion to
dismiss was filed on behalf of nearly all defendants seeking to eliminate
or limit certain of the claims of the direct and indirect purchasers. There
is no definitive schedule for resolution of the motions to dismiss by the
Court. Discovery on personal jurisdiction and most merits-related
issues is likely to be delayed until the resolution of the motions to
dismiss. Philips intends to continue to vigorously defend these lawsuits.
11 Group financial statements 11.12 - 11.12
196 Philips Annual Report 2009