Philips 2013 Annual Report Download - page 170

11 Group financial statements 11.9 - 11.9
170 Annual Report 2013
authorities in Brazil and Hungary are continuing to pursue the matter
against Philips and other defendants. Philips will respond to these
allegations in 2014.
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 pretrial
proceedings in the United States District Court for the Northern District of
California.
In 2012 a settlement agreement was approved between the Company and
counsel for direct purchaser plaintis fully resolving all claims of the direct
purchaser class and obtaining a complete release by class members.
Sixteen individual plaintis, principally large retailers of CRT products who
sought exclusion from the direct purchaser class settlement, filed separate
“opt-out” actions against Philips and other defendants based on the same
substantive allegations as the putative class plainti complaints. These
cases are consolidated for pre-trial purposes with the putative class
actions in the Northern District of California and discovery is being
coordinated. Philips’ motions to dismiss the complaints of the individual
plaintis have been denied. Trials on the individual claims have not yet
been scheduled.
On September 24, 2013 a class of indirect purchasers was certified
pursuant to F.R.C.P. 23. Discovery is proceeding in the indirect purchaser
action and a trial on these claims is currently scheduled for 2015. Philips
intends to continue to vigorously defend these indirect purchaser and
individual lawsuits.
In addition, the state attorneys general of California, Florida, Illinois,
Oregon and Washington filed actions against Philips and other defendants
seeking to recover damages on behalf of the states and, in parens patriae
capacity, their consumers. In 2012 the Florida complaint was withdrawn. In
2013 a settlement agreement with the state attorney general of California
has been approved. The actions brought by the state attorneys general of
Illinois, Oregon and Washington are pending in the respective state courts
of the plaintis. The Courts have not set trial dates and there is no
timetable for the resolution of these cases. Philips intends to continue to
vigorously defend these remaining lawsuits.
Certain Philips group companies have also been named as defendants, in
proposed class proceedings in Ontario, Quebec and British Columbia,
Canada, along with numerous other participants in the industry. At this
time, no statement of defense has been filed, no certification motion has
been scheduled and no class proceeding has been certified as against the
Philips defendants. Philips intends to vigorously oppose these claims.
Due to the considerable uncertainty associated with certain of these
matters, on the basis of current knowledge, the Company has concluded
that potential losses cannot be reliably estimated with respect to these
matters. These investigations and litigation could have a materially
adverse eect on the Company’s consolidated financial position, results of
operations and cash flows.
In addition to the above cases, in 2006 Italian investor Mr. Carlo Vichi filed
a claim against Philips for the repayment of a 2002 EUR 200 million loan
(plus interest and damages) that was given to an affiliate of the CRT joint
venture LG.Philips Displays (“LPD”) that went bankrupt in January of
2006. One of the issues in the case was whether LPD’s alleged
participation in the CRT cartel as determined by the European
Commission was a matter that should have been disclosed to Mr. Vichi.
The trial in the case took place in December 2012 and after a period of
post-trial briefing, the Delaware Chancery Court ruled in favor of Philips on
February 18, 2014. The decision is subject to appeal to the Delaware
Supreme Court.
Optical Disc Drive (ODD)
On October 27, 2009, the Antitrust Division of the United States
Department of Justice confirmed that it had initiated an investigation into
possible anticompetitive practices in the Optical Disc Drive (ODD)
industry. Philips Lite-On Digital Solutions Corp. (PLDS), a joint venture
owned by the Company and Lite-On IT Corporation, as an ODD market
participant, is included in this investigation. PLDS and the Company have
been accepted under the Corporate Leniency program of the US
Department of Justice and have continued to cooperate with the
authorities in these investigations. On this basis, the Company expects to
be immune from governmental fines.
In July 2012, the European Commission issued a Statement of Objections
addressed to (former) ODD suppliers including the Company. The
European Commission granted the Company immunity from fines,
conditional upon the Company’s continued cooperation. The Company
responded to the Statement of Objections both in writing and at an oral
hearing. PLDS is also subject to similar investigations outside the US and
Europe relating to the ODD market. Where relevant, the Company is
cooperating with the authorities.
Subsequent to the public announcement of these investigations in 2009,
the Company, PLDS and Philips & Lite-On Digital Solutions USA, Inc.
(PLDS USA), among other industry participants, were named as
defendants in numerous class action antitrust complaints filed in various
federal district courts in the United States. These actions allege
anticompetitive conduct by manufacturers of ODDs and seek treble
damages on behalf of direct and indirect purchasers of ODDs and
products incorporating ODDs. 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 for pre-trial
proceedings in the United States District Court for the Northern District of
California.
Consolidated Amended Complaints were filed by direct and indirect
purchasers. The defendants’ motions to dismiss these Complaints were
denied and Philips has filed Answers to the Complaints. Discovery is
proceeding. Plaintis filed motions seeking to certify the putative classes
of direct and indirect purchasers under F.R.C.P. Rule 23 in May 2013, and
Defendants have filed responses opposing class certification. Plaintis are
scheduled to file reply briefs in February 2014, and oral argument will be
scheduled after briefing is complete. In addition, five individual entities
have filed separate actions against the Company, PLDS, PLDS USA and
other defendants. The allegations contained in these individual
complaints are substantially identical to the allegations in the direct
purchaser class complaints. The Company is in the process of submitting
answers to these various individual complaints. All of these matters have
been consolidated into the action in the Northern District of California for
pre-trial purposes and discovery is being coordinated. The Company
intends to vigorously defend all of the civil actions in the US courts.
Also, in June 2013, the State of Florida filed a separate complaint in the
Northern District of California against the Company, PLDS, PLDS USA and
other defendants containing largely the same allegations as the class and
individual complaints. Florida seeks to recover damages sustained in its
capacity as a buyer of ODDs and, in its parens patriae capacity, on behalf
of its citizens. This case has been joined with the ODD class action cases in
the Northern District of California for pre-trial purposes. The Company
intends to seek dismissal of the Florida complaint. The Company and
certain Philips group companies have also been named as defendants, in
proposed class proceedings in Ontario, Quebec, British Columbia, and
Manitoba, Canada along with numerous other participants in the industry.
These complaints assert claims against various ODD manufacturers under
federal competition laws as well as tort laws and may involve joint and
several liability among the named defendants. Philips intends to
vigorously defend these lawsuits.
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. These
investigations and litigation could have a materially adverse eect on the
Company’s consolidated financial position, results of operations and cash
flows.
Smart card chips
Philips is part of an investigation by the European Commission into
alleged anti-competitive conduct in the period September 2003 to
September 2004 relating to the former Philips smart card chips business.
This business was part of Philips’ former Product Division Semiconductors,
which was divested in 2006. The European Commission issued its
Statement of Objections on April 22, 2013. The Company responded to the
Statement of Objections both in writing and at a hearing. Based on our
current knowledge, the Company does not believe that this investigation
will have a materially adverse eect on the Company’s consolidated
financial position.