Philips 2014 Annual Report Download - page 161

Group nancial statements 12.9
Annual Report 2014 161
Optical Disc Drive (ODD)
On October 27, 2009, the Antitrust Division of the
United States Department of Justice conrmed 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 nes.
In July 2012, the European Commission issued a
Statement of Objections addressed to (former) ODD
suppliers including the Company and PLDS. The
European Commission granted the Company and PLDS
immunity from nes, conditional upon the Company’s
continued cooperation. The Company responded to
the Statement of Objections both in writing and at an
oral hearing. The Company and PLDS are also subject
to similar investigations outside the US and Europe
relating to the ODD market. Where relevant, they are
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 led 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. The plaintis’ applications for certication of
both the direct and indirect purchaser classes were
denied on October 3, 2014. The representatives of these
putative classes tried appealing the denial of class
certication to the United States Court of Appeals for
the Ninth Circuit. However, the Ninth Circuit declined
this request to appeal.
In addition, various individual entities have led
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. 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 led 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. The defendants’ motion to dismiss has been
denied and Philips led an answer to the complaint.
This case has been joined with the ODD class action
cases in the Northern District of California for pre-trial
purposes.
The Company and certain Philips Group companies
have also been named as defendants, in proposed
class proceedings in Ontario, Quebec, British Columbia,
Manitoba and Saskatchewan, 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. Plaintis in the British
Columbia case have proceeded with their application
to certify that proceeding as a class action. The hearing
was held in January 2015 and the Court’s decision is
pending.
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 matters could have a materially adverse eect on
the Company’s consolidated nancial position, results
of operations and cash ows.
Consumer Electronics products and small Domestic
Appliances
Several companies, amongst which the Company, are
involved in an investigation by the European
Commission into alleged restrictions of online sales of
consumer electronic products and small domestic
appliances. This investigation commenced in
December 2013 when Philips was one of the companies
that was inspected by ocials of the European
Commission. Philips is fully cooperating with the
European Commission.
Due to the considerable uncertainty associated with
this matter, on the basis of current knowledge, the
Company has concluded that potential losses cannot
be reliably estimated with respect to these matters. This
investigation could have a materially adverse eect on
the Company’s consolidated nancial position, results
of operations and cash ows.
Masimo
On October 1, 2014 a jury awarded USD 467 million (EUR
366M) to Masimo Corporation (Masimo) in the patent
infringement lawsuit by Masimo in the United States
District Court for the District of Delaware against Philips.