Out-Law News 2 min. read

Nintendo's price-fixing fine reduced on appeal because of co-operation

A European Union court has reduced market-fixing fines levied on games console maker Nintendo and its distributors in 2002. It ruled that most of the fines should be reduced because of the co-operation the companies gave to the investigation.

In 2002 the European Commission fined Japan's Nintendo and seven distributors including the UK's John Menzies €167.8 million in total over its finding that the companies colluded to keep prices high.

The EU's Court of First Instance has now said that most of the fines should be reduced by 40% or more because of the companies' co-operation in the Commission's competition law investigation. Only Itochu Corporation failed to have its €4.5m fine reduced.

The Commission had found that Nintendo and its distributors had colluded to prevent parallel exporting of consoles and games. This meant that distributors agreed to stop the movement of consoles from European Union countries where they were cheap to countries where they were expensive for sale at a discount.

The Commission found that Nintendo used its power of control of supply of the in-demand products to force distributors to comply with its demands.

"The [companies] collaborated closely in order to identify the origin of any parallel trade," said a statement from the Court. "Operators which allowed parallel exports were punished by a reduction of their supply or by a total boycott by Nintendo. The Commission decided that, since the conduct of those undertakings from 1991 until 1997 had had the object and effect of restricting parallel exports of the products, it was contrary to Community law."

Nintendo was identified as the instigator of the illegal activity and the leader of the companies in their behaviour. It was fined €149 million, while distributor Itochu was fined €4.5 million.

John Menzies was identified by the Commission, which regulates adherence to competition law in the EU, as a company that helped the investigation, and so its fine was reduced. The Court said that the same discount should apply to any of the companies that helped as much as John Menzies did.

"In the contested decision, the Commission took account of John Menzies’s cooperation, with the result that it reduced that undertaking’s fine by 40%," said the Court of First Instance's statement. "The Court held that pursuant to the principle of equal treatment, since Nintendo produced the relevant documents at the same stage of the procedure and its cooperation must be regarded as comparable, it must benefit in this respect from the same level of reduction of fine."

"Consequently, the Court reduced the fine imposed on Nintendo to €119.2425 million," it said.

The Court also reduced the fine imposed on CD-Contact Data, the distributor for Belgium and Luxembourg.

"CD Contact Data … played a passive role in the infringement, like Concentra, the distributor for Portugal. Since the Commission had reduced Concentra’s fine by 50%, the Court decided to reduce the fine imposed on CD Contact Data to €500 000, pursuant to the principle of equal treatment," the Court said.

It refused, though, to reduce the fine imposed on Japan's Itochu. "The Court decided that [the company] had not adduced sufficient evidence to rebut the presumption that it in fact exercised decisive influence over the conduct of its Greek subsidiary Itochu Hellas," the Court said.

The founding document of the European Union is the EU Treaty, whose main purpose is to enable free trade between member states. It specifically outlaws deals or behaviour that may affect trade between member states and "have as their object or effect the prevention, restriction or distortion of competition within the common market".

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