The European Commission has opened a formal investigation to assess whether Corning may have abused its dominant position on the worldwide market for a special type of glass that is mainly used to protect the screens of handheld electronic devices, such as mobile phones.
Corning, based in the US, is a global glass producer for many industrial and consumer applications. It produces Alkali-aluminosilicate glass ('Alkali-AS Glass'), a particularly break-resistant glass mainly used as cover for displays of portable electronic devices such as mobile phones, tablets, or smartwatches. Corning markets Alkali-AS Glass under the 'Gorilla Glass' brand, among others.
The Commission has concerns that Corning may have distorted competition by concluding anti-competitive exclusive supply agreements with mobile phone manufacturers (Original Equipment Manufacturers or 'OEMs') and with companies that process raw glass ('finishers').
In particular, it appears that in its agreements with mobile OEMs Corning included:
- Exclusive sourcing obligations requiring OEMs to source all or nearly all of their Alkali-AS Glass demand from Corning.
- Exclusivity rebates granting rebates to OEMs on the condition that they comply with the exclusive sourcing obligations.
- 'English clauses' obliging OEMs to report to Corning on competitive offers, and allowing OEMs to accept that offer only if Corning fails to match the price.
Additionally, it appears that in its agreements with finishers Corning included:
- Exclusive purchase obligations obliging finishers to purchase all or nearly all of their Alkali-AS Glass demand, or an important subtype of Alkali-AS Glass, from Corning.
- No challenge clauses preventing finishers from challenging Corning's patents.
The Commission is concerned that the agreements that Corning put in place with OEMs and finishers may have excluded rival glass producers from large segments of the market, thereby reducing customer choice, increasing prices, and stifling innovation to the detriment of consumers worldwide.
If proven, the behaviour under investigation may breach EU competition rules, which prohibit the abuse of a dominant position (Article 102 of the Treaty on the Functioning of the European Union ('TFEU')).
The Commission will now carry out its in-depth investigation as a matter of priority. The opening of a formal investigation does not prejudge its outcome.
In parallel to the opening of proceedings, the Commission has adopted a Preliminary Assessment summarising the main facts of the case and identifying its competition concerns. To address the Commission's concerns, Corning may now submit commitments.
Background
Article 102 TFEU prohibits the abuse of a dominant position that may affect trade within the EU and prevent or restrict competition. The implementation of this provision is defined in Regulation No 1/2003 , which can also be applied by the national competition authorities.
A Preliminary Assessment summarises the main facts of the case and identifies the competition concerns of the Commission. To meet these concerns, the addressee of the Preliminary Assessment may offer commitments in line with Article 9(1) of Regulation No 1/2003, which allows the Commission to conclude antitrust proceedings by accepting commitments offered by a company. Such a decision does not reach a conclusion as to whether there is an infringement of EU antitrust rules, but legally binds the company to respect the commitments submitted.
Article 11(6) of Regulation No 1/2003 provides that the opening of proceedings by the Commission relieves the competition authorities of the Member States of their competence to apply EU competition rules to the practices concerned. Article 16(1) further provides that national courts must avoid adopting decisions which would conflict with a decision contemplated by the Commission in proceedings it has initiated.
The Commission has informed Corning and the competition authorities of the Member States that it has opened proceedings in this case. There is no legal deadline for bringing an antitrust investigation to an end. Its duration depends on a number of factors, including the complexity of the case, the extent to which the companies concerned cooperate with the Commission and the exercise of the rights of defence.
