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After the European Union opened a competition investigation into Corning earlier this month, citing concerns about alleged exclusive dealing, the Gorilla Glass maker offered a raft of changes to the terms of its contract aimed at settling the probe.
The US company is a supplier to major electronics brands including Apple’s iPhone, and the changes may also be intended to prevent the investigation from intensifying further. Confirmed violations of competition rules can result in penalties of up to 10% of global annual turnover.
The European Commission is now seeking industry views on Corning’s offer. Feedback can be submitted for approximately six weeks.
If the EU accepts Corning’s proposals after this market test, the package of commitments will become legally binding on the company. It will also be applicable worldwide and remain in force for nine years, and implementation will be monitored by a trustee reporting to the Commission. Any violation of obligations may result in the imposition of large fines.
Exclusive dealing, purchase quotas and patent enforcement within the framework
Corning has proposed to waive all exclusivity clauses in all of its existing agreements with device manufacturers (OEMs) and finishers for the supply of alkali-aluminosilicate glass (Alkali-AS Glass), which is primarily used for displays in mobile devices. There is also an agreement not to use such clauses (or other clauses with similar effects) in future agreements around the world.
For devices intended to be sold in the European Economic Area (EEA), Corning also proposes not to require OEMs to purchase or source any quantity of Alkali-AS glass from its own business. It also promises that it will not offer device manufacturers any price advantages conditional on these requirements.
For the combined demand of non-EEA OEMs for Alkali-AS Glass and clear glass ceramics (also known as “clear glass ceramics”), and their aggregate demand for lithium aluminosilicate glass (LAS Glass) or clear glass ceramics, it is suggested not to claim Device makers purchase or cause their supply chain to purchase more than 50% of their order from Corning. In addition, Corning would not provide OEMs with any price benefits conditional on these requirements, according to the proposal.
Another proposal focuses on third-party companies that process raw glass (also known as finishes). Corning is offering to not require finishing companies to purchase more than half of its products Combined demand for sodium aluminosilicate glass (NAS Glass), LAS Glass, and Corning clear glass ceramics; There is no requirement for price advantages on these purchase requirements.
In addition, it offers not to require, in any other way, that finishing companies concentrate more than 50% of this joint demand with Corning.
“This means that finishing companies are free to decide the amount of different covering materials (NAS glass, LAS glass or clear glass ceramic) they wish to purchase from Corning to comply with this comprehensive cap,” the European Commission report said. press release Summarizing the Corning presentation.
Additional obligations relate to the enforcement of patents held by Corning relating to the shatter-resistant glass cover. I have here offered to base any claim only About patent infringement, not about breach of contract. It would also not use any contractual mechanisms (such as penalties) to bolster patent claims, according to the proposal.
As part of the proposal, Corning also committed to reaching out to device makers and manufacturers to explain changes to its business terms, including in English and Mandarin Chinese.
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