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HP scores US$439m win on Quanta's factories, patents

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HP Inc will get to keep all the cash, factories and patents Quanta Storage was ordered to turn over to satisfy a US$439 million antitrust judgment from 2019, a federal appeals court ruled.

[NEW ORLEANS] HP Inc will get to keep all the cash, factories and patents Quanta Storage was ordered to turn over to satisfy a US$439 million antitrust judgment from 2019, a federal appeals court ruled.

The Taiwanese disk drive maker was ordered to surrender almost all its assets before its appellate challenge had played out because it failed to post an US$85 million bond to prevent early collection of the crippling award. The appellate court did agree to give it more time to comply.

"Quanta risked bet-the-company litigation and lost, so the district court ordered it to hand over the company," a three-judge panel of the Court of Appeals in New Orleans said Friday in a 21-page ruling.

Quanta tried repeatedly in April to delay HP's push to collect on the judgment. It claimed that coronavirus travel and business restrictions in Taiwan and China, where most of its executives and factories are, prevented it from posting the bond while complying with Taiwanese regulations on asset transfers by publicly traded companies. HP said Quanta was using the pandemic as a ploy to dissipate assets that could be used to satisfy the judgment.

"It is not apparent from the record that the district court considered the amount of time it would take for Quanta to complete the asset transfer process required by Taiwanese law," the panel said Friday.

'CANNOT GO UNPUNISHED'

HP said it was pleased that the panel agreed with the trial judge and jury.

"Quanta violated US antitrust laws by conspiring to fix prices," Alex Roberts, one of HP's lawyers, said in an email. "That conduct cannot go unpunished. HP took them to task for those violations, and now we look forward to ensuring they comply promptly" with the turnover orders.

Quanta's attorneys Marie Yeates and Zach Levine didn't immediately return calls and emails seeking comment on the decision.

A Houston jury awarded HP US$176 million in damages after a price-fixing trial in late 2019. Quanta was the only optical disk drive maker that didn't settle out of court when HP sued more than a dozen manufacturers over a decade-long conspiracy to rig prices for components used to store and read media and data on DVDs, CDs and Blu-Ray discs. Industry giants including Toshiba, Samsung Electronics, Hitachi-LG and Sony Electronics jointly controlled 90 per cent of the market.

DAMAGES TRIPLED

After the jury tagged Quanta with all of HP's losses from the racket, US District Judge David Hittner in Houston compounded Quanta's woes by tripling the damages, as allowed under US antitrust law, subtracting settlement credits HP had already received.

On appeal, Quanta argued that the damages were incorrectly calculated at trial because jurors included purchases by HP's foreign subsidiaries, which Quanta claimed aren't covered by US antitrust protections. HP said its economic expert excluded purchases by the foreign units, and the appeals court agreed, upholding the money judgment.

Quanta, which has surrendered some assets to a court custodian, had sought more time to comply with Taiwanese regulations before turning over the keys to its Asian factories. It had also said it needs to make sure the HP judgment is enforceable under local law before complying with an overseas court order that essentially liquidates the company.

It urged the courts to respect international comity and require HP to confirm the judgment in Taiwanese courts - or risk retaliation by foreign judges who might strip American companies of the protection of US courts in overseas disputes. The appeals court rejected those arguments.

BLOOMBERG

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