Nokia 2009 Annual Report Download - page 155

to December 2006 (the “Cartel Period”). Defendants Sharp Corporation, LG Display Co. Ltd., Chunghwa
Picture Tubes, Ltd., Hitachi Displays Ltd. and Epson Imaging Devices Corporation, as well as non
defendant Chi Mei Optoelectronics, have pled guilty in the United States to participating in a
conspiracy to fix certain LCD prices and have agreed to pay fines totaling approximately
USD 860 million. During the Cartel Period, Nokia purchased substantial quantities of LCDs from several
defendants and other manufacturers for incorporation into its mobile handsets. The lawsuits allege
that as a result of defendants’ cartel activities, Nokia suffered harm by, among other reasons, paying
supracompetitive prices for LCDs.
Also in November 2009, Nokia Corporation filed a lawsuit in the United Kingdom’s High Court of
Justice against certain manufacturers of cathode rays tubes (“CRTs”). In this lawsuit, Nokia alleges that
the defendants violated the relevant antitrust or competition laws (Article 81 EC Treaty and Article 53
EEA Agreement) by entering into a worldwide conspiracy to raise and/or stabilize the prices of CRTs,
among other anticompetitive conduct, from no later than March 1995 to around November 2007.
During the Cartel Period, Nokia, through its subsidiary Nokia Display Products Oy, engaged in the
manufacture and supply of computer monitors for third parties. Nokia purchased substantial
quantities of CRTs for this purpose from several defendants, as well as nondefendant manufacturers.
The lawsuit alleges that as a result of defendants’ cartel activities, Nokia suffered harm by, among
other reasons, paying supracompetitive prices for CRTs.
We intend to pursue our CRT and LCD claims as appropriate in these matters in order to protect our
interests. However, the final outcome of the claims, including the ability to recover damages for any
overcharges paid, is uncertain due to the nature and inherent risks of such legal proceedings.
Agreement Related Litigation
We are also involved in arbitrations and several lawsuits with Basari Elektronik Sanayi ve Ticaret A.S.
(“Basari Elektronik”) and Basari Teknik Servis Hizmetleri Ticaret A.S. regarding claims associated with
the expiration of a product distribution agreement and the termination of a product service
agreement. Those matters have been before various courts and arbitral tribunals in Turkey and
Finland. Basari Elektronik claims that it is entitled to compensation for goodwill it generated on
behalf of Nokia during the term of the agreement and for Nokia’s alleged actions in connection with
the termination of the agreement. The compensation claim has been dismissed by the Turkish courts
and referred to arbitration. Basari Elektronik has filed for arbitration in Helsinki and Turkey. In October
2009, the arbitration in Helsinki was resolved in our favor while the arbitration in Turkey continues.
We believe that these claims are without merit, and will continue to defend ourselves against these
actions vigorously.
Securities Litigation
On February 5, 2010, a lawsuit was initiated by a municipal retirement fund, holding fewer than 10
000 shares, in the United States District Court for the Southern District of New York on behalf of itself,
and seeking class action status on behalf of purchasers of the American Depositary Shares, or ADSs, of
Nokia between January 24, 2008 and September 5, 2008, inclusive (the “Class Period”), to pursue
remedies under the Securities Exchange Act of 1934 (the “Exchange Act”). The complaint names Nokia
Corporation, as well as its executives, OlliPekka Kallasvuo, Richard Simonson and Kai O
¨ista
¨mo ¨, and
claims violations of the Exchange Act. In particular, the complaint alleges that throughout the
Class Period, Nokia and the individual defendants failed to disclose alleged material adverse facts
about the company’s true financial condition and business prospects, including specifically that:
(i) the positive statements made about Nokia’s new product launches were without reasonable basis
given the component supply shortages and manufacturing problems Nokia was encountering during
that time; (ii) Nokia was losing market share due to intense price cuts by its competitors; and
(iii) while the named individual defendants stated they expected the overall industry ASP to decline in
2008, they failed to disclose Nokia had significantly cut its ASPs to maintain its market share due to
the severe price competition. Plaintiff claims that as a result of the above allegations, the price of
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