IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN:

Pro-Sys Consultants Ltd.

and

Infineon Technologies AG, Infineon Technologies North America Corp., HynixSemiconductor Inc., Hynix Semiconductor America Inc., Hynix Semiconductor

Manufacturing America, Inc., Samsung Electronics Co. Ltd., SamsungSemiconductor, Inc., Samsung Electronics America, Inc., Samsung

Electronics Canada Inc., Micron Technology, Inc. and Micron SemiconductorProducts, Inc. doing business as Crucial Technologies, Elpida Memory, Inc.

and Elpida Memory (USA) Inc.

Brought under the Class Proceedings Act, RSBC 1996, c 50

CANADAPROVINCE DE QUEBECDISTRICT DE MONTREAL

AND

(RECOURS COLLECTIF)

COUR SUPERIEURE

Plaintiff

Defendants

No : 500-06-000251-047 OPTION CONSOMMATEURS

Representante/Demanderesse

-et-

CLAUDETTE CLOUTIER,

Personne designee

C.

INFINEON TECHNOLOGIES AG, ET AL.

Defenderesses

AND IN THE ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:Court File No. 05-CV-4340

Khalid Eidoo and Cygnus Electronics Corporation

and

Plaintiffs

Infineon Technologies AG, Infineon Technologies Corporation, InfineonTechnologies North America Corporation, Hynix Semiconductor Inc.,

Hynix Semiconductor America Inc., Hynix Semiconductor ManufacturingAmerica, Inc., Samsung Electronics Co., Ltd., Samsung Semiconductor, Inc.,

Samsung Electronics America, Inc., Samsung Electronics Canada Inc.,Micron Technology, Inc., Micron Semiconductor Products, Inc. o/a Crucial

Technologies, Mosel Vitelic Corp., Mosel Vitelic Inc. and Elpida Memory, Inc.

Proceeding Under the Class Proceedings Act, 1992

AND IN THE ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Defendants

Court File No. CV-10-15178

Khalid Eidoo and Cygnus Electronics CorporationPlaintiffs

and

Hitachi Ltd., Hitachi America, Hitachi Electronic Devices (USA),Hitachi Canada Ltd., Mitsubishi Electric Corporation,Mitsubishi Electric Sales

Canada Inc., Mitsubishi Electric &Electronics USA, Inc., Nanya Technology Corporation, Nanya

Technology Corporation USA, NEC Corporation, NEC Corporation ofAmerica, NEC Canada, Renesas Electronics Corporation fka NEC Electronics

Corporation, Renesas Electronics America, Inc. fka NEC ElectronicsAmerica, Inc., Renesas Electronics Canada Ltd., Toshiba Corporation,Toshiba America Electronics Components Inc., Toshiba of CanadaLimited, Winbond Electronics Corporation and Winbond Electronics

Corporation America

Defendants

Proceeding Under the Class Proceedings Act, 1992

REPORT OF THE HON. IAN BINNIE, C.C., Q.C.

On whether the proposed distribution of fundsresulting from the DRAM class actions

is fair, reasonable and equitable among class members

1

1. I have been requested by class counsel in the DRAM litigation to make recommendations

as an independent third party to the three supervising courts in British Columbia, Ontario and

Quebec with respect to the distribution of settlement funds (after payment of class counsel fees and

expenses and the expenses to administer the claim program) to the class members.

I. INTRODUCTION

2. As the supervising courts are aware, DRAM is a commonly used semiconductor memory

product found in computers, servers, telecommunications and a host of other consumer electronic

products.

3. To date, settlements including accrued interest have been negotiated or approved in excess

of $80 million as against the settling defendants. These settlements resolve the claims of all direct

and indirect purchasers of DRAM in Canada during the period April 1, 1999 through December

31, 2002.1

4. As is more fully explained below, class counsel propose the following allocation of the net

proceeds of the settlements:

1) END CONSUMERS FUND 50%

2) ELECTRONIC MANUFACTURING SERVICES (EMS) FUND 30%

3) OTHER DRAM PURCHASERS FUND 20%

5. The Canadian DRAM National Class Actions Distribution Protocol is attached hereto as

Appendix A.

Subject to the Mosel Vitelic defendants to the Ontario action. Those defendants have discontinued all or virtually all

operations in the midst of severe financial difficulty. Counsel are monitoring the status of the Mosel business

and are considering a discontinuance of the claims made against the companies.

2

Distribution Protocol

6. The Distribution Protocol provides for the allocation of funds among class members. It

does not, however, specify when actual payment of funds to class members will occur.

7. Class counsel recommend that payment to class members be initiated once the litigation is

resolved in its entirety. If multiple distributions are made, the costs of administering the

Distribution Protocol are likely to be substantially higher with a corresponding erosion of the value

of the settlement fund. In particular, an interim distribution followed by another subsequent

distribution will lead to duplicative allocation of settlement funds among claiming class members,

issuing of payment (whether by cheques, electronic transfer, or other means), and reporting to the

supervising courts.

8. Settlements have recently been reached which, for all practical purposes, will resolve the

action in its entirety2, it is recommended that one distribution be undertaken following the

approval of those settlements if so granted and following the payment of those settlement amounts

into the settlement account.

Claims Administration

9. Class counsel are creating a claims administration plan and appointing a claims

administrator to carry out the Distribution Protocol. Class counsel have sent a request for proposals

("RFP") to selected claims administration firms with a copy of class counsel's proposed claims

administration protocol. Class counsel will select the claims administrator on the basis of the

2 Subject only again to the Mosel defendants against whom a discontinuance is likely.

3

proposals received in response to the RFP subject to the ultimate approval of the supervising

courts, where necessary.

II. HISTORY OF THE DISPUTE

10. During the relevant period, DRAM was the most common form of digital memory used in

electronic devices including computers, servers, printers and other computer-peripheral products.

DRAM was also used in other devices, such as office equipment (faxes etc.), telecommunications

equipment and game consoles.

11. The class includes the entire Canadian distribution chain from direct purchasers to the

ultimate end consumers of the DRAM.

12. A substantial amount of computer DRAM was sold directly by the defendant chip

manufacturers to computer manufacturers ("OEMs") such as Dell, Apple, Hewlett Packard, IBM

and Sun Microsystems. OEMs generally sold to resellers as well as to end-buyers through

telephonic and internet sales.

13. The defendant DRAM manufacturers also sold a significant amount of DRAM directly to

certain distributors and Electronic Manufacturing Services ("EMS") companies. In Canada by far

the largest purchaser of DRAM (direct and indirect) was Celestica, an EMS company based in

Toronto that has global operations.

14. DRAM resales took two main forms: DRAM chips on modules that were used by the

purchaser to increase the memory in a computer or peripheral equipment; and DRAM modules

installed in computers, peripherals and other DRAM-containing devices purchased by other

resellers or end-buyers.

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Canadian DRAM Proceedings

15. Class actions were commenced in British Columbia, Ontario and Quebec approximately

10 years ago alleging that the manufacturers of DRAM got together to fix the price of DRAM

during the period from April 1, 1999 to June 30, 2002. The class actions claim that the DRAM

manufacturers were able to charge more than they would have without the conspiracy (an amount

referred to as the "overcharge") and that buyers of DRAM at various levels of the distribution

chain therefore paid more than they otherwise would have paid.

16. The BC Action, Pro-Sys Consultants Ltd. v. Infineon AG, was commenced on December

20, 2004. The plaintiff's application for class certification of the BC Action was denied by the BC

Court on May 5, 2008 after an eight-day certification hearing.

17. The plaintiff appealed and, on November 12, 2009, the BC Court of Appeal certified the

BC Action as a class proceeding. On June 3, 2010, the defendants' application for leave to appeal

to the Supreme Court of Canada was dismissed with costs. On May 17, 2012, the Supreme Court

of Canada denied the application of certain defendants for reconsideration of the refusal of leave.

18. The BC Action was initially scheduled for 80 days of trial commencing September 10,

2012. This trial date was adjourned and re-scheduled to begin on September 8, 2014 for 70 days.

The trial was recently adjourned again pending finalization and approval of a settlement agreement

in principle reached with Infineon.

19. The Quebec Action, Option Consommateurs c. Infineon Technologies AG was commenced

on October 6, 2004. The Quebec Court dismissed the applicant's application for authorization on

June 17, 2008. The applicant appealed and, on November 16, 2011, the Quebec Court of Appeal

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authorized the Quebec Action as a class proceeding. Certain defendants in the Quebec Action

sought, and, on May 17, 2012, were granted leave to appeal the judgment of the Quebec Court of

Appeal to the Supreme Court of Canada. The appeal was heard on October 17, 2012 and dismissed

on October 31, 2013. Counsel in the Quebec Action have been on a fast track to prepare for trial

with Infineon which has now been put on hold pending finalization and approval of the settlement

agreement in principle reached with Infineon.

20. The First Ontario Action, Eidoo v. Infineon Technologies AG was commenced on February

3, 2005. The Second Ontario Action, Eidoo v. Hitachi Ltd. which named additional defendants but

covered the same alleged conspiracy, was commenced on August 20, 2010. Based on the decision

of class counsel to push the litigation in BC and Quebec, the Ontario Actions have not yet

proceeded to a contested certification hearing.

21. Eventually, as stated, the Canadian claims were settled (still subject to approval, in part) for

an amount in excess of $80 million inclusive of interest earned to date, as shown in Appendix B.

The anticipated amount available for distribution to class members will be approximately $50

million, as explained in Appendix C.

The Canadian Competition Bureau Investigation

22. The Canadian Competition Bureau investigated allegations of anti-competitive activity in

the DRAM industry in Canada, but discontinued those investigations in April 2010.

US DRAM Class Actions

23. In the United States, a multitude of class actions were commenced against the

manufacturers of DRAM by both direct purchasers and indirect purchasers. These actions were

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consolidated as multi-district litigation captioned In re DRAM Antitrust Litigation. The defendants

in the US Actions include entities from the groups of corporate defendants named in the Canadian

actions including the Settling Defendants.

24. The US multidistrict DRAM litigation settled with court approval for approximately $636

million.

European Commission Proceedings

25. After investigation, the European Commission fined certain DRAM manufacturers selling

to the European Economic Area €331,273,800.

III. CLASS REPRESENTATION IN ALLOCATION NEGOTIATIONS

26. Each cohort of the distribution chain within the class was independently represented by

counsel in the allocation negotiations.

27. Various class counsel from the plaintiff DRAM team in Ontario and Quebec were

designated to advance the interests of the respective cohorts in the distribution chain as follows:

Direct purchasers:Harrison Pensa LLP in London, OntarioAttn: Jonathan Foremanjforeman@harrisonpensa.com(519)-661-6775

Resellers:Sutts, Strosberg LLP in Windsor, OntarioAttn: Heather Rumble Petersondramclassaction@strosbergco.com1-800-229-5323 extn 8296

End consumers:Belleau Lapointe in Montreal, QuebecAttn: Maxime Nasr

7

info@belleaulapointe.com514-987-6700

28. In addition the law fiiiii of Camp Fiorante Matthews Mogerman provided independent

advice to the independent economics expert Dr. Tom Ross (whose work is described below) and to

me regarding the Distribution Protocol. They did not represent any of the participants in the

disputed allocation of proceeds among the direct and indirect purchasers of DRAM.

IV. INDEPENDENT ECONOMICS EXPERT: DR. THOMAS ROSS

29. Dr. Thomas Ross, a senior economist with the Sauder School of Business at the University

of British Columbia, was retained to provide an independent and objective opinion as to the

distribution of loss as a result of the overcharge and in particular where the overcharge came to rest

in the chain of distribution.

30. Specifically, Dr. Ross was asked:

a. What are the predominant distribution channels through whichprice-fixed DRAM would have flowed through the Canadian economy,during the class period, from defendants to final consumers in Canada?

b. With respect to those channels, what is the likely incidence of theovercharge in Canada caused by this price-fixing; that is, at what stages ofthe various distribution channels was harm from the overcharge felt, andto what extent? This relates to the question of the "pass-through" of harmdown the various distribution channels.

3 1 . Dr. Ross encountered some difficulty in obtaining precise data on the Canadian markets.

His report therefore evolved through extensive discussion with market participants from his initial

Report dated June 28, 2013 (attached hereto as Appendix D) which relied to a substantial extent

on U.S. market data, to a second Report dated April 11, 2014 (attached hereto as Appendix E) to

-8

the final Report dated June 13, 2014 (attached hereto as Appendix F), which reflected more

accurately the Canadian market.

First Question Posed to Dr. Ross: Description and Analysis of Distribution Channels

32. As described more fully by Dr. Ross, in his June 13, 2014 Report (Appendix F), buyers of

DRAM fall within three major distribution channels:

(a) end consumers including:

(i) individuals and households, as well as sole proprietorships;

(ii) government entities including the federal government, the provinces,

territories and municipalities;

(iii) various large and small public corporations and entities like power

companies, insurers, hospitals and school boards; and

(iv) private corporations and partnerships.

(b) Original Equipment Manufacturers buy the DRAM modules to insert into their

computers. These Computer OEMs include companies such as IBM,

Hewlett-Packard (HP), Apple and Dell. Most will use resellers (distributors,

retailers etc.) but some, notably Dell, sell directly to final purchasers via telephone

and (largely now) internet modes.

(c) Other DRAM Purchasers including "white box manufacturers" that assemble

personal computers on a much smaller scale than Computer OEMs and without a

well-recognized brand of their own. They may distribute directly to large

9

purchasers such as governments and educational bodies (e.g. school boards) or

through retailers (possibly marketed as the retailer's house brand). This residual

group also includes what Dr. Ross described as "Resellers" and "Other computer

parts manufacturers" as well as non-computer OEM firms; and DRAM resellers

and module-makers. In summary, the "Other DRAM Purchasers" group includes

any DRAM purchaser not already identified as belonging to one of the first two

categories.

Second Question Posed to Dr. Ross: Which of the three distribution channels absorbed what

percentage of the overcharge?

33. As will be seen from his reports, Dr. Ross significantly modified his opinion of the

"incidence of loss" as his report evolved from June 2013 to June 2014. The modifications were

based largely on fresh batches of information which he obtained that were specific to the Canadian

market. In his final Report Dr. Ross accepted as reasonable the shares of the settlement funds

proposed by class counsel to be allocated to each of these categories as follows, with the

corresponding (rounded) share from the initial Report in parentheses after:

(a) End Consumers Fund receives 50% (initial Report — 88%)

(b) EMS Fund receives 30% (initial Report — 5%)

(c) Other DRAM Purchasers Fund receives 20% (initial Report — 8%)

34. A detailed description of the process of negotiation of the Distribution Protocol, and the

evolution of Dr. Ross' Report, is attached hereto as Appendix G.

35. Dr. Ross concluded that the proposed allocation (as modified) is reasonable because:

- 10 -

(a) the limitations on the available data on DRAM markets, particularly in Canada,

means that any assessment of harm must be recognized to be approximate;

(b) additional information about DRAM markets in Canada, particularly with respect

to the importance of the EMS sector in Canada relative to its minor significance in

the United States required a significant adjustment to his earlier US data based

estimates;

(c) additional information shed significant new light on the "take-up" characteristics of

different class members of damage award offers, and in particular:

(i) take-up (i.e. the proportion of class members who file claims) by End

Consumers is an area which presents traditional challenges; and

(ii) take-up in the EMS category is likely to be very high as Celestica itself

represents a large proportion of that group's DRAM activity;

Dr. Ross points out that from an economist's perspective the deterrent effect of

private competition law enforcement is enhanced by concentrating awards on

actual victims as it increases the willingness of actual victims to bring cases ;

(d) as noted, Dr. Ross came to include some categories excluded in his initial Report

but included in class counsel's "Other DRAM Purchasers Fund" as well as possibly

some parties buying DRAM products that were in other identified categories. In the

result, Dr. Ross endorsed an increase in the size of the allocation to this "Other"

group relative to what was contained in the initial Ross proposal;

(e) Dr. Ross concluded that victims will not be overcompensated in the proposed

allocation — that is they will not receive more than the current best estimate of the

harm they suffered. The exception here is in the End Consumers category where

purchasers only claiming for one to four Computer Equivalent Units (CEUs) will

have their awards increased to a full $20 which is likely to exceed the actual dollar

damage suffered if a claimant only purchased one CEU during the class period.

However, a certain amount of overpayment is necessary in some small-numbers

situations to ensure that the benefits of filing a claim will exceed the costs of filing

(e.g. what are sometimes called "hassle costs" which include the costs of figuring

out if one is eligible; if so, then what to do to apply; securing and filling in forms;

getting the claim into the right hands; etc). The true net benefit from making a claim

will be the damage award less these costs of filing — and these costs are large as a

proportion of benefits when there are small numbers of units involved;

(f) again with the exception of End Consumers with a small number of units, actual

victims who file claims will receive awards in proportion to the harm they suffered,

taking into account the absorption categories in Dr. Ross' final Report. This means

that there is a form of horizontal equity across user groups. Situations will be

avoided, for example, where individual EMS group members get a much larger

share of their actual harm compensated than individual "Other DRAM Purchasers"

receive.

Dr. Ross' Conclusion: at p. 10 of his Final June 13, 2014 Report

36. Dr. Ross concludes that:

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in my opinion, the proposed settlement Distribution Protocol [i.e. thedocument attached hereto as Appendix A] is a reasonable approach fordistributing the settlement funds to Class Members harmed by the conductof defendants in this matter.

V. METHODOLOGY FOR VALUING CLAIMS

37. Class counsel sought a simple and practical means of facilitating and valuing claims by

class members. Class Counsel have elected to employ a system whereby class members' DRAM

purchases can be simply converted to a common unit of measurement, both for the ease of filing a

claim and for generating compensatory payments through the distribution protocol.

38. The common unit of measurement will be the "Computer Equivalent Unit", or the "CEU".

CEU values have been assigned to various products which contain DRAM so that class members

can simply identify those products purchased by them in order to calculate and assign a total CEU

value for the purposes of their claim. For class members who purchased raw DRAM or DRAM in

large quantities, there is an additional schedule for assigning a CEU value to those purchases in a

straightforward manner.

39. The average DRAM content of a computer in the class period will be used as the baseline

for calculating the computer equivalent units (CEUs) of all DRAM products. Other common types

of DRAM products are assigned a CEU value based on their average DRAM content compared to

the DRAM in an average computer during the class period.

40. The CEU methodology for valuing claims is derived from work done in the US DRAM

Indirect Purchaser litigation by Jonathan Schwartz, a principal economist at Nathan Associates

Inc. with many years experience providing economic analysis on large antitrust class actions. The

work of Mr. Schwartz was approved by the U.S. Special Master in the US DRAM Indirect

- 13 -

Purchaser litigation. While the US work has been relied upon by Class Counsel certain

adjustments were required to be made in order to reflect the differences in the Canadian market for

DRAM and DRAM products during the class period.

41. This methodology has the advantage of generally not requiring claimants to report either

the amount of DRAM in their DRAM products or the exact year when the DRAM products were

purchased during the class period while still valuing the claimants' purchases fairly. The dollar

value of a CEU will depend on the category of the claim as provided in the Distribution Protocol.

VI. THE LEGAL FRAMEWORK

42. Among the legal questions under consideration are the following:

(a) What are the general principles that guide a distribution?

(b) How are those general principles applied in a case where the class includes both

direct and indirect purchasers of a price fixed product?

General Principles

43. Class proceedings legislation across Canada contains tools to facilitate the distribution of

recoveries achieved in class action litigation. While those legislative tools focus on distribution of

judgments at the conclusion of contested proceedings, guidance can be taken from those

provisions for the purposes of distributing recoveries achieved by settlement. Generally speaking,

the statutory provisions permit and facilitate the flexible and efficient delivery of litigation

recoveries to class members.

-14-

44. All of the various acts afford the Courts broad discretion to "direct any means of

distribution [of a judgment] ...that it considers appropriate: BC Class Proceedings Act, R.S.B.C.

1996, c. 50 at s. 33(1) [BC CPA]; Ontario Class Proceedings Act, S.O. 1992, c. 6 at s. 26(1)

[Ontario CPA]; Quebec Code of Civil Procedure at ss. 1030, 1039 and 1045.

45. There are also provisions which broadly authorize the use of a number of efficient

procedures to minimize burdens on class members such as: i) the payment of awards on an average

or proportional basis, ii) the use of individual claims processes using standardized claims foiins

and iii) the payment of awards in a manner that may reasonably be expected to benefit class

members: BC CPA ss. 31-33; Ontario CPA ss. 24(2), (4), 6) and 26(4), (5), (6); Quebec Code of

Civil Procedure ss. 1030, 1039 and 1045.

46. Settlement distribution elements have typically been considered for approval within the

broader settlement approval test.

47. The approach of Canadian courts is to examine whether a proposed distribution is

reasonable, fair, economical, and practical on the facts of each particular case. For instance, in

Markson v. MBNA Canada Bank, 2012 ONSC 5891 at para. 39, the court concluded that a

distribution that avoided a "prohibitively expensive" search for certain class members was "fair

and reasonable". Similarly, in Ontario Hospital Association v. Summers, 2010 ONSC 4497 at

para. 31, the court held that a distribution which was "consistent" with the underlying facts was

"equitable". In addition, in Abdulrahim v. Air France, 2009 CanLII 72086 at para. 26 (Ont. S.C.),

the court determined that the proposed distribution was anticipated to achieve "a fair distribution

of the settlement funds, efficiently and economically". Finally, in Main v. Cadbury Schweppes plc

(19 March 2013), Vancouver Registry No. S078807 (B.C.S.C.) (Memorandum to counsel)

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[Chocolate], the court assessed a plan of distribution to be "fair, reasonable, and in the best

interests of the class as a whole'.

48. Jurisprudence on certain distribution related matters, such as the distribution of settlement

proceeds as between direct and indirect purchasers in price-fixing proceedings and cy pres

distributions has also developed. Guidance may also be taken from procedural decisions

respecting the certification and authorization of actions in price-fixing litigation.

(a) Direct and indirect purchasers

49. The treatment of direct and indirect purchasers in price-fixing litigation was recently

considered in the trilogy of decisions from the Supreme Court of Canada released on October 31,

2013, including the Quebec DRAM case: Pro-Sys Consultants Ltd. v. Microsoft Corporation,

2013 SCC 57 [Microsoft]; Sun-Rype Products Ltd. v. Archer Daniels Midland Company, 2013

SCC 58 [Sun-Rype]; and Option Consommateurs v. Infineon Technologies AG, 2013 SCC 59.

50. In Sun-Rype the Court held that direct and indirect purchasers are able to seek aggregate

recovery from the defendants, calculated as a sum equal to the total of the overcharge (at paras.

17-19). In the settlement context, this translates into an interest, shared by purchasers at all levels

of the distribution chain, in maximizing the settlement recovery. The Supreme Court of Canada

rejected a longstanding US approach to treatment of the direct and indirect purchasers.

51. Once the aggregate value of the claim on behalf of class members is maximized, there is a

potential for conflict among the different levels of the distribution chain. Yet, as the Court noted in

Micro.s'ofi at paras. 39-41, courts have "practical tools" to prevent double or multiple recovery.

Courts are similarly able to use "practical tools" to determine how to allocate settlement funds.

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(b) Canadian Legislation and Jurisprudence

52. Courts have held that, as a general rule, funds should be distributed directly to class

members where practicable before any funds are distributed cy pres: Cassano v.

Toronto-Dominion Bank (2009), 98 O.R. (3d) 543 at para. 17 [Cassano], Carom v. Bre-X Minerals

Ltd., 2014 ONSC 2507 at para. 124 [Carom]. However, while the primary provision of the

Distribution Protocol in the present case is to distribute the settlement proceeds and any future

recoveries to the class members in cash, it also includes provisions for the creation of a cy pres

distribution in certain circumstances. It is currently uncertain as to whether a cy pres distribution

will be necessary and, if so, what the nature and size of it might be. Thus, deferring any cy pres

amounts to be paid, subject of course to approval by the supervising courts, is in the best interests

of the class members.

(c) Recommendations and experience of counsel

53. The experience of counsel working out a settlement in an adversarial context favours

approval: Carom v. Bre-X, supra at paras. 100 and 133-139.

Parallel US Jurisprudence

54. Canadian courts have thought it useful, considering the similarities in class action

legislation in the United States, to have regard to the U.S. jurisprudence, where there is substantial

discussion about the guiding principles and where the overall test, whether the proposed

distribution is fair, equitable and both practically and economically in the best interests of the

class, parallels the Canadian test discussed above.

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55. The US litigation which preceded and foreshadowed the current DRAM litigation in

Canada is entitled In Re Dynamic Random Access Memory (Anti-Trust) Litigation, file MDL No.

1486 (the United States District Court for the Northern District of California, Oakland Division).

Particulars of the US DRAM action are set out in Appendix H hereto. In a comprehensive opinion

the Special Master appointed in the US indirect purchaser class action helpfully summarized the

US jurisprudence on distribution approval at pages 144 to 166. The relevant pages are attached

hereto as Appendix I. What follows is a summary of that discussion with most of the citations

removed. In light of the high similarity between subject matter of the underlying litigation as

between Canada and the US, it is also useful to have regard to the determinations made by the US

court respecting the distribution of DRAM settlement recoveries in the US.

56. In the US, courts have held that approval of plans of allocation and distribution of a

settlement fund in a class action is governed by the same standards applicable to approval of the

settlement as a whole — namely, allocation and distribution plans must be fair, adequate and

reasonable. District courts enjoy broad supervisory powers over the administration of class action

settlements to allocate the proceeds among the claiming class members equitably. As such, a

district court's approval of a proposed settlement distribution is an exercise of discretion.

57. By any objective measure, a plan of allocation need not be, and cannot be, perfect. Neither

need a plan of distribution be optimal from the perspective of each and every potential claimant. In

many cases, if not in most cases, perfection to everyone's satisfaction is unattainable. In designing

a plan of distribution for a settlement involving a large number of different products and millions

of class members, a delicate balance must be achieved between precision and administrative

feasibility. Efficiency, practicality, ease of administration and conservation of public and private

resources are relevant to the reasonableness of a settlement. A district court's "principal

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obligation" in approving a plan of allocation is simply to ensure that the "fund distribution is fair

and reasonable as to all participants in the fund": In re Music Compact Disc Minimum Advertised

Price Litigation, 216 F.R.D. at 214. A plan that reimburses class members based on the type and

extent of their injuries is generally reasonable.

58. The US courts have recognized that there is rarely only one way of distributing settlement

funds that qualifies as appropriate under any given set of circumstances. Accordingly, the selection

of a distribution method or plan does not require that all other possible means of distributing the

settlement funds be rejected as inadequate or unreasonable, only that the method that is selected by

the parties and the court be fundamentally fair and practicable.

59. The crafting of a plan of distribution by negotiation and agreement of counsel familiar with

the litigation is the preferred method of arriving at a fair, reasonable and adequate allocation and

distribution of the settlement proceeds. As noted by the District Court in In re Marsh ERISA Litig.,

265 F.R.D. 128, 145-46 (S.D.N.Y. 2010):

A district court has broad supervisory powers with respect to allocating aclass action settlement and wide latitude in determining what to considerin approving a settlement allocation.... 'When formulated by competentand experienced class counsel, an allocation plan need have only a'reasonable, rational basis.' ... In determining whether a plan of allocation is fair, courts give substantial weight to the opinions of experiencedcounsel. (Emphasis added)

60. Thus, the "adequacy of an allocation plan ordinarily 'turns on whether counsel has

properly apprised itself of the merits of all claims, and whether the proposed apportionment is fair

and reasonable in light of that information': Law v. NCAA, 108 F. Supp. 2d 1193, 1196 (D. Kan.

2000) [Law v NCAA]. In addition, the "fact that the plan of allocation is recommended by

experienced and competent counsel further cuts in favor of approving the Settlement:" Maley v.

Del Global Techs. Corp., 186 F. Supp. 2d 358, 367 (S.D.N.Y. 2002).

61. The Special Master's role in the recommendation of a plan of allocation and distribution is

not unlike the court's principal role, which "is to protect the unnamed members of the class:"

Ehrheart v. Verizon Wireless, 609 F.3d 590, 593 (3d Cir. 2010). Accordingly, as the court in

Sullivan v. DB Invs., Inc., 667 F.3d 273 (3d Cir. Dec. 20, 2011) advised, judges and special masters

alike must:

[R]emain cognizant that our "intrusion upon what is otherwise a privateconsensual agreement negotiated between the parties to a lawsuit must belimited to the extent necessary to reach a reasoned judgment that theagreement is not the product of fraud or overreaching by, or collusionbetween, the negotiating parties."

The Distribution Protocol [Appendix A] Meets the Legal Test

62. Based on the evidence underlying the Distribution Protocol, and the process by which the

Distribution Protocol was developed, class counsel have submitted that the Distribution Protocol is

fair, reasonable and adequate and that it should be recommended to the Courts. I agree and I so

recommend.

63. The "fair and reasonable" approach to the distribution of funds among different levels in

the distribution chain is to attempt to allocate the settlement funds according to the actual damages

suffered by class members, as measured by the amount of the overcharge "passed through" to them

and the estimated take up rates. This approach is consistent with the legislation, the Canadian

jurisprudence, and US jurisprudence.

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64. End consumers likely absorbed the largest percentage of the overcharge but are likely to

have a very low take up rates, while large purchasers up the distribution chain likely absorbed a

smaller percentage but are much more likely to claim. As stated, a high take up rate promotes the

legislative objective of deterrence to anti-competitive conduct. The Distribution Protocol is a

reasonable attempt to balance those two factors. The Second Ross Report agrees that the

Distribution Protocol is economically reasonable.

65. The Distribution Protocol provides for the possibility of a return to the Courts for

amendments if, once claims are made, it is discovered that the Distribution Protocol produces an

unjust result. This may occur if, for instance, take-up rates are significantly different than

expected. This provides substantial comfort that the final distribution will be fair.

66. In addition, the Distribution Protocol aims strongly to promote the distribution of funds to

the people who suffered actual loss. Any cy pres distribution is left to be determined after the

claims process is complete. This is consistent with Canadian case law: see Cassano.

(a) Class counsel took on adversarial roles to ensure that the conflict among groups within theclass was addressed

67. The process by which the Distribution Protocol was developed was thorough. To

paraphrase Law v NCAA, this is a case where class counsel took great care to apprise themselves of

the merits of all claims, and to design a distribution which was fair and reasonable in light of that

information.

68. Class counsel provided the initial Ross Report to a large number of interested class

members, some of whom were able to provide more specific and detailed Canadian market data,

which resulted in significant improvements to the Distribution Protocol.

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69. The different interests within the groups of potential recipients were, as mentioned,

separately and independently represented by counsel.

70. The involvement of class members throughout the negotiation of the Distribution Protocol,

as discussed in Appendix G, is also significant. Their involvement and acceptance of the final

Distribution Protocol suggest that class members at different levels of the distribution chain

consider the result to be fair and reasonable. This is a factor that supports approval.

71. Class counsel are all highly experienced in class actions generally, and competition class

actions specifically. As noted above, this points in favour of approving the Distribution Protocol.

(b) The Distribution Protocol is similar to plans of distribution that have been approved by thecourts in the past, particularly in the Chocolate and Vitamins cases.

72. Like this action, the class in the Chocolate class action included both direct and indirect

purchasers at varying levels of the distribution chain. The law fill is of CFM and Sutts, Strosberg

were members of the class counsel team in the Chocolate class action, and as in this action, an

economist was retained to give an opinion similar to that given by Dr. Ross in the initial Ross

Report. In addition, various class counsel in the Chocolate class action took on roles as advocates

for different levels of the distribution chain and attended a mediation before Justice Cumming of

the Ontario Superior Court of Justice to determine the allocation of settlement funds among class

members.

73. CFM and Sutts, Strosberg were again class counsel in the Vitamins case, Ford v.

F.Hoffman-LaRoche Ltd., 2005 CanLII 8751 (Ont. S.C.) [Vitamins]. In Vitamins, Justice

Cumming was presented with a proposed plan of distribution which, like this Distribution

Protocol, allocated portions of the total settlement funds among the groups of direct and indirect

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purchasers. Justice Cumming examined the funds and their proposed distribution, determined that

it was "fair and reasonable", and approved the distribution.

74. As has been noted in both the US and Canadian jurisprudence, no one plan of distribution

will ever be perfect. It need only be fair and reasonable. Class counsel submit that the Distribution

Protocol meets this test. I agree.

VII. BASIS OF MY OPINION THAT THE PROPOSED ALLOCATION OFSETTLEMENT FUNDS IS FAIR, REASONABLE AND EQUITABLE

75. My view is informed, of course, by the expert opinion of Dr. Ross as set out in his various

reports.

76. This Distribution Protocol is the result of aim's length negotiations between experienced

counsel representing the interests of direct purchasers, EMS companies, resellers, and end-buyers.

77. The parties exchanged data and evidence and counsel advocated their respective positions.

Among the subsidiary issues that informed and resulted in the proposed Distribution Protocol were

the determination of:

(a) a fair and reasonable estimate of the channels of DRAM distribution;

(b) a fair and reasonable estimate of the absorption of overcharges by DRAM resellers

and the pass-on of overcharges to end-buyers;

(c) whether or to what degree differences in claimants' litigation postures and/or

strengths, should be reflected in the distribution of the settlement proceeds; and

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(d) the likely "take-up rate" by the layers in the distribution chain from direct

purchasers down through to the end consumers.

78. As appears from the analysis of Dr. Ross, all class members are to be treated fairly and with

reasonable consistency with reference to the economic factors applicable to the segments of the

DRAM market in Canada during the class period to the maximum extent possible. Further, the

Distribution Protocol will have direct regard for the anticipated harm suffered by class members in

each segment relative to the quantity of DRAM purchased. Finally, the Distribution Protocol

contains a number of features which permit reasonable flexibility in order to adapt and respond to

the needs of class members in the execution of the claims process.

79. Delaying the implementation of the distribution of the current settlement funds to class

members until the Proceedings are resolved in their entirety is economical and practical, and thus

serves the best interests of the class as a whole.

80. In my view the Distribution Protocol proposed here is fair, reasonable and adequate and

consistent with the prior case law.

ALL OF WHICH IS RESPECTFULLY SUBMITTED

Hon. Ian Binnie, C.C., Q.C.Toronto, OntarioJuly 23, 2014