A Dutch court on Saturday dismissed shareholders' demands for an investigation into Koninklijke Philips NV's handling of its 2021 sleep apnea device recall, siding with the health technology company over allegations that management failed to act promptly on safety concerns and misled investors. The Enterprise Chamber of the Amsterdam Court of Appeal said it found no sufficient grounds to question Philips' policies or management practices that would justify an inquiry, following a review of extensive case files and internal documents. The shareholders, including Dutch investors' association VEB and a large group of retail and institutional investors, had argued that Philips' internal controls failed to identify and address problems with the recalled devices promptly, that its board knew or should have known about the risks before they became public, and that its disclosures breached legal obligations. The court found that sufficient reliable research data pointing to potential health risks from the PE-PUR sound-abatement foam became available only in the first months of 2021, and found no basis to conclude Philips should have intervened earlier at its U.S. subsidiary Respironics. The ruling does not determine whether errors were made at Respironics or decide whether investors are entitled to compensation, addressing only whether there were grounds to order an investigation. Philips recalled around 15 million sleep apnea and respiratory devices globally in 2021, a recall that caused its shares to lose about two-thirds of their value; the company agreed in 2024 to pay $1.1 billion to settle all personal injury claims filed in the United States, and investigations continue in multiple countries, including France, where prosecutors are examining allegations of aggravated fraud and failure to report safety risks.
Koninklijke Philips NVDutch court dismissed shareholders' demands for an investigation into Philips' handling of the 2021 sleep apnea recall, removing a legal/regulatory overhang.
