New EU Procedure Settles Price-Fix Case vs. East Asia, Euro Chip Makers

By: EW News Desk Team   Date: 25 May 2010

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25 May 2010

The European Union fined a group of several East Asian and one European computer chip makers 331.3 million euros ($409 million) for price fixing in the first use of a new procedure that allows settlement of cartel cases in Europe.

The European competition commissioner, Joaquín Almunia, said that because of the new procedure, he expected to handle some cases in less than six months from the time that a cartel was discovered or reported.

In the past, some cartel cases have taken close to a decade to complete in Europe, largely because of lengthy investigation times.

The case involving the chip makers was already six years old when the new procedure was introduced in 2008.

An important goal of the new policy was to bring long-running investigations “to a close and to free up resources to investigate other suspected cartels,” Mr. Almunia said.

The settlement involved dynamic random-access memory chips, or DRAMs, which provide the main memory for personal computers, according to this article in the New York Times.

Samsung of South Korea, the market leader, received the highest fine, 145.7 million euros, or $185 million; Infineon of Germany was second at 56.7 million euros.

Those amounts were less than they could have been — about 20 percent for Samsung and about 50 percent for Infineon —

partly because of the new procedure, which grants companies that settle a reduction in the penalties,

and partly because of other leniency arrangements based on the level of cooperation with the inquiry.

Other companies in the settlement included Hynix of South Korea; the Japanese companies Elpida, NEC, Mitsubishi, Hitachi and Toshiba; and Nanya Technology of Taiwan.

The new procedure is partly aimed at cutting down investigation times by reducing the burden of casework on the commission in exchange for companies admitting that they participated in a cartel and agreeing to pay a certain level of fine.

The commission probably will use the new procedure in certain cases to try to clear a backlog of dozens of cases that have accumulated as a result of incentives that were introduced early in the decade.

Those incentives, which are separate from the new settlement procedure, are intended to encourage companies to cooperate during the investigation stage and can result in lower fines.

Ordinarily the commission fixes the fines without knowledge on the part of the companies involved.

The companies then often appeal that decision to the general court, the European Union’s highest tribunal after the European Court of Justice, where judges have frequently faulted the commission’s procedures.

“It’s a matter of common sense,” Mr. Almunia said. “If the company is ready to settle, I hope they will not spend more time in an appeal that can trigger for them not only positive potential consequences but potential negative consequences.”

In addition to the automatic 10 percent reduction in their penalty by agreeing to a settlement,

companies should also gain from using the new settlement procedure by resolving cases more speedily without having to divulge as much detail about the cartels in which they participated.

Those details can be used by consumers to sue for further damages in the United States and sometimes in Europe.

Antitrust experts warned that the commission would need to accelerate the way it dealt with its other procedures to speed up cartel cases significantly.


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