EU Slaps $1.96 Billion Fine On Electronics Firms For Price-Fixing
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For nearly a decade, starting in 1996, senior executives from at least seven global electronics companies were conducting secret meetings, where they conspired to fix the price of picture and display tubes for television sets and computer screens, said EU’s top anti-trust regulator on Wednesday, following a three-year probe culminating in the largest fine – 1.47 billion euros ($1.96 billion) – ever imposed on a cartel.
For nearly a decade, starting in 1996, senior executives from at least seven global electronics companies were conducting secret meetings, where they conspired to fix the price of picture and display tubes for television sets and computer screens, said EU’s top anti-trust regulator on Wednesday, following a three-year probe culminating in the largest fine – 1.47 billion euros ($1.96 billion) – ever imposed on a cartel.
According to the Associated Press, Philips, LG Electronics, Samsung, Panasonic, Toshiba, Technicolor and MTPD were all involved in the scheme, while Chunghwa Electronics of Taiwan escaped penalties as it was the first company to reveal the cartel to the EU.
Joaquin Almunia, the EU Competition Commissioner, added that the companies’ top managers would often hold “greens meetings” – meetings on the golf course – to discuss market sharing, customer allocation and exchanges of important commercial information; before eventually agreeing to artificially set prices and restrict their production output of cathode ray tube – the most essential component of monitor screens before LCD and plasma technology, accounting for up to 70 percent of production cost.
[quote]“These action feature all the worst kinds of anticompetitive behaviour that are strictly forbidden to companies doing business in Europe,” said Almunia, adding that “the undue profits that the companies derived from the collusion may even have artificially slowed down the transition to the more modern products like LCD and plasma displays;” bringing “serious harm” to consumers.[/quote]During his news conference, Almunia also read from one of the documents obtained by the commission to show that cartel members were complicit in breaking the law. “Everybody is requested to keep it a secret,” the document read, “as it would be serious damage if it is open to customers or to the European Commission.”
Netherlands-based Philips received the largest single fine, 313 million euros, while it was also ordered to split a 392 million euro fine with LG for a joint venture. LG, on its part, was also was ordered to pay 296 million euros for its own role, while Samsung SDI Co. was ordered to pay 151 million euros.
Although Philips CEO Frans van Houten admitted that his company regretted its executives behaviour, the company still said it would appeal its fine as it was “disproportionate and unjust.” LG also disagreed with the way the Commission calculated the amount of fine, while a Panasonic spokesman said that the decision was “factually and legally erroneous”.
Almunia countered however that the companies were given clear warnings on price-fixing behaviour. One document seized by the Commission gave the conspiring companies clear instructions: “Producers need to avoid price competition through controlling their production capacity.”
[quote]“Instead of competing with each other to innovate and provide the best product at the best price, they chose to conspire to artificially maintain returns in a declining technology market,” Almunia said, as cited by AP. “This is why we fight cartels,” he added.[/quote]Related: Major Petrol Companies Investigated For Price-Fixing In Germany
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Caroline Hobson, an antitrust partner for London-based law firm CMS Cameron McKenna, who wasn’t involved in the case, also told the Wall Street Journal that the electronics firms would most likely face further legal action even after the EU’s ruling.
“This decision is not the end of the matter…Customers of the companies involved will be looking closely at the decision and may result in a number of sizable damages actions,” she noted. In addition, Almunia said that U.S. authorities were currently investigating the case as well.
