Out-Law News 2 min. read

EU fines firms €1.47bn over cathode tube cartels operated over a decade

The European Commission has served fines totalling more than €1.47 billion to six companies it said had operated in at least one of two global cartels where prices for cathode ray tubes (CRT) were fixed.

The regulator said that LG Electronics, Philips, Samsung SDI, Panasonic, Toshiba, MTPD and Technicolor and Chunghwa had entered into anti-competitive agreements over the sale of colour picture tubes used for televisions between 1996 and 2006.

Chunghwa, LG Electronics, Philips and Samsung also operated a cartel in relation to the sale of colour display tubes used in computer monitors during the same period, it said. Chunghwa escaped a fine after disclosing the arrangements to the Commission.

In addition to fixing prices, the companies also engaged in other "most harmful" infringing practices, including sharing markets, allocating customers among themselves, restricting production output and exchanging commercially sensitive information, the Commission said.

"The cartelists also monitored the implementation, including auditing compliance with the capacity restrictions by plant visits in the case of the computer monitor tubes cartel," the Commission added. The regulator said the cartels were "among the most organised" it has ever investigated.

The EU's Competition Commissioner, Joaquín Almunia, said: "These cartels for cathode ray tubes are 'textbook cartels': they feature all the worst kinds of anticompetitive behaviour that are strictly forbidden to companies doing business in Europe."

"Cathode ray tubes were a very important component in the making of television and computer screens. They accounted for 50 to 70% of the price of a screen. This gives an indication of the serious harm this illegal behaviour has caused both to television and computer screen producers in the EEA, and ultimately the harm it caused to the European consumers over the years," Almunia added.

The Commission said that senior managers at the companies used to meet each other prior to playing golf together, whilst less senior-level meetings between staff at the companies took place sometimes as often as weekly across the world, including in European cities such as Glasgow, Amsterdam and Paris.

"Multilateral meetings usually started with a review of demand, production, sales and capacity in the main sales areas, including Europe; then prices were discussed, including for individual customers, i.e. TV and computer manufacturers," the Commission said. "They had therefore a direct impact on customers in the European Economic Area (EEA), ultimately harming final consumers."

"The cartelists were trying to address the decline of the CRT market in a collusive way, to the detriment of consumers. For example, one document recording the cartel discussions spells out clearly: 'producers need to avoid price competition through controlling their production capacity'," it said.

The Commission said the companies were aware that they were acting against the law and that they had encouraged the destruction of documents to keep secret their infringing behaviour.

Philips was fined more than €313 million for its part in the cartels, whilst the joint venture company of Philips and LG Electronics was found jointly and severally liable for an additional fine totalling more than €391m. LG Electronics on its own was fined more than €295m, whilst Samsung was ordered to pay more than €150m.

The Commission fined Panasonic more than €157m, whilst the company was also found jointly and severally liable for a further amount totalling nearly €95m for separate business it conducted through structures involving Toshiba and MTPD and just MTPD respectively. Technicolor and Toshiba were also fined more than €38m and €28m respectively for their part in the cartel.

"In setting the level of fines, the Commission took into account the companies' sales of the products concerned in the EEA, the very serious nature of the infringement, its geographic scope, its implementation and its duration," the Commission said.

Samsung, Philips and Technicolor benefited from reduced fines over the way they cooperated with the Commission's investigation, the regulator said.

However, in a statement Philips said that the fine served on it was "disproportionate and unjustified" and that it intended to appeal the Commission's decision. It said it had "divested its CRT activities by transferring these activities" to the joint venture company of LG.Philips Displays in 2001.

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