TV Computer Makers Fined $1.93 Billion for Price Fixing

The European Commission has fined seven companies a total of $1.94 billion for participating in cathode ray tubes cartels.

For almost ten years, between 1996 and 2006, the companies fixed prices, shared markets, allocated customers between themselves and restricted their output.

One of the cartels was for color picture tubes for televisions.

The other cartel was for color display tubes used in computer monitors.

The cartels operated worldwide.

Chunghwa, LG Electronics, Philips and Samsung SDI participated in both cartels, while Panasonic, Toshiba, MTPD — currently a Panasonic subsidiary — and Technicolor — formerly Thomson — participated only in the cartel for television tubes.

Chunghwa received full immunity from fines under the Commission’s 2006 Leniency Notice for the two cartels, as it was the first to reveal their existence to the Commission.

Other companies received reductions of their fines for their cooperation in the investigation under the Commission’s leniency program.

“These cartels for cathode ray tubes are textbook cartels — they feature all the worst kinds of anti-competitive behavior that are strictly forbidden to companies doing business in Europe,” said EU Competition’s Joaquín Almunia. “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.”

The two cartels were among the most organized cartels that the Commission has investigated.

For almost 10 years, the companies carried out the most harmful anti-competitive practices including price fixing, market sharing, customer allocation, capacity and output coordination and exchanges of commercial sensitive information.

The companies also monitored the implementation, including auditing compliance with the capacity restrictions by plant visits in the case of the computer monitor tubes cartel.

Top management level meetings, dubbed “green(s) meetings” by the companies themselves because they were often followed by a golf game, designed the orientations for the two cartels.

Preparation and implementation were carried out through lower level meetings, often referred to as “glass meetings”, on a quarterly, monthly, sometimes even weekly basis.

Meetings were held in various locations in Asia – Taiwan, Korea, Japan, Malaysia, Indonesia, Thailand, Hong Kong – and Europe – Amsterdam, Budapest, Glasgow, Paris, Rome.

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 – TV and computer manufacturers.

The companies 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.”

The investigation also revealed that the companies were well aware they were breaking the law.

For instance, in a document found during the Commission’s inspections, a warning goes as follows:

“Everybody is requested to keep it as secret as it would be serious damage if it is open to customers or European Commission.”

The participants were therefore taking precautions to avoid being in possession of anticompetitive documents.

Some documents spelled out, for example: “Please dispose the following document after reading it.”

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.

If Chunghwa had not received full immunity, its fines would have been $11 million for the TV tubes cartel and $11 million for the computer monitor tubes cartel.

Samsung SDI, Philips and Technicolor received reductions of fines ranging from 10 percent to 40 percent for their cooperation under the Commission’s leniency program.

The reductions reflect the timing of their cooperation and the extent to which the evidence they provided helped the Commission to prove the respective cartels.

One of the companies invoked its inability to pay the fine.

The Commission granted a reduction of the fine for that firm.

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