News Column

EU Slaps Record Fine on Cathode Ray Tube Cartel

Dec 5, 2012

The European Union on Wednesday slapped a record $1.92-billion (1.47-billion-euro) fine on seven electronics companies - including giants Philips, Samsung, LG Electronics and Panasonic - for forming a cathode ray tube (CRT) cartel during the 1990s.

The firms illegally "fixed prices, shared markets, allocated customers between themselves and restricted their output" from 1996 until 2006 in the markets for television and computer CRTs, according to the EU's executive, the European Commission.

"These cartels for cathode ray tubes ... feature all the worst kinds of anti-competitive behaviour that are strictly forbidden to companies doing business in Europe," said EU Competition Commissioner Joaquin Almunia.

"The cartellists knew very well that their conduct was illegal," Almunia added. "This is why they did everything they could to hide it."

"Cathode ray tubes were a very important component in the making of television and computer screens. They accounted for 50 to 70 percent of the price of a screen," Almunia added.

He said the worldwide cartel was "among the most organized" the commission had ever investigated, imposing "serious harm" on both manufacturers and private households.

The combined fine was the commission's biggest ever in a cartel decision, the commissioner said.

With cathode ray tubes becoming less and less prevalent, the cartel participants "were trying to address the decline of the CRT market in a collusive way," the commission said in a statement.

The cartellists would hold so-called green meetings in Asia and Europe, Almunia said, explaining that they were "called this way because they took place very often at a golf course."

Other gatherings, referred to by the cartellists as glass meetings, had been the "engine room of the cartel," according to information from a whistleblower.

"Because of the success of the glass meeting, everybody has been enjoying business this year," Almunia quoted from one company memo.

"The word 'glass' was not because of the objective of being transparent," Almunia responded to speculation on the meaning of the term.

The commission said that Chunghwa, LG Electronics, Philips and Samsung SDI participated in both cartels, while Panasonic, Toshiba, MTPD and Technicolor participated only in the television cartel.

Philips and LG Electronics face the largest fines, while Chunghwa's penalties were waived because it blew the whistle on the cartel.

Philips said in a statement that it intended to appeal its fines - 313 million euros plus a joint 392-million-euro fine with LG Electronics - calling them "disproportionate and unjustified."

The Dutch-based company said it had transferred its CRT activities in 2001 to a separate joint venture with LG Electronics that had since gone bankrupt.

"We regret any association with this type of behavior," said Philips chief executive Frans van Houten. "Our ethical standards ... are very clear and must be strictly adhered to."

Technicolor stated that it had made provisions for a fine, which would feature as an "extraordinary item" in its income statement for the second half of 2012.

Source: Copyright 2012 dpa Deutsche Presse-Agentur GmbH

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