Fri, Dec 07, 2012 - Page 15 News List

EU imposes huge fine on screen makers

WHISTLE-BLOWER:Taiwanese firm Chunghwa Picture Tube escaped any punishment because it revealed a cartel made up of seven leading electronics companies to the EU


For years, some top managers at electronics multinationals would hold secretive meetings in Europe and Asia to fix the global market on the most expensive part of television and computer monitors.

Then, said the EU’s antitrust chief, it was off to the golf course, where the executives would complete the “green(s) meetings” at which they set up a massive scam that affected millions of consumers.

On Wednesday, EU antitrust commissioner Joaquin Almunia said he got back at them, slapping the biggest ever cartel fine — over 1.47 billion euros (US$1.96 billion) — on seven companies for allegedly rigging the international market of television and computer monitor tubes.

The EU’s Commission ruled that, for a decade ending in 2006, the companies — including Philips, LG Electronics and Panasonic — artificially set prices, shared markets and restricted their output.

Almunia said the companies’ actions “feature all the worst kinds of anticompetitive behavior that are strictly forbidden to companies doing business in Europe.”

Tubes were the essential part of television screens and computer monitors before they were replaced by LCD and plasma flatscreens. The cathode ray tubes accounted for up to 70 percent of the cost of a screen, the Commission said.

Philips and LG Electronics, which acted jointly and separately, were fined a combined 999 million euros with Panasonic punished with a 157 million euros fine, adding to more if combined fines and affiliates were included.

Despite its cooperation with the Commission probe, Philips said in a statement it planned to appeal the fine since it considered it “disproportionate and unjust.”

“We regret that we are linked to this kind of behavior,” said Philips CEO Frans van Houten, as the company spoke of’ “alleged infringements of competition rules.”

LG Electronics said it is currently reviewing the European Commission’s decision with the intention to appeal the decision.

The South Korean TV maker argued that it should not be held liable for the conduct of LG Philips Display, a joint venture between LG and Royal Philips Electronics NV.

LG also disagreed with the way the Commission calculated the amount of fine.

“It appears that the European Commission has calculated the fine imposed on LG Electronics partly on the basis of TV sets and PC monitors sold by LG Electronics in Europe rather than just cathode ray tubes,” LG said in a statement.

Other companies fined were Samsung SDI, Technicolor, MTPD and Toshiba. Chunghwa Picture Tube (中華映管) of Taiwan escaped fines as it was the first to reveal the cartel to the EU.

“It is the biggest fine for a cartel, ever,” Almunia said.

The fine exceeded the previous record of the 2008 fine of 1.38 billion euros in a car glass cartel.

Almunia said the tubes cartel operated worldwide and that the companies involved fully realized they acted illegally.

“The participants during this period seemed very happy about the outcome,” Almunia said, citing one document that read: “Because of the success of the ‘glass meeting’ everybody has been enjoying business this year.”

Not the consumer, he said.

The cartel started when the tube market was still booming but lasted even when sales dropped with the advent of flatscreens. The cartel made sure the companies kept making profits even as demand for tube screens waned.

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