General Court upholds historic cartel fine

March 03, 2020 / By mobanmarket

General Court upholds historic cartel fine

Philips and LG Electronics paid the lion’s share of the fine.

The European General Court on Wednesday upheld virtually all of a historic €1.47 billion fine against seven manufacturers that colluded to fix prices to shield their business against fast-evolving technology in the TV industry.

The judges agreed that the European Commission had proved the companies, including Philips, LG Electronics, Samsung SDI and Panasonic, broke the law between 1996 and 2006. Their senior managers met in glamorous European and Asian destinations, spoke in code and played golf while setting prices for cathode ray tubes, a key component for TVs of that era.

This was the Commission’s largest fine against a cartel and the lion’s share was paid by Philips and LG Electronics, which shelled out a combined €1 billion.

Philips said in a statement it “disagrees with the outcome and continues to dispute the decision and will appeal today’s judgment.”

Chunghwa escaped a fine as the whistleblower which revealed the cartel’s existence to the Commission in return for immunity against fines.

The judges also shaved off almost €60 million from the total penalty, largely by erasing €28 million in fines against Toshiba and about the same amount for Panasonic.

While TV technology advanced over the past decade, the companies’ business practices did not.

Ironically, the Commission discovered the cartel around cathode ray tubes, while probing the market for the next generation LCD screens. The LCD cartel, which included many of the same companies, resulted in fines of around €600 million and several follow-on actions.

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In the ruling Wednesday, the companies had challenged the EC, arguing the many sales of cathode ray tubes took place outside Europe. However, the Commission countered that the cartel then sold TVs containing those tubes within Europe.

The high-water mark for EU cartel fines was in 2012, when they totaled €1.88 billion.

The fines were so high in the cathode ray tube case in part because the companies had sought to cover up their tracks and because CRTs made up as much as 70 percent of the price of TV screens and computer monitors.