On Wednesday, the European Commission imposed its highest total fines ever in a cartel case. It fined seven international groups of companies a total of Euro 1,470,515,000 for participating in either one or both of two distinct cartels in the cathode ray tubes (CRT) sector.
How has 2012 been for cartel enforcement ?
The first half of 2012 was slower than usual for the European Commission's enforcement programme with only three new cartel decisions, but Wednesday's fine has significantly boosted the European Commission's total fine tally for 2012. These fines in the CRT sector now bring the European Commission's cartel fine total for 2012 to Euro 1,875,694,000 which is considerably higher than in 2011 (Euro 614,053,000). They also strongly follow through the key messages and warnings that the EU Competition Commissioner, Joaquín Almunia, has been giving over the year that the European Commission is working on a number of major cases, that they consider the vigour of their cartel enforcement activities should remain unaffected by the economic crisis, and that the level of fines should be punitive.
The CRT cartels
In announcing the fines, EU Competition Commissioner, Joaquín Almunia, described the cartels as "textbook cartels". The European Commission found that for a ten year period on a worldwide basis, the companies involved fixed prices, shared markets, allocated customers between themselves and restricted output. One cartel concerned colour picture tubes used for televisions and the other one colour display tubes used in computer monitors. Chunghwa, LG Electronics, Philips and Samsung SDI are alleged to have participated in both cartels, while Panasonic, Toshiba, MTPD (currently a Panasonic subsidiary) and Technicolor (formerly Thomson) allegedly participated only in the cartel for television tubes. Chunghwa received full immunity from fines under the Commission's leniency programme.
The cartels were allegedly designed to curtail the decline of the cathode ray tube market, which is gradually being replaced by alternative techniques such as LCD and plasma displays.
The European Commission claimed in its press release announcing the fines that the companies were "well aware they were breaking the law". To support this view, the Commission highlighted several examples of unfortunate language discovered in documents seized during the European on-site inspections at the companies concerned, such as: "Everybody is requested to keep a secret as it would be serious damage if it is open to customers or European Commission", and "Please dispose the following document after reading it".
Message for global companies and joint ventures
Yesterday's fines in the CRT sector send a clear warning to global companies of the European Commission's continued determination in its cartel enforcement activities. Companies should ensure that they have an effective and vigorous competition compliance programme, which is implemented throughout the corporate group, including their joint ventures.