Senior managers at some of the world’s largest electronics companies often used those meetings, mostly in Asia, to fix the price of picture and display tubes for televisions and computer screens, the top European antitrust regulator said Wednesday.
Joaquín Almunia, the E.U. competition commissioner, said he would levy fines totaling almost €1.5 billion, or $1.96 billion, on seven companies involved in the two cartels, which operated for a decade until 2006. Combined, the fines amount to the largest single penalty for price fixing ever imposed by the commission.
The action follows a spate of similar cases in the glass and display sectors, where bulky cathode ray tubes have been supplanted by technologies like liquid crystal display and plasma that allow manufacturers to build far more compact monitors and screens.
Mr. Almunia imposed the strongest penalties on Philips Electronics of the Netherlands and LG Electronics of South Korea.
Mr. Almunia said at a news conference that the cartel activity began in the late 1990s, when the market was still strong for cathode ray tubes, and lasted until 2006 even as that market declined, allowing the conspirators to continue generating strong returns for a technology that was rapidly becoming outmoded.
“The companies were trying to manage through collusion the decline in the market for these kinds of tubes,” Mr. Almunia said. “The undue profits that the companies derived from the collusion may even have artificially slowed down the transition to the more modern products like LCD and plasma displays.”
Excerpts of minutes from meetings held by the cartel members obtained during the investigation showed the efforts they made to fix the market for the older technologies, according to commission officials.
“Producers need to avoid price competition through controlling their production capacity (of flat types in particular),” one excerpt read. Another noted that “mutual cooperation is required to deal with an expected economic downturn” in the second half of 2002.
One of the “greens meetings” took place at the Palm Garden Golf Club and was followed by a “Top Management” meeting in the Terengganu room of a Marriott Hotel, according to a person with knowledge of the investigation who asked not to be named because of the legal sensitivity of the case.
The person gave no further details about the location or the meeting. But those details suggested that the conspirators played and ate during the day at a luxury golfing resort near the Malaysian capital Kuala Lumpur that is equipped with a driving range, infinity-edge swimming pool and tennis courts.
In addition to the “greens meetings,” there were “glass meetings” for lower-level managers, the name probably related to the glass structure of the cathode ray tubes, officials said. They were held in Asia and in European cities including Glasgow, Paris, Rome, Amsterdam and Budapest, commission officials said.
The cartels “feature all the worst kinds of anti-competitive behavior that are strictly forbidden to companies doing business in Europe,” Mr. Almunia said. There had been “serious harm” to producers in Europe and to consumers, he said, since the cathode ray tubes had accounted for up to 70 percent of the price of screens.
The commission’s antitrust division can fine offenders up to 10 percent of their annual worldwide sales, and the fine on Wednesday exceeded the previous record of almost €1.4 billion, which was imposed in 2008, for a car-glass cartel.
But unlike regulators in the United States, the commission has no criminal enforcement powers and cannot prosecute or seek to jail participants for anti-competitive offenses. Many lawyers say that remains a shortcoming of the European system.
Article source: http://www.nytimes.com/2012/12/06/business/global/europe-fines-7-companies-for-picture-tube-price-fixing.html?partner=rss&emc=rss
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