Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC imposes €116 million fine on optical disc drive suppliers in cartel settlement, (Oct 21, 2015)
Organizations Mentioned:Hitachi, Ltd. | Koninklijke Philips Electronics, N.V. | Lite-On | Quanta Services | Sony Corporation | Toshiba Corporation
By Linda O’Brien, J.D., LL.M.
The European Commission (EC) fined eight optical disc drive suppliers a total of €116 million for having coordinated their behavior in relation to procurement tenders organized by two computer manufacturers, in breach of European Union antitrust rules, the EC announced today.
Eight suppliers engaged in the illegal practices covered by this decision, namely Philips, Lite-On, their joint venture Philips & Lite-On Digital Solutions, Hitachi-LG Data Storage, Toshiba Samsung Storage Technology, Sony, Sony Optiarc, and Quanta Storage.
Optical disc drives ("ODDs") read or record data stored on optical disks, such as CDs, DVDs, or Blu-ray. They are used in personal computers, CD and DVD players and video game consoles. The anticompetitive conduct subject to fines in this case concerns agreements to collude in procurement tenders for ODDs for laptops and desktops produced by Dell and Hewlett Packard (HP).
The Commission's investigation started with a set of requests for information in June 2009. The Commission issued a statement of objections in July 2012, in which it took the preliminary view that the companies engaged in bid rigging for at least five years and that their behavior may have ultimately affected customers that bought optical disk drives manufactured by the companies concerned.
The Commission's investigation revealed that between June 2004 and November 2008, the companies participating in the cartel communicated to each other their intentions regarding bidding strategies, shared the results of procurement tenders, and exchanged other commercially-sensitive information concerning ODDs used in laptops and desktops. They organized a network of parallel bilateral contacts that pursued a single plan to avoid aggressive competition in procurement tenders organized by Dell and HP.
Although the cartel contacts took place outside of the European Economic Area (EEA), they were implemented on a worldwide basis. Of the companies involved in the cartel, only Philips is headquartered in Europe. The remaining seven are headquartered in Asia. The duration of each company's involvement in the cartel varied and ranged from less than a year to over four years.
The companies were aware that their behavior was illegal and tried to conceal their contacts and to evade detection of their arrangements, according to the EC. For example, they avoided naming the competitors concerned in their internal correspondence but used abbreviations or generic names.
The cartelists also avoided leaving traces of anticompetitive arrangements by preferring face-to-face meetings and ensured that the competitors' discussions were not revealed to customers. Some of them met in places where they could not be easily spotted, including in parking lots or cinemas.
The fines were set on the basis of the EC’s 2006 Guidelines on fines. In setting the level of fines, the Commission took into account the companies' sales of the products concerned in the EEA, the serious nature of the infringement, its geographic scope, and its duration.
Philips, Lite-On, and Philips & Lite-On jointly received full immunity from fines as they were the first to reveal the cartel to the Commission, thereby avoiding an aggregate fine of €63.5 million. Hitachi-LG Data Storage received a 50% reduction on its fine for its cooperation in the investigation under the Commission's leniency program and partial immunity for enabling the Commission to establish a longer duration of the cartel.
In setting the fines, the Commission also took account of the fact that Philips, Sony, and Sony Optiarc took part in the cartel behavior only with regard to procurement tenders organized by Dell.
“Millions of EU citizens use devices integrating optical disc drives all the time, for example, when storing their favorite pictures on a disc,” said Margrethe Vestager, Commissioner in charge of competition policy. “Keeping these markets competitive is important. Today's decision demonstrates once again that cartelists cannot escape fines just by holding their meetings in cinemas and car parks outside Europe, while selling their products in Europe."
Companies: Koninklijke Philips Electronics, N.V.; Lite-On; Hitachi, Ltd.; Toshiba Corporation; Sony Corporation; Quanta Services
News: Antitrust