Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC welcomes rulings upholding TV, computer monitor tubes cartel decision , (Sep 9, 2015)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) welcomes the judgments by the European Union General Court in the TV and computer monitor tubes cartel, involving electronics manufacturers Panasonic, Samsung SDI, LG Electronics, Philips, and Toshiba, the EC announced today. The judgments upheld the majority of the EC’s decision, regarding both the substantive issues and general principles followed to set the level of fines imposed—over € 1.4 billion—which represent the highest combined fines issued for cartels to date.

In November 2007, the EC began its investigation into the cathode ray tube (CRT) sector with unannounced inspections at the premises of CRT manufacturers. In December 2012, the EC imposed fines on seven international groups of companies totaling €1,470,515 for participating in either one or both of two distinct cartels in the CRT sector. One cartel concerned color picture tubes (CPT) used for televisions, while the other cartel color concerned display tubes (CDT) used in computer monitors. The companies involved were Chunghwa, LG Electronics, Panasonic, Philips, Samsung SDI, Technicolor (formerly Thomson), and Toshiba. Chunghwa received full immunity from fines under the EC’s 2006 Leniency Notice. Samsung SDI, Philips and Technicolor received reductions of their fines for their cooperation in the EC’s investigation.

The EC found that for almost 10 years, between 1996 and 2006, the companies fixed prices, shared markets, allocated customers and restricted their output. The cartel members also monitored the implementation of these measures. In the case of the CDT cartel, the EC’s monitoring included plant visits to audit compliance with the agreed capacity restrictions. The cartels operated worldwide.

Extensive cartel contacts took place during 10 years, both at the bilateral and multilateral level, including at the top level of management. The top management level meetings, called ‘green meeting’ by the cartelists because they were often followed by a round of golf, designed the orientations for the two cartels. Preparation and implementation were carried out through lower level meetings, referred to as ‘glass meetings’, on a quarterly, monthly, sometimes even weekly basis. Some cartel members chose to participate only or mainly via bilateral contacts in order to reduce the risk of detection.

All companies, except Chunghwa and Technicolor, brought actions for annulment of the 2012 decision before the General Court.

According to the EC, the judgments are important for several reasons. First, they confirm the EC’s right to sanction cartels that concern products made from components of foreign origin and that are not themselves sold within the European Economic Area (EEA). The General Court confirmed in particular that the EC had jurisdiction notwithstanding the fact that the cartels were formed outside the EEA. The cartel arrangements directly influenced the setting of prices and of volumes delivered to the EEA either as direct sales or as processed products.

Second, the General Court agreed with the EC’s substantive assessment of the case, except for the individual participation of Toshiba as it considered that the EC had not sufficiently established Toshiba's awareness of the overall cartel. The General Court found that the different sets of meetings (either in Europe or Asia) and different product variations were an integral part of a single and continuous infringement of EU antitrust rules. The cartel members continued their collusion even after alternative technologies (such as Liquid Crystal Displays, or LCD) started to replace the product and took action to jointly counter a decline in demand.

Third, some of the cartel members in this case formed joint ventures through which they continued their participation in the cartels. The General Court confirmed the EC’s decision, in line with established case law, that parent companies were liable for the illegal anticompetitive behavior of joint ventures irrespective of the ownership shares. The General Court confirmed this for both joint ventures and rejected arguments based on lack of awareness of the joint ventures’ participation in the cartels.

Finally, the General Court also confirmed the methodology for the fines, including the EC’s leniency assessment. However, it reduced the fines for Panasonic and Toshiba as it found that the companies provided more detailed value of sales figures than what the EC had used. Importantly, it agreed with the EC that Samsung SDI had downplayed the nature of the cartel and that the contacts with other parties were clearly collusive.

Companies: Panasonic Corp.; Samsung SDI Co. Ltd.; LG Electronics, Inc.; Koninklijke Philips Electronics NV; Toshiba Corp.

News: Antitrust