The European Commission has fined six LCD giants, including Philips, Samsung, LG, and Panasonic, by imposing an antitrust penalty in excess of 1.4 billion euros (more than $1.8 billion). This figure marks the biggest antitrust penalty the EU has ever imposed. The same companies also paid $1.1 billion in fines in the US a few months ago.
The EU competition commission said it believes that these companies came together between 1996 and 2006 in a series of meetings during which they formed cartels to fix prices and to decide how to share the market. According to Joaquin Almunia, the EU competition commissioner, those companies were fully aware that their actions were illegal. This price fixing in the CRT market is against fair competition practices from which consumers ultimately benefit.
Following is the list of top three fines:
Philips: 313.4 million euros ($412 million)
LG Electronics: 295.6 million euros ($388 million)
Samsung: 150.8 million euros ($197 million)
This clearly shows that the rules apply to everyone, including the industry giants. However, the fact that the companies were fined for actions that took place more than six years ago is of concern. The slow legal process is one of the reasons companies are able to take the risk of playing unfairly in this business. The decision has been reached so late that CRT technology does not exist anymore. The fines are high enough that, hopefully, this will set an example for the rest of the players in industry.
The one thing that cannot be fixed is how much extra money consumers ended up paying due to these cartels. Ultimately, they are the ones who are harmed the most while big companies are making money via illegal means. The trouble with such penalties is they are effective in punishing the offenders, but they do not help the losses of the consumers at all. I think in addition to these penalties, forcing a fair percentage of price cut on the current comparable goods (such as LCDs, in this case) would help fix things from the consumers’ perspective. It would also be a bigger deterrent for price fixing cases in the future.
Another point I find interesting with such cases is that while most companies complain about the economic crisis and how difficult it is to keep a strong balance sheet these days, such companies are still able to take the risk of paying millions of Euros in fines for not playing fair. I guess the potential earnings to be made by price fixing are attractive enough to risk huge amounts of losses in fines.
This is probably one of the many cases that was caught and exposed globally; however, it makes you think of many other unfair competition tricks that the big companies are playing as you are reading this.
Cryptoman, I think there is nothing difficult in that. There are government agencies to fix and monitor fair pricing policy for various commodities and they are doing fine. Similarly they can constitute another agency with industrial/market/business experts for monitoring and price fixing. If no such super monitoring agencies are in place, companies can fix the price without any justification.
It is a difficult one for the government I think. The only thing that can be done is to escalate the fines whilst shortening the court case decision making delays. I think the cartels are formed in a very high degree of secrecy and it is difficult to know about them promptly. The time needs to pass so that an evidence of such an illegal act can somehow leak into the public domain. I am sure only a handful of people in those large companies will know about such cartels. An average employee will never have the exposure to such information. Therefore, the level of secrecy determines the safety of such illegal acts that prevent from governments finding out.
It is definitely very harmful to the end customer and to the fundamentals of free trade in terms of getting a competitive deal on products.
I totally agree on the timescales of this decision. It is funny to see that the manufacturers have to pay a fine for the unfair play they have performed on the CRT technology that does not exist anymore! The court decision is way too late for this. The pace of the the legal system in the third world countries is rather slow because the system does not function properly. In some countries, the suspects are imprisoned first under the assumption that they are guilty. Until the suspect proves that he/she is innocent, he/she remains in prison; even for a few years on end.
In the EU and the rest of the developed world, the suspect is assumed to be innocent until proven guilty (which is the right way). However, this legal method works slower than the backward one I mentioned above.
Maybe in commercial cases, the funds from the suspects should at least be blocked promptly to save time and kept blocked throughout the case. That may put off any potential lawbreakers before they even think of mk,ng such an attempt.
_hm, I think government and commercial departments has to be more vigilant on such issues. Otherwise finally, such companies will move a part of such burdens to customer through various methods. The only thing is government agencies has to monitor the entire process at various levels.
Cagri, I personally feel that it's a government responsibility to protect citizen's right. Such monopolistic nature of business can harm the citizen's right to get a good product at a better price. Again "will such penalties discourage price fixing" is a big question; at the end companies may forced to share a part of these penalties with customers by hiking the price of product.
Consumers are improperly discarding old phones although most of these can be recycled at a huge gain to the supply chain and the environment. Where are the recyclers?
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Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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