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.