Earlier this week, the European Commission ("the Commission") imposed a record fine of €1.47 billion on the members of two cartels relating to the production of cathode ray tubes for TV and computer monitors. The cartel members include some very well-known household names - including Philips, LG Electronics, Samsung and Panasonic.
The cartels operated on a worldwide basis between 1996 and 2006 and involved seven international groups of companies. The Commission Vice President described them as "textbook cartels" in that they involved the most serious forms of anti-competitive conduct – this included price fixing, market sharing, customer allocation, capacity and output coordination and exchanging commercially sensitive information.
They were extremely organised. The members held top level management meetings where the objectives were designed and agreed. These were even dubbed "green meetings" as they were often followed by a round of golf! The more practical matters of preparation and implementation were carried out at lower level management meetings which were held on a quarterly, monthly or even weekly basis. Discussions focused on sales areas and individual customers. In terms of the computer monitors cartel, plant visits were carried out to audit compliance with capacity restrictions.
The members also took active steps to conceal the cartels. In the course of its on site inspections (ie dawn raids) the Commission found documents which warned "Everybody is requested to keep it as secret as it would be serious damage if it is open to customers or European Commission". Other documents instructed the members to "dispose of the following document after reading it". The Commission inspectors would clearly have been very pleased that some members did not heed this advice!
This is clearly one of the most serious cartels uncovered by the Commission to date and is an excellent example of how not to conduct business from a competition point of view. Despite their high degree of organisation and coordination, these textbook cartels were undone by a whistleblower under the Commission's leniency regime. This party, Chunghwa, received full immunity from fines by virtue of it being first to reveal the existence of the cartels to the Commission. This shows that no matter how sophisticated the cartel, full immunity will at some point represent an attractive option for one member and it only takes one whistleblower to uncover the cartel.
MacRoberts has extensive experience in dealing with cartel investigations and leniency applications. Immediate specialist help is imperative when dealing with the competition authorities to ensure that your interests are fully protected. We also offer full competition law training, compliance and audit services to help you educate your staff and comply with the rules. Compliance training is regarded favourably by the competition authorities and its cost is significantly less than any potential penalty!
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
