EU levies €116m fines against firms in CD and DVD drive cartel

EC takes tough stance against tech firms in cartel

Executives from leading tech companies including Sony, Philips and Toshiba held clandestine meetings in car parks and cinemas during the operation of a price-fixing cartel, it has been revealed.

The European Commission (EC) said that it uncovered evidence of the spy-like tactics during an investigation into the cartel, which operated to fix offers made when tendering for deals with Dell and HP to provide optical disk drive (ODD) components.

The cartel also shared the results of these procurement tenders and exchanged commercially sensitive information, the EC said.

As a result the EC has now issued fines totalling €116m to the firms involved after a three-year investigation.

The EC said that eight companies were involved in the cartel, including several joint ventures: Philips, Lite-On, Philips and Lite-On Digital Solutions, Hitachi-LG Data Storage, Toshiba Samsung Storage Technology, Sony, Sony Optiarc and Quanta Storage.

The cartel operated between 2004 and 2008 and saw the firms agreeing to set prices when pitching for tenders from Dell and HP to provide ODDs such as CD, DVD and Blu-ray drives in laptops and desktops.

The biggest fine of €41m was levied against Toshiba Samsung Storage Technology, while Sony was fined €21m, Sony Optiarc €9.7m and Quanta Storage €7.1m.

Philips, Lite-On and the Philips & Lite-On Digital Solutions joint venture received full immunity from fines, which would have totalled €63.6m, as they revealed the existence of the cartel to the EC.

Hitachi-LG Data Storage had its fine halved from €74m to €37m for its cooperation in the investigation and the fact that it helped the EC to establish how long the cartel was in operation.

The EC investigation found that the companies went to great lengths to hide their activities. Emails used only abbreviations or generic names, and furtive meetings were held to avoid raising suspicion.

EC competition commissioner Margrethe Vestager explained that the fines showed that businesses operating in cartels will be caught and dealt with accordingly.

“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,” she said.

However, Sony took issue with the fine, saying it would appeal as it does not believe the EC has reached a proper conclusion.

“We disagree with and strongly contest the decision rendered today by the EC,” it said. 

“Despite the narrowness of the Commission’s finding as to Sony, the company believes the decision is incorrect and not supported by the evidence and it intends to appeal.”

This was just the latest cartel that the EC has had to tackle, after issuing a €138m fine to three tech companies last year involved in smart card chip prices collusion.

Samsung, Philips and Infineon were discovered to have co-ordinated their market behaviour for smart card chips, which are used in mobile phone SIM cards, bank cards, passports and other items.

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21 October 2015 | 12:01 pm – Source: v3.co.uk

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