November 26, 2009

EU accuses Philips, others of forming CRT screen cartel

Prices kept artificially high despite collapse in demand after switch to flat screens

By Paul Meller

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The European Commission has accused manufacturers of cathode-ray tubes of running cartels in the markets for computer monitors and TVs, the regulator said on Thursday.

The Commission declined to name any of the companies involved, but Dutch consumer electronics manufacturer Philips has received a formal statement of objections from the Commission, the company said in a filing to the Euronext stock exchange.

The charges follow a two-year investigation sparked by complaints from customers in 2007. The complainants alleged that Philips and five other manufacturers colluded in order to prevent prices of CRT screens from falling as demand for the old technology almost evaporated.

Cathode ray tubes (CRTs) fall into two categories: color display tubes used in computer monitors, and color picture tubes used in color television sets. Both technologies have largely been superseded by LCD and plasma screens used in flat monitors and TVs, but CRTs are still manufactured for sale in developing countries.

The other CRT manufacturers named by the complainants were LG Electronics, Chunghwa Picture Tubes (a unit of Taiwan-based Tatung), Matsushita, Samsung and Toshiba.

The statement of objections against CRT makers comes four months after similar charges were made against the makers of LCD screens.

That probe was coordinated with antitrust authorities in the US, Canada and Japan. Most of the LCD screen cartel probes first came to light in 2006, when Philips, Samsung and Sharp all confirmed they had been approached by antitrust regulators.

European Commission investigation

The European Commission is coordinating its latest investigation with other antitrust authorities including Japan, spokesman Jonathan Todd said.

Although the market for CRT screens has shrunk, the screens are "still widely used in Southern and Eastern Europe, especially for TVs," Todd said.

Philips spokesman Joon Knapen said the CRT screens "are still made for a couple of emerging markets, but the volumes produced are very small."

He said the cartel probes into the two types of screens are not connected.

Philips will study the statement of objections concerning the CRT cartel in detail, it said in its statement to the stock exchange, adding that the company's policy is "to conduct business in full compliance with all applicable competition laws. Philips takes the investigations into possible violations of these laws very seriously."

Cartels are not subject to criminal law in Europe, as they are in the US and other jurisdictions. However, they are considered one of the most serious forms of antitrust abuse in Europe, and under civil law the Commission can fine companies up to 10 percent of their global annual sales.

Action is necessary in order to punish the companies involved for past cartel abuse and "to dissuade future cartel activity," Todd said.

The companies charged in the alleged CRT cartels have two months to submit a written response to the statement of objections. They are also entitled to request an oral hearing with the Commission's antitrust division.

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