back to article Record €1.47 BEELLION EC fine for price-fixing display cartels

The EC has fined screen-makers including Samsung and LG €1.47bn for joining in one or both of two different CRT cartels running between 1996 and 2006. The European Commission's antitrust division said that eight different companies fixed prices, shared markets, divvied out customers between them and restricted their output in …

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WTF?

Woefully Inadequate Fines

Fines should total a significant amount of turnover for each year in which this took place. It's quite possible that they have all still made higher profit after paying the fines than if the market had actually operated correctly. Criminal charges should also follow against all executives involved. Once this happens a few times then we may see a reduction in this sort of activity but current punishment is a slap on the wrist and no disincentive not to repeat this in other areas in future,

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Re: Woefully Inadequate Fines

I think an easier way would be to apply the fines directly to the executives instead of the company. Saves having to jail them and if the CEO knows those millions will come out of his own pocket I'd wager it wouldn't happen too often in the future. Personal accountability, it's a great motivator.

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Re: Woefully Inadequate Fines

> higher profit

Woah! Call the wahambulance! Someone has made higher profit than is rightfully owed according to... who exactly?

Yeah, who is to decide on the correct price of a CRT? Well, unlike in control economies where the "just price" of a CRT is fixed by bureaucratic fiat -- but you can't buy any -- it turns out that in nominally capitalist economies, the consumers actually fix the price. Price too high - consumer won't buy. Consumer buys - price may be too low, so the possibility of higher revenues and, yes, profits offer themselves. That's the way it goes. Last I checked, CRTs are not list of stuff that fall under hydraulic despotism. Oh wait, that's governments that do that kind of thing.

Some bureaucrat affirms: "This gives an indication of the serious harm this illegal behaviour has caused both to television and computer screen producers in the EEA, and ultimately the harm it caused to the European consumers over the years".

Not to be outdone, this blowhard's clique has basically nuked the EEA's economy single-handedly. Who's harmful now?

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Re: Woefully Inadequate Fines

Let me correct that for you:

" in real capitalist economies, the consumers actually fix the price"

in nominal capitalist economies, situations may occur such as this where suppliers are not competing against each other (allowing consumer choices to fix the price), but colluding with each other so that they are the ones fixing the price and consumer choice becomes an illusion.

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Anonymous Coward

Re: Woefully Inadequate Fines

'Woah! Call the wahambulance! Someone has made higher profit than is rightfully owed according to... who exactly?'

Think your missing the point. The case was about collusion! Collusion over a round of golf! Its anti-competitive, harms economies and therefore illegal!

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Anonymous Coward

Re: Woefully Inadequate Fines

Airline executives in the cargo rate fixing schemes did get gaol time IIRC

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Anonymous Coward

Re: Woefully Inadequate Fines

'I think an easier way would be to apply the fines directly to the executives instead of the company.'

Agree totally. Individual executive accountability is necessary, otherwise present day shareholders, employees and executives have to unfairly foot up the bill!! We need individual executive responsibility also to stop executives fixing the books. As long as executives know the company will pay any and all fines down the road, collusion and creative accounting practices will be with us forever...

The case of Countrywide that Bank of America comes to mind here. How the Countrywide CEO got off leaving a massive fine to BofA is beyond me, especially when the Olympus board got sentenced! Still it doesn't look like any kind of change is coming soon, not even with Dodd-Frank and the 2008 meltdown!

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Meh

Does this mean

The fines will be divvied out to everyone that was ripped off?

No?

So where does the money go?

Oh, into the expense accounts of the EC!

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Pint

Re: Does this mean

Enjoy your 1.47 billion EUR investments and job payouts that will never happen now.

From "Tom Smith and His Incredible Bread Machine":

So, antitrust now took a hand.

Of course, it was appalled

At what it found was going on.

The "bread trust," it was called.

Now this was getting serious.

So Smith felt that he must

Have a friendly interview

With the men in antitrust.

So, hat in hand, he went to them.

They'd surely been misled;

No rule of law had he defied.

But then their lawyer said:

The rule of law, in complex times,

Has proved itself deficient.

We much prefer the rule of men!

It's vastly more efficient.

Now, let me state the present rules.

The lawyer then went on,

These very simpIe guidelines

You can rely upon:

You're gouging on your prices if

You charge more than the rest.

But it's unfair competition

If you think you can charge less.

A second point that we would make

To help avoid confusion:

Don't try to charge the same amount:

That would be collusion!

You must compete. But not too much,

For if you do, you see,

Then the market would be yours

And that's monopoly!"

Price too high? Or price too low?

Now, which charge did they make?

Well, they weren't loath to charging both

With Public Good at stake!

In fact, they went one better

They charged "monopoly!"

No muss, no fuss, oh woe is us,

Egad, they charged all three!

"Five years in jail," the judge then said.

"You're lucky it's not worse.

Robber Barons must be taught

Society Comes First!"

Now, bread is baked by government.

And as might be expected,

Everything is well controlled;

The public well protected.

True, loaves cost a dollar each.

But our leaders do their best.

The selling price is half a cent.

(Taxes pay the rest!)"

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Re: Woefully Inadequate Fines

> Think your missing the point. The case was about collusion! Collusion over a round of golf! Its anti-competitive, harms economies and therefore illegal!

+1

The fines can't correct a past "wrong" but they are there to encourage people not to do it again. If it is more profitable to collude and pay a fine, there's little incentive not to do it again. Linking the fine to revenue would be a rough approximation of what would hurt them.

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Re: Woefully Inadequate Fines

@Destroy All Monsters:

Did you miss the bit about illegal collusion to maintain artificially high prices and agreeing to prevent the competition by rival suppliers and vendors that's key to a working free market?

I think you did. Because even if you think that legislation shouldn't exist to prevent such behaviour, arguing that someone shouldn't be punished for breaking such legislation when it is in force and known to them is a bit silly.

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Re: Bread machine

While the post might be true, it is completely irrelevant.

Besides which, we now* all know the reason for the high cost of a loaf of bread is the unions, not the government per se.

*Hostess Bakery bankruptcy.

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Anonymous Coward

where's me money then?!

cause, like, you know, it's pretty good. So... they get fined. They appeal. The appeal gets rejected, this goes one for another 10 years (by which time the EU will have collapsed), they are made to pay this fine, which, let's be optimistic, gets paid, to the EU coffers, and that's it, right? In other words, I get ripped off, and the EU, out of their concern for my well-being, etc, etc, - grab the cash?

which will then get used up in all the useful ways, I bet.

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Pie

Re: where's me money then?!

seconded, I purchased several large CRT's over this period and they were not cheap, what do I get back....

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Re: where's me money then?!

thirded, I had purchased at least 10 monitors back then. I think this means I am owed between £10 - £100

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Anonymous Coward

Re: where's me money then?!

this is why these fines are a waste of time... we, who bought displays in this time period will get jack shit while the people issuing the fines will probably get a new suite of offices in a more swanky part of town...

they are as corrupt as the cartels....

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Re: where's me money then?!

Fourthed, I spent a small fortune on CRTS around then, yet when a fine is issued, it's gobbled up by the EU bureaucracy instead of going to the people who deserve to be compensated.

Regardless, this is just the tip of the iceberg, as these price fixing cartels are everywhere. So much for a free market. Capitalism = monopolies, oligopolies, and cartels, and we the consumer are the ones that always get shafted. I sometimes wonder if it's possible to dream up a more nightmarish and dystopian world than we already inhabit.

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Anonymous Coward

Re: where's me money then?!

Upon reflection, the only monitor I bought in that period was Trinitron tube based. I didn't see Sony there, so I am not owed anything. I still paid a shit load for it though ...

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Pint

Re: where's me money then?!

Sigh. Trinitron. That was damn good product and one of Sony's few items that wasn't a 100% attempt at proprietary lock-in. I've got a 19" Trinitron TV made in August 1986 which still running like a champ.

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Re: where's me money then?!

Fines for breach of antitrust regulation never get paid to individuals.

How does the fine benefit you? Firstly, they got caught so they had to stop the price-fixing - more competition and lower prices even outside the EU. Secondly, they're likely to think twice before they try it again. Thirdly, the money collected means less needs to be raised from member states and, therefore, from you.

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Re: where's me money then?!

And fourthly, no-one buys CRTs anymore. So win-win.

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Re: where's me money then?!

Cartels benefit non-members the most. That's why they usually end up collapsing - there's always an incentive to break them.

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FAIL

Re: where's me money then?!

«The appeal gets rejected, this goes one for another 10 years (by which time the EU will have collapsed), they are made to pay this fine, which, let's be optimistic, gets paid, to the EU coffers, and that's it, right?» Wait a moment - the EU collapses within the 10 years for the appeal process to wind its way through the bureaucracy and then «they [the companies] are made to pay this fine» into the coffers of an organisation which no longer exists ? Is that what is meant by a non sequitur ?...

Henri

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Re: was Trinitron tube based.

I'd wager you're still owed money. The odds that the cartel didn't affect your price even from a non-participant of the cartel are diminishingly small.

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Re: How does the fine benefit you?

First, (granted I might have missed it), but the last time I checked for either a tv or a computer monitor, I didn't see any CRTs. So this fine didn't stop a damn thing.

Second, if they still made more money than the fines took away, no they won't. Given that having to pay out more than they cartel netted them over a ten year period would have a severe adverse impact on the company's revenues (even if they don't go bankrupt immediately, likely to have a run on the stock which is bad for the EU) I doubt they were fined more than they netted.

Third, I doubt the EU numbers are better than the US numbers. Over here for every dollar of increased revenue the politicians spend two.

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Anonymous Coward

Re: where's me money then?!

I used my Trinitron monitor as my spare for building/fixing machines. It died only a few months ago and I was sad to see it go. It was a good piece of kit!

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jai
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viable business plan

So, in a world where being a patent troll appears to be a valid way to make money, it surprises me that we don't have more companies setting up shop, encouraging the competition to join in and form a cartel to extort money from the consumers, and then being the first to shop the competition to the regulators and walk away without fines and patting the bulge in your pockets from the big fat profits you collected over the years.

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Re: viable business plan

Exactly it's almost rewarding the behaviour as there is no real penalty not to repeat this in future. Like I say above criminal sanctions should apply to everyone involved with whomever came forward getting a reduced sentence but the company still paying a whopping fine ie much much larger than the ones levied so far.

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Re: viable business plan

It's either that or the companies do it anyway, pocket the money, don't tell the commission because they're afraid of fines and no one get's punished. Which do you prefer?

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Facepalm

Pay Twice Great!

So I paid over the top for my last monitor and due to this fine I will pay over the top for my next one.

Thanks, bloody thanks a lot......

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Re: Pay Twice Great!

The EC normally says something along the lines of "if you have been affected you can claim some of the money", or something like that. Though how you are supposed to prove your right to some of the money, I'm not quite sure.

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Genuine question

What happens to the $2 billion? Do the EU elves fly round to every family and leave €3 per head on the doorstep? Or will there be a really slap-up Xmas party at the Berlaymont this year (and can I get an invite)?

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Pint

Re: Genuine question

It gets discounted from the amount that member states pay to finance the EU. Assuming you're a British taxpayer (and therefore one of the net contributors to the EU budget) it's worth a lot more to you than €3.

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Re: Genuine question

I don't know where the money will go.

In the UK all monies go into a single pot at the Treasury.

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@Rikkeh

I'm greatly looking forward to seeing the reduction in the EU budget. Indeed, so confident am I that I will be booking a short skiing break in hell while I wait.

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Re: @Rikkeh

See link below and enjoy your trip next year ;-)

http://ec.europa.eu/budget/explained/budg_system/financing/fin_en.cfm

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Coat

Silver Lining?

Whilst they were operating this cartel, where any of the companies suing each other for patent infringement?

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h3
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Cartels.

Mobile phone unlocking I think is a textbook cartel also.

(I have no quarms about using cracked gsm unlocking software because they distribute the proprietary software of the phone makers for commercial gain).

No way I will pay someone to click a button. (Might pay the maker of the software directly for the price they charge the shop).

(And they look ugly in the high street the junk phone unlocking shops). None of them can actually do anything except one that I know of in a fairly large city. (In top 5 in terms of size in England).

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Devil

Re: Cartels.

Have you seen the price that CEX charge for unlocking an iPhone??

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Facepalm

So . . .

. . . according to the argument as to why it was a cartel (deliberately keeping prices high in a declining market), when do they fine music companies regarding CD prices? Movie companies regarding DVD prices? Cinemas for tickets? And so on.

They are all declining markets, yet I don't see declining prices (on new products). In many cases the opposite is true.

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Vic
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Re: So . . .

> why it was a cartel (deliberately keeping prices high in a declining market)

No, that's not why it was a cartel, that's why they chose to form the cartel.

The reason for calling it a cartel is that they all got together to fix the price.

Vic.

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Megaphone

Why doesn't ANY of the media report the whole story?

It was Nokia who filed the price fixing inveslawsuit back in 2009:

http://www.eweek.com/c/a/Mobile-and-Wireless/Nokia-Sues-LCD-CRT-Makers-for-Illegal-Price-Fixing-392991/

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MrH
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Re: Why doesn't ANY of the media report the whole story?

God know Nokia isnt perfect, but in my experience it generally conducted its business in a respectable and fair manner.

Given the report cites "top management" as being directly responsible, it rather sours my willingness to buy their products or work for those companies. How many are scared to say anything about this kind of behaviour for fear of their careers?

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Boffin

Re: Why doesn't ANY of the media report the whole story?

But the Nokia suits, which mainly concerned LCD displays (although CRTs were included in one fileing in the UK) were filed in courts in the US and the UK (it would seem in late 2009), not with the European Commission, which latter began its investigation into the CRT cartel two years earlier in November 2007. Not really the same story at all....

Henri

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Facepalm

CRT monitors?

Well, I guess there were some appeals that had to be gone through, but it would be nice if watchdogs could head off these collusive practices while the products in question are still on the market.

Next week, the EU puts the smack down on the floppy disk trust!!

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Anonymous Coward

Re: CRT monitors?

Any investigation that needs to hold up legally takes a long time, would you prefer they'd be booked under circumstantial evidence and then old sue the EU back for billions on challenge?

Hopefully the companies in question will now think twice next time (unfortunately they'll probably just hide it better)

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Re: CRT monitors?

I wonder why you got a downvote for that.

The foot note on the article should have said which senior mangement were still in office and which had been paid to play golf full time in very expensiver parts of the world and how much dosh that could have been spent on hard not working Greeks and Icelanders went with them.

But we got told that they were already playing golf instead.

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Anonymous Coward

Just a slap on the wrist

Until the CEOs of these criminal corporations are sent to prison, they will continue to defraud and exploit consumer via price fixing.

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Anonymous Coward

Notice more than one make Android devices?

Just saying!

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