Mobile SIM chip-makers 'will be fined by EU' for price-fixing, say sources EU antitrust regulators are set to fine Samsung, Philips, Infineon Technologies and other tech firms for fixing the prices of chips used in mobile SIM cards, familiar folks whispered to Reuters. The European Commission kicked off a probe of the chips used in telly smart cards, passports, mobiles and ATM cards all the way back …
Well there was recently possibly a precedent set in an EU court-case that people who weren't directly effected by a cartel could however sue the cartellers for compensation. Strangely this didn't receive wide coverage......
Now I've found the link
http://euobserver.com/news/124508
“EU ruling could open floodgates on cartel lawsuits”
Individuals can claim compensation from cartels even if they did not buy products from one of the companies involved, the EU’s top court has ruled.
In a verdict on Thursday (5 June), the European Court of Justice stated that companies that participate in cartels are responsible for the losses caused by competitors being forced to raise their prices.
Thursday’s judgement could open the floodgates for a slew of private damages claims, but has particular implications for the commission’s ongoing cartel investigation into the Libor rate-fixing scandal"
Yes they can. Price fixing is a serious crime, but it is hard do prove, so whenever an illegal cartel is discovered, it is going to be expensive, indeed. Fines in the range of a few hundred million $/€/£ are not so rare.
Also Samsung and Infineon are old hands on fixing prices. (Or at getting caught).
If they fined them 10% of their global revenue, they might find they had less competition in the EU simply because some companies would feel it isn't worth the risk to do business there. I'm going to assume that Samsung's CEO didn't know about, let alone scheme/approve price fixing something petty like SIM chips, so a company would be risking a massive fine for something an underling might do on his own!
I'm all for real punishment for those caught price fixing, but fining a company 10% of their global revenue for price fixing something that is a fraction of a fraction of their global revenue is ridiculous.
It would be like the government taking your car if you park in front of a fire hydrant. Sure, we really don't want people parking in front of a fire hydrant, but taking their car would be going well beyond the punishment the crime deserves.
companies would feel it isn't worth the risk to do business there
Oh come on - always the same old argument - "don't fine us for breaking the rules or we will leave!"
Given, that the EU is one of the biggest markets in the world and has a very solid legal framework, it is unlikely that any company will find the risk to do business there is too high. If you leave the EU because of legal uncertainty - what about China? Oh look - they are all there! Isn't greed a wonderful stimulus?
As for the damage to the public - I could imagine that it could be quite high. Chip cards are sold in enormous quantities worldwide. The damage will likely go in the billions. If I understood the article correctly, they didn't only fix SIM card prices, but also similar chip cards. How many of these passed your hands in the last 10 years or so?
Anyway - let's lean back and enjoy the show!
Edit: Btw: 10% of Samsung's yearly revenue would be about 2 billion US$.
10% of Samsung's revenue would be tens of billions of dollars. You're confusing revenue with profit.
If you're a company that never makes much money at all (let's say AMD for example) a fine of 10% of your revenue could bankrupt you. Hell yes that's a disincentive to do business in places where that might happen, especially for something that could happen without the knowledge of the CEO and board.
A reasonable fine, or even an unreasonable fine isn't going to stop them doing business in the EU. But a fine so unreasonable that it could end your company because of the decision of some underling? You're dreaming if you think it wouldn't affect anyone's decision to do business in the EU.
"... you're confusing revenue with profit."
I stand corrected. After checking once more, the difference is roughly about factor 10.
So the maximum possible fine would be around 20 billion dollars. That would be still somewhat lower than their annual profit. Seems, that Samsung could probably survive this.
That said, yes, I agree. It would be completely unreasonable to fine that kind of money in this case. My point is, that the legal upper limit for the fine is extremely high. Usually courts take the financial situation in consideration, when they hand out the slapping. Several factors are taken into account, including the damage to the public and who was the leader of the cartel. Looking at past cases, they usually set the fine in a range that really hurts, but doesn't kill.
Setting up an illegal cartel is not a gentleman offence, it's a serious crime. Unfortunately there are still enough salespeople around that don't get the message and are surprised when they are send to jail. Btw. parking in front of a hydrant can become really expensive, if there happens to be a fire around. You might lose more than just your car.
"It would be like the government taking your car if you park in front of a fire hydrant. "
It would be more like the courts taking two wheels off your car after you formed a conspiracy with other drivers to make sure all the hydrants in town were blocked by cars.
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