European Commission Fines €116 Million Suppliers of Optical Disc Drives for Cartel

The European Commission has fined eight optical disc drive (ODD) suppliers a total of €116 million for having coordinated their behaviour in relation to procurement tenders organised by two computer manufacturers, in breach of EU antitrust rules.

ODDs read or record data stored on optical disks, such as CDs, DVDs or Blu-ray.They are used for instance in personal computers, CD and DVD players and video game consoles. The anti-competitive conduct subject to fines in this case concerns agreements to collude in procurement tenders for ODDs for laptops and desktops produced by Dell and Hewlett Packard.

Commissioner Margrethe Vestager, in charge of competition policy said: “Millions of EU citizens use devices integrating optical disc drives all the time, for example when storing their favourite pictures on a disc. Keeping these markets competitive is important. 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.”

Eight suppliers engaged in the illegal practices covered by this decision, namely Philips, Lite-On, their joint venture Philips and Lite-On Digital Solutions, Hitachi-LG storage, Toshiba Samsung Storage Technology, Sony, Sony Optiarc and Quanta Storage.

Under the Commission’s 2006 Leniency Notice, Philips, Lite-On and their joint venture Philips and Lite-On Digital Solutions received full immunity from fines as they were the first to reveal the existence of the cartel.

The Commission’s investigation revealed that between June 2004 and November 2008, the companies participating in the cartel communicated to each other their intentions regarding bidding strategies, shared the results of procurement tenders and exchanged other commercially sensitive information concerning ODDs used in laptops and desktops. They organised a network of parallel bilateral contacts that pursued a single plan to avoid aggressive competition in procurement tenders organised by Dell and HP.

Although the cartel contacts took place outside of the European Economic Area (EEA), they were implemented on a worldwide basis. Of the companies involved in the cartel, only Philips is headquartered in Europe. The remaining seven are headquartered in Asia.The duration of each company’s involvement in the cartel varied and ranged from less than a year to over four years.

The companies were aware that their behaviour was illegal and tried to conceal their contacts and to evade detection of their arrangements. For example, they avoided naming the competitors concerned in their internal correspondence but used abbreviations or generic names.

The cartelists also avoided leaving traces of anti-competitive arrangements by preferring face-to-face meetings and ensured that the competitors’ discussions were not revealed to customers.Some of them met in places where they could not be easily spotted, including in parking lots or cinemas.

Fines
The fines were set on the basis of the Commission’s 2006 Guidelines on fines (see press release and MEMO). In setting the level of fines, the Commission took into account, in particular, the companies’ sales of the products concerned in the EEA, the serious nature of the infringement, its geographic scope and its duration. The fines achieve an appropriate level of deterrence while remaining proportional to the infringement.

Philips, Lite-On and Philips and Lite-On jointly received full immunity from fines as they were the first to reveal the cartel to the Commission, thereby avoiding an aggregate fine of € 63.5 million. Hitachi-LG storage received a 50% reduction on its fine for its cooperation in the investigation under the Commission’s leniency programme and partial immunity for enabling the Commission to establish a longer duration of the cartel.

In setting the fines, the Commission also took account of the fact that Philips, Sony and Sony Optiarc took part in the cartel behaviour only with regard to procurement tenders organised by Dell.

Breakdown of fines imposed to each company for participation in cartel:

Background
Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the EEA Agreement prohibit cartels and other restrictive business practices.

The Commission’s investigation started with a set of requests for information in June 2009. The Commission issued a statement of objections in July 2012 and carried out an oral hearing in November 2012.

More information on this case will be available under the case number 39639 in the public case register on the Commission’s competition website, once confidentiality issues have been dealt with. For more information on the Commission’s action against cartels, see its cartels website.

Action for damages
Any person or firm affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages. The case law of the Court of Justice of the European Union and the Antitrust Regulation 1/2003 both confirm that in cases before national courts, a Commission decision is binding proof that the behaviour took place and was illegal. Even though the Commission has fined the companies concerned, damages may be awarded without these being reduced on account of the Commission fine.

The Antitrust Damages Directive, which the Member States have to implement in their legal systems by 27 December 2016, makes it easier for victims of anti-competitive practices to obtain damages. More information on antitrust damages actions, including a practical guide on how to quantify antitrust harm, is available here.