CADE’s General Superintendence Asks for Condemnation of International Cartel in Optical Disc Drive

By Assessoria de Comunicação Social

The merger has been submitted to CADE‘s Tribunal analysis, which will be responsible for the final decision

The General Superintendence of the Administrative Council of Economic Defense – CADE (Brazil) issued an official opinion, published in the Federal Official Gazette on December 30, 2016, recommending the condemnation of the companies Toshiba Samsung Storage Technology Corporation, Sony Optiarc Inc., Hitachi-LG Storage, Teac Corporation, BenQ Corporation (currently, Qisda Corporation) and Quanta Storage Inc. for an international cartel, with effects in Brazil, in the market of optical disc drives (ODDs) – Administrative Proceeding 08012.001395/2011-00

ODD units read and record data contained in optical disks, such as CDs, DVDs or Blu-ray, and are used in personal computers, CD and DVD players, and video game consoles.

According to the opinion issued by the General Superintendence, the cartel operated between 2003 and 2009. The conduct affected competition in the ODD market and harmed, in Brazil, at the same time, the companies that bought the product of the parties in a worldwide level (Dell, Hewlett-Packard, Samsung Electronics, Asus, Gateway, Acer and Microsoft) and the final consumers of goods that used the affected product in their manufacturing process (laptops, desktops and consoles).

For the General Superintendence, the collusion was featured by the regular exchange of sensible commercial information (production capacity, lack of offering, requisites of clients quality, information about the release of new products), by agreements involving private biddings and by price definition. The goal was to reduce and/or eliminate the possibility of an effective competition for the acquisition of ODDs.

The administrative proceeding will be judged now by CADE’s Tribunal, responsible for issuing the final decision. If the companies are condemned, they may have to pay a fine reaching up to 20% of the gross revenues in the year preceding the beginning of the proceeding. The individuals involved are subject to the payment of a fine of 1% to 20% of that applied to the company to which they are related.

The ODD cartel has also been recently investigated and punished in other jurisdictions. In Europe and in Taiwan, companies were convicted due to the infraction. In the United States, the companies under investigation made a deal with the antitrust authority for the filling of the proceeding. For instance, Hitachi-LG Storage paid $21,1 million.