European Commission Levies €74m In Fines On Videotape Price Fixing Cartel

The European Commission (EC) has imposed a total of €74.8 million in fines on Sony, Fuji and Maxell for fixing the prices for professional videotapes sold to customers in Europe.
The EC investigation found the companies to be in violation of the EC Treaty ban on cartels and restrictive business practices. Between 1999 and 2002, Sony, Fuji and Maxell managed to raise or otherwise control prices through a series of regular meetings and other illicit contacts.
The Commission ordered the three companies to pay massive fines for infringing EU competition law in relation to the supply of certain professional videotape products in Europe.
Sony were ordered to pay €47.2 million; Maxell were ordered to pay €14.4 million; Fuji were ordered to pay €13.2 million.
Sony's fine was increased by 30% for obstructing the Commission's investigation during on-site inspections at its premises. Fuji's and Maxell's fines were reduced by 40% and 20% respectively because they co-operated with the investigation under the Commission's lenience policies.
Competition Commissioner Neelie Kroes said: "This decision sends two warnings to companies engaging in cartel activities: first, the Commission can prosecute cartels effectively even without prompts from immunity applicants, and second, obstructing a Commission's antitrust investigation leads to severe penalties."
The Commission investigation started with surprise inspections, carried out at the premises of Sony's, Fuji's and Maxell's European subsidiaries in May 2002. The inspections turned up what was described as "abundant evidence" of cartel activities.
The cartel covered the two most popular professional videotape formats at the time: Betacam SP and Digital Betacam, which in 2001 totalled annual sales of some €115 million in the Europe.
Responding to the EC Decision in a statement Sony said: "We are very disappointed by the conduct described in the announcement, which involved a small number of employees located in Europe. While the details still need to be confirmed in the full text of the Decision, Sony wants to make clear that it does not approve of or condone conduct of the kind described in the announcement. We are sorry that it happened and express our sincere regret."
Sony said it was "committed to complying fully with all applicable competition rules, including the EU antitrust rules, and it did not contest the principal matters described in the Commission's announcement after they had been formally communicated to Sony."
However Sony denied the allegation of obstructing the investigation, claiming that while the incidents in question were inappropriate and regrettable, they did not amount to obstruction and had no material impact on the Commission's investigation.
Sony have pointed out that the events referred to took place some years ago, and that the company had "reinforced its antitrust compliance policies and training" and made clear to its employees that such conduct violated the company's "basic principles of integrity and our code of conduct, is unacceptable, and will not be tolerated".
Regarding the EC Decision, Hitachi Maxell said it would "examine the content in detail and consider an appropriate response".
The Commission found that Sony, Fuji and Maxell, with a combined share of more than 85% of the professional video tape market, organised three successful rounds of price increases and endeavoured to stabilise prices whenever an increase was not possible.
They also regularly monitored the implementation of the price agreements.
The EC said it had uncovered evidence describing 11 meetings during which Sony, Fuji and Maxell discussed and agreed prices, exchanged sensitive commercial information.
(SP)