Germany: From The Sat Finder To The Cathode Ray Tube –Not Only Large Companies Are Threatened By Cartel Fines

At the end of last year the "cathode ray tube cartel" attracted a lot of attention, when cathode ray tube manufacturers were fined a total of EUR 1.47 billion. Only two days before the press release by the European Commission, the German Federal Cartel Office published the report on the case of the "sat finder" cartel. Fines were also imposed here, in the four-figure range.

The cathode ray tube and sat finder cartels involved agreements between competitors, among other things concerning the prices of the goods they manufactured or sold. Those involved were fined as a result; the cathode ray tube manufacturers by the European Commission as the responsible competition authority and the sat finder dealers by the Federal Cartel Office. But in their results, specifically the amounts of the fines imposed, the decisions could not have been more different.

1.The cathode ray tube cartel

Several international manufacturers of cathode ray tubes (CRT) – known as colour picture tubes (CPT) in the case of tubes for TV screens, and colour display tubes (CDT) in the case of tubes for computer monitors – had been agreeing the prices of these TV and monitor tubes for decades, allocating markets and customers between themselves and mutually restricting their output. Companies involved included Samsung, Philips and LG Electronics.

Between 1996 and 2006, the companies involved in the cartel came to their agreements in a number of "green(s) meetings" (alluding to meetings on the golf course) at the highest management level. The decisions were implemented in the course of further meetings below management level. In this way the companies succe eded in allocating their markets by customer and agreeing on capacities and production quantities.

At the same time, the companies exchanged sensitive commercial information. The companies checked that the agreed restrictions were being complied with by mutually inspecting one another's premises.

The European Commission imposed a total fine of EUR 1.47 billion on the companies involved. Chunghwa was the first company to inform the Commission of the existence of this cartel, and as key witness this company was granted full immunity from the fines.

Further details and an overview of the fines imposed on each of the companies can be found on the European Commission website at www.ec.europa.eu/competition/index_en.html.

2. The sat finder cartel

Sat finders are devices for aligning satellite dishes to the relevant communications satellites. This ensures reception of specific signals by means of the precise orienta-tion of the satellite dish. Sat finders are sold not only through the physical retail trade but also via the Internet, in particular the auction platform eBay.

The companies involved in the sat finder cartel agreed to mutually increase the eBay prices charged to end users. This was instigated by one of the eBay traders involved making contact with other dealers through the eBay dealer communication system. He demanded that the prices be jointly increased, while threatening, should the joint price increase not take place, to reduce the prices of the goods he was offering. One of the dealers approached in this way finally contacted the Federal Cartel Office.

The Federal Cartel Office imposed fines against the companies involved in the cartel, "a four-figure sum in each case" (cf. case report of 03.12.2012, published in the report archive of the Federal Cartel Office at www.bundeskartellamt.de).

3. These cases show both that antitrust law forms the basis for sensitive fining, and that it is aimed not only at major companies. The companies involved in the sat finder cartel were eBay traders. Their pricing agreement, which represents a hardcore restriction or hardcore cartel, was penalised by the Federal Cartel Office and a fine imposed. Since the amount of the fine was calculated inter alia on the basis of the cartel members' turnover in the goods covered by the agreement, this shows the dimension of the sat finder cartel – the fines were mere "four-figure sums".

However, antitrust law should be observed by small and medium-sized enterprises not only because of the possible threat of fines – injunctions in respect of dealings in breach of antitrust law and any resultant claims for compensation should be taken into account. Ultimately, such claims are not limited to price or territory agreements between competitors to the detriment of others. Business relations between companies at different levels of the economy must also satisfy the requirements imposed on them by antitrust law. For instance, in the opinion of the Düsseldorf Regional Court, the printing of the price ("€ 4.99") on the packaging of a food product (in this case Turkish sausage) without any additional wording ("RRP") by the manufacturer is inadmissible price fixing for the retailer (judgement of 18.03.2010, file ref.: 14c O 24/09). An injunction was therefore imposed on the manufacturer.

4. Conclusion

Antitrust law must be complied with by all companies, regardless of size. It gives companies the opportunity both to defend themselves against anticompetitive actions by competitors, suppliers or buyers, and to strengthen their own competitive position.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.