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Samsung, Philips and others fined by EU for participating in smartcard cartel

Samsung, Philips and others fined by EU for participating in smartcard cartel

The companies exchanged sensitive commercial information on pricing, customers and contract negotiations, the Commission said

Smart card producers Samsung Electronics, Philips and Infineon were fined €138 million (about US$181 million) by the European Commission on Wednesday for forming a cartel. Renesas, also part of the cartel, escaped a fine by revealing the existence of the cartel.

Smart cards are used by almost everybody in mobile phones as SIM cards, bank cards, identity cards and passports as well as pay TV cards among other applications.

"It is crucial that the companies producing them focus their efforts on how to outperform their competitors by innovating and providing the best products at the most attractive prices. If instead companies choose to collude, at the expense of both customers and end consumers, they should expect sanctions," Joaquín Almunia, Commission Vice President in charge of competition policy, said in a statement.

The companies involved in the cartel conspired through a network of contacts in order to determine their responses to customers' requests to lower prices, the Commission said. They also discussed and exchanged sensitive commercial information on pricing, customers, contract negotiations, production capacity or capacity utilization and their future market conduct, it added.

This kind of conspiracy breaches European Union rules prohibiting cartels and restrictive business practices, the Commission said.

The cartel ran between September 2003 and September 2005 and was brought to light by Renesas, at the time a joint venture of Hitachi and Mitsubishi. The Commission said Renesas benefitted from full immunity under the its 2006 Leniency Notice for revealing the existence of the cartel.

This means that Renesas avoided what would have been a fine of more than €51 million for its participation in the cartel. Samsung's fine was reduced by 30 percent to around €35 million because it cooperated in the investigation.

Philips was fined over €20 million. It still remains liable for what happened during the period of the infringement even though it has divested its smart card chips business after the infringement, the Commission said. Infineon was fined €82.8 million.

Loek is Amsterdam Correspondent and covers online privacy, intellectual property, open-source and online payment issues for the IDG News Service. Follow him on Twitter at @loekessers or email tips and comments to loek_essers@idg.com

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