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EU fines optical drive cartel for colluding against Dell and HP

EU fines optical drive cartel for colluding against Dell and HP

The European Commission has fined an eight-member cartel €116 million for colluding on tenders to supply optical drives to Dell and Hewlett-Packard.

Buyers of Dell and Hewlett-Packard PCs may have paid over the odds for their optical drives as a result of a cartel arrangement between eight component manufacturers.

The European Commission fined the eight cartel members a total of €116 million (US$132 million) for colluding between 2004 and 2008 to fix the prices of bids to supply optical drives to Dell and HP.

Philips, Lite-On and their joint venture Philips & Lite-On Digital Solutions got away scot-free for their role in revealing the cartel. Had they not turned in their co-conspirators, they would have had to pay fines totalling €64 million between them.

But the other five member, Hitachi-LG Digital Storage, Toshiba Samsung Storage Technology, Sony, Sony OptiArc and Quanta Storage, must together pay €116 million, with Hitachi-LG and Toshiba Samsung paying the largest shares.

The fines are for breaching EU antitrust rules by coordinating their behaviour on procurement tenders to supply optical disc drives to HP and Dell between June 2004 and November 2008.

The cartel members went out of their way to escape detection by EU authorities, conducting as much of their business as possible outside of Europe and in person, meeting in parking lots and cinemas. They avoided naming one another in emails, using abbreviations or codenames.

Not all the companies were involved for the full duration of the cartel, some joining for as little as one year. Sony and Philips only colluded on tenders organised by Dell.

The eight companies told one another their bidding strategies, and exchanged the responses they received to their tenders from Dell and HP as they sought to avoid aggressive competition.

"Millions of EU citizens use devices integrating optical disc drives all the time," said Commissioner Margrethe Vestager, in charge of competition policy said, adding that it is important to keep these markets competitive.

Optical drive pricing is less important now, as today's ultralight laptops often do not have them, and modern operating systems such as Windows 10 and OS X allow for installation of many apps and even entire OS upgrades direct from online app stores.

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