LUXEMBOURG (CN) — The EU’s second-highest court upheld a fine Wednesday against nine Japanese companies that colluded to drive up the price of essential electronic components.
The General Court of the European Court of Justice agreed that the manufacturing entities had formed a cartel to get favorable pricing and contract agreements for the aluminum electrolytic capacitors and tantalum electrolytic capacitors.
Sparked by a tip from another member of the cartel, the EU’s executive body fined the group a total of €254 million ($296 million) in 2018, following a four-year investigation.
Sanyo Electric, a subsidiary of Panasonic, approached the commission in 2014, sharing emails that detailed monthly meetings in which company executives at Elna, Hitachi Chemical, Holy Stone, Matsuo, NEC, Nichicon, Nippon Chemi-Con, Rubycon and Sanyo held to discuss price arrangements as well as supply and demand information from 1998 until 2012. "After reading this email, please destroy it without stowing it away,” the emails said.
Capacitors, which allow electricity to flow in one direction in an electronic device but not the other, are critical for everything from washing machines to personal computers.
The fines sparked appeals from five members of the group, including Tokin, which was fully owned by NEC until 2013.
Nippon and Nichicon argued the commission did not have the authority to punish their behavior because the collusion occurred outside of the European Union. The ninth chamber was unsympathetic. “Although the cartel participants were undertakings based in Japan and the anticompetitive contacts took place in Japan, those contacts either had a global reach,” the court wrote.
Nichicon also argued that because it had been fined in other countries, the EU shouldn’t be able to impose additional fines. The Kyoto-based company had previously been fined by the United States, Taiwan, Singapore and Japan. But the court concluded it was up to the commission to decide to reduce the fine, which it had opted not to do.
NEC and Rubycon argued they should have been given reduced fines. Though Rubycon had also supplied the commission with information about the cartel’s activities, the five-judge panel found that the information “had no impact on the gravity of the infringement” and therefore didn’t entitle the company to a discount. NEC wanted the court to toss out an increased fine, given by the commission for continuing to engage in price-fixing after the first fine was announced, which was also unsuccessful.
Tokin's appeal challenged its fine as disproportionate, saying the last year it participated in the cartel happened to be an exceptionally high-sales year not comparable to the revenue it saw before or since.
Panasonic has blown the whistle on other anticompetitive practices. In 2013, the company revealed the existence of a cartel of battery manufacturers to Indian regulators, leading to a 10,000,000 Indian rupee ($130,000) fine against its other members. It also shared the details of another capacitor cartel with the Competition Commission of Singapore in 2013, resulting in a record fine of 19.5 million Singapore dollars ($14 million).
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