Commission imposes €138m fines on smart card chips cartel

On 3 September 2014, the European Commission (Commission) fined three semiconductor companies active in the smart card industry companies a total of just over €138m for anticompetitive practices.

Smart card chips are used in various applications, including mobile phone SIM cards, payment cards and passports. According to the Commission, Infineon, Philips, Samsung and Renesas (a joint venture between Hitachi and Mitsubishi), all producers of smart cards, entered into certain bilateral agreements between September 2003 and September 2005. The producers agreed to exchange a range of commercially sensitive information including prices, customers, contract negotiations with individual customers, production data and future market conduct. The Commission considered that the agreements restricted competition on innovation and price, in breach of EU competition rules..

Renesas received immunity from fines, having disclosed the existence of the cartel to the Commission, and another company (Samsung) received a 30per cent reduction in fines. Philips had divested itself of the relevant activities in 2006, but was held responsible for conduct before that date. Of particular interest from a procedural point of view are the settlement discussions held. The Commission initially pursued talks with some of the parties, with a view to a settlement of the case. It however broke off those talks in 2012, referring to lack of progress, and resumed the process towards infringement decision. It appears reasonable to assume that the fact that Philips' involvement would have been time barred in 2014 provided an impetus for the Commission to adopt its decision.

Both Philips and Infineon have expressed their intention to appeal the decision.

Please click on the links below for the other articles in the September 2014 competition newsletter:

• ECJ dismisses MasterCard appeal
• Court of Justice clarifies limits to fines in relation to acquired companies
• Belgian guidelines on setting antitrust fines
• New cartel immunity policy in Australia