EU sends antitrust complaint to unnamed smart card chip 'cartel'

EU sends antitrust complaint to unnamed smart card chip 'cartel'

Summary: Bank cards, SIM cards, even in your passport: smart cards are everywhere. But the EU believes such smart card chip suppliers are falling foul of antitrust laws by fixing prices.

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TOPICS: EU
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The European Commission has sent a list of formal antitrust objections to "a number of suppliers of smart card chips," claiming that they have acted in price-fixing in the region.

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(Image: Håkan Dahlström, CC 2.0)

At this time, the EU has offered little in terms of detail. However, such cartel activity is rare and has previously shown to amass fines into the billions of euros across multiple antitrust law infringers.

The Commission said a "cartel" is defined as a group of similar, independent companies that join together to fix prices, to limit production or to share markets or customers between them. 

If companies are found to have broken European antitrust laws, they could be fined up to 10 percent of their global turnover for infringing years.

The statement of antitrust objections is the EU's way of asking companies to come clean and settle. The EU notes that the "sending of a statement of objections does not prejudge the outcome of the investigation."

While the Commission initially looked at the possibility of a pre-investigation settlement, talks with those companies discontinued "due to lack of progress," meaning a formal set of charges can now be drummed up.

EU Competition Commissioner Joaquin Almunia said in prepared remarks:

It is not because settlement talks fail that companies get off the hook. The essence of settlement is to benefit from a quicker, more efficient procedure, and to reach a common understanding on the existence and characteristics of a cartel. If that is not possible, the Commission will not hesitate to revert to the normal procedure and to pursue the suspected infringement.

Following a fine of up to 10 percent, companies can also be forced to change the way they do business in the 27-member state bloc.

Fines as high as 2 or 3 percent of a company's global annual revenue at their maximum are more common, particularly for companies that breach those antitrust commitments.

Topic: EU

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  • Price Fixing

    If I am selling a product, I should have the absolute right to set whatever price I want. It's called "free trade". If I call up somebody from another company that makes the same product, and we decide we want to charge the same price, the right to free trade includes that option. I'm not allowed to compel anyone else to charge the same price as I'm charging by physical coersion, so if some company decides to charge a lower price for the same product, I am powerless to stop them.

    This is really just an example of a government, the EU, wanting to control something that it has no right to control. The EU government, or politically well connected purchasers of the product in question, are not happy that the price is as high as it is, so they are going to go put guns to peoples' heads, which is the only thing governments know how to do, and get the prices where they want them.

    No thanks, EU. I prefer freedom.
    FDanconia
    • Eh?

      But trusts actually destroy the normal operation of the free market for corporations with high entry costs, or other exclusive entry conditions, by effectively limiting competition.

      So no, antitrust cases don't make you less free.
      spacespeed@...
      • I disagree

        That's a myth of conventional mainstream economics, based on "perfect competition" theory (which, developed by Frank Knight as a thought experiment, was never intended to be used as a normative evaluator of the market). Competition, properly understood, includes the possibility that one company will win 100% of the business, and a free market does not require governments to intercede to prevent that from happening. High entry costs are a fact of reality and part of a free market. The only "exclusive entry condition" that hampers a free market is when *government* grants a monopoly right to one company (which, incidentally, they do all the time), forcibly preventing competition.

        All of the interesting writing on free markets and monopoly laws has been done by the Austrian School (von Mises, Rothbard) and D. T. Armentano (not sure if he considers himself to be part of the Austrian School). Alan Greenspan also wrote a great piece on it in the 1960's: http://bit.ly/17Jk2Qc
        FDanconia