EU details concerns about alleged smartcard chip cartel

The EU's executive body has sent letters to chip suppliers

By Jennifer Baker, IDG News Service |  IT Management

The European Commission announced on Monday that it has launched a formal investigation into a group of smartcard chip suppliers who are suspected of breaking the European Union's antitrust laws by operating a cartel, and has sent letters detailing its concerns to the companies.

Although the Commission did not name the companies, it did confirm in January 2009 that raids were carried out on Infineon Technologies, STMicroelectronics, Atmel Corp, Renesas Technology and NXP, a Philips spin-off.

The Commission said at the time that it had reason to believe the companies had coordinated their behavior to keep prices artificially high. Following the raids, the Commission offered the companies a chance to reach a so-called Article 9 settlement. However a lack of progress has now led to formal proceedings.

Infineon, Renesas and Philips all confirmed on Monday that they had received an official Statement of Objections from the Commission. However STMicroelectronics said it had not, nor has it been involved in any settlement negotiations.

"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," said Competition Commissioner Joaquín Almunia in a statement.

The Statement of Objections is the first step in formal proceedings and officially informs the parties of the Commission's concerns. If, after the companies put forward their defense, the Commission concludes that a violation has taken place, it can impose a fine of up to 10 percent of a company's annual worldwide turnover.

Smart card chips are used in mobile phone SIM cards, bank cards, passports and identity cards.

Follow Jennifer on Twitter at @BrusselsGeek or email tips and comments to jennifer_baker@idg.com.

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