European Commission imposes fine of €254 million on capacitor cartel

On 21 March 2018, the European Commission fined eight Japanese capacitor suppliers €254 million for their participation in a cartel between 1998 and 2012.

The companies – Elna, Hitachi Chemical, Holy Stone, Matsuo, NEC Tokin, Nichicon, Nippon Chemi-Con and Rubycon – are suppliers of aluminium and tantalum electrolytic capacitors. Capacitors are electrical components that store energy in an electric field and are used in a wide variety of electronic products such as smartphones, televisions and car engines.

The European Commission found that nine Japanese companies had violated article 101 TFEU by exchanging commercially sensitive information (such as future prices, pricing intentions and future supply and demand information) during several meetings and multiple bilateral or trilateral contacts. According to the Commission, their objective was clearly to coordinate their future behaviour and avoid price competition. In some cases, they also had concluded price agreements which is one of the most serious infringements of competition law. It was clear the companies were aware of their anticompetitive behaviour given the different messages and internal emails containing phrases such as “discard after reading”, “after reading this e-mail, please destroy it without stowing it away” and “the gathering should not be disclosed to the public”.

The Commission started its investigation in 2014 after a leniency application submitted by Panasonic on behalf of its subsidiary Sanyo, which received full immunity for exposing the cartel, and avoided a €32 million fine.

In calculating the fines, the Commission considered several factors such as the companies’ sales of capacitors in the EEA, the serious nature of the infringement, its geographic scope (the entire EEA) and its long duration (14 years). Therefore, the Elna, Nippon Chemi-Con and Rubycon fines were capped at 10% of their annual worldwide turnover, which is the maximum fine.

Some of the participants’ fines were reduced for their cooperation during the investigation, but none of the companies opted for a transaction with the European Commission.

The Commission’s decision sends a clear signal that anti-competitive behaviour that (potentially) affects European consumers will not be tolerated, even if coordinated outside Europe (in this case, in Japan).

The European Commission is not the first regulator to investigate and condemn the cartel. As a reminder, the European Commission has engaged actively in cooperation with competition authorities outside the EU. Cooperation with some of them is based on bilateral agreements dedicated entirely to competition ("dedicated agreements"). In other cases, competition provisions are included as part of wider general agreements such as free Trade Agreements, Partnership and Cooperation Agreements, Association Agreements, etc.

In December 2015, Taiwan’s Fair Trade Commission imposed a fine of NT$5.8 billion (€162 million) on Elna, Nichicon, Nippon Chemi-Con, Rubycon, Sanyo, NEC Tokin, Vishay Polytech, Matsuo and two other capacitor suppliers for price collusion. It was the largest fine imposed on antitrust law violators since the Commission’s establishment in 1992.

In March 2016, the Japanese Fair Trade Commission (“FTC”) imposed a fine of 6.7 billion yen (€57 million) on Nippon Chemi-Con, Nichicon, Rubycon, NEC Tokin and Matsuo. According to the Commission, the companies agreed to hike prices of aluminium electrolytic capacitors between February 2010 and November 2011. In its press release, the FTC declared that it had cooperated with the competition authorities in the US, EU and Singapore from the outset.

Finally, in January this year the Competition Commission of Singapore ordered Panasonic Industrial Devices Singapore and Panasonic Industrial Devices Malaysia, Rubycon Singapore, Singapore Chemi-Con, Nichicon Singapore and Elna Electronics to pay a record fine of S$19.5 million (€12.2 million). Panasonic was not fined as it had applied for immunity under the leniency programme. All the other parties except Nichicon had their fines reduced after also applying for leniency.

Other cartel investigations are ongoing in the US and Korea. In the US, seven companies have already pleaded guilty to fixing prices of electrolytic capacitors sold in the US and elsewhere.

KEMET Corporation, a leading global supplier of passive electronic components which acquired Tokin on April 2017, reacted on the European Commission’s decision by saying the fine wouldn’t have a material impact as they had set aside approximately $15 million for this liability. They welcomed the completion of the investigation of one more jurisdiction as it removes the uncertainty over the total liability and brings the Tokin Group closer to closing this chapter in history.

Hanne Baeyens, Associate, hanne.baeyens@cms-db.com
Annabelle Lepièce, Partner, annabelle.lepiece@cms-db.com