Responding to soaring food prices and widespread allegations of collusion and price fixing, the South African Competition Commission (SACC) has commenced a large scale investigation involving over 30 companies involved with food production and supply.
Commissioner Shan Ramburuth said that the SACC had spent over two years researching food price fluctuations spanning a number of industries, and was now ready to launch formal investigations into companies suspected of artificially manipulating prices.
Commenting on an ongoing investigation into the bread industry, Deputy Commissioner Tembekile Bonakele said that three bread manufacturing companies had already settled with the SACC, with a fourth due to face court in June 2009. The latest investigation includes various grain silo storage companies and grain mills, accused of colluding to increase prices over their respective parts of the supply chain.
South Africa is in the process of finalising amendments to the Competition Act including the introduction of prison sentences for those found guilty of price fixing.
The United Kingdom’s Competition Commission has begun consultations on two proposed remedies arising from its recent investigation of the UK’s supermarket and grocery sector. The investigation did not find evidence of illegal conduct, but identified multiple factors contributing to high grocery prices.
The proposed remedies are:
The European Union (EU) has fined computer chip manufacturer Intel 1.06 billion Euros (A$1.89 billion) for engaging in repeated abuse of its dominant market position between October 2002 and December 2008.
The EU found that Intel illegally leveraged its 70% market share, offering hidden rebates to computer manufacturers NEC, Dell, Lenovo and Acer in exchange for undertakings that they sourced their x86 CPU chips exclusively or predominantly from Intel. In discussing the rebates, the EU stated that Intel’s conduct forced equally-efficient competing manufacturers to sell their chips below cost in order to compete.
Intel also directly targeted major competitor AMD, granting substantial payments to computer manufacturers on condition that they limited their sales of AMD products to certain market segments and postponed AMD product launch dates.
In separate conduct, Intel made direct payments to Media Saturn Holding, a major international retailer, on condition that it only sell Intel-equipped computers in its 770 stores across 16 European countries.
Intel intends to appeal the decision, with CEO Paul Ottelini stating “We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace…There has been zero harm to consumers. Intel will appeal.”
The world market for x86 CPUs is valued by the EU at 22 billion Euros ($A39 billion) per year.
China's anti-monopoly enforcement regulators, the Ministry of Commerce (MOFCOM) and the State Administration of Industry and Commerce (SAIC), have kept active in April 2009.
A month after rejecting Coca-Cola's China juice deal, China's Ministry of Commerce (MOFCOM) announced its decision on 24 April 2009 to clear Mitsubishi Rayon Co. Ltd's acquisition of Lucite International Group Limited subject to various conditions. Limits placed on Mitsubishi Rayon included divesting production capacity upfront, maintaining operational independence until divestiture is complete and obtaining consent for future expansion in investment capacity, whether by acquisitions or investment in new plants.
On 27 April 2009, SAIC officially published two draft regulations concerning monopoly agreements and the abuse of dominant market position, respectively, for public comment on or before 31 May 2009. A preliminary version of these draft provisions, together with a third regarding the investigation and sanction of the mentioned anti-competitive behaviours, were previously disseminated to a small circle of competition professionals in China for consultation.
A high-level executive from Korean company LG has entered a guilty plea to conspiring to fix the price of Thin Film Transistor Liquid Crystal Display (TFT-LCD) screens. The executive will serve one year in prison for his part in the cartel, joining a fellow LG executive as well as 3 executives from Taiwanese manufacturer Chungwa, each serving between six and nine months.
In late December 2008, the United States Department of Justice (DOJ) successfully obtained guilty pleas from cartel members LG, Chungwa, Sharp and Hitachi. As of late April 2009, over US$616 million (A$784 million) in fines had been handed down in relation to the cartel and charges brought against 9 individuals.
The worldwide market for TFT-LCD panels is estimated to be worth US$70 billion (A$89 billion) a year. The panels are used in a wide variety of consumer devices, such as computers, televisions, mobile phones and MP3 players.
A separate class action against the cartel companies remains on foot.
The Obama administration is showing signs of a more aggressive approach to antitrust investigation and enforcement, appointing Christine Varney as Assistant Attorney General for Antitrust at the DOJ, and selecting Jon Leibowitz as new head of the Federal Trade Commission (FTC).
An FTC Commissioner since 2004, Leibowitz was appointed as Chairman on 3 March 2009. Leibowitz has been an outspoken advocate of expanded FTC powers, arguing that the FTC’s legislated power to prohibit “unfair methods of competition” goes beyond the strict interpretation that the prohibition extends only to conduct that otherwise falls under the Sherman and Clayton Antitrust Acts.
As new DOJ Assistant Attorney General for Antitrust, Christine Varney has promised to bring the DOJ’s enforcement strategy closer to that shown by the EU, with stricter merger controls and an uncompromising approach to any attempt by dominant companies to abuse their market power. In her first public comments since her appointment on 4 May 2009, Varney said that the previous administration’s policy of “standing aside” had resulted in significant harm to the economy. She went on to signal that the administration was working towards repealing antitrust guidelines which restricted DOJ action.
Italian marine hose manufacturer Parker ITR has announced that it is willing to settle with any non-U.S. based direct purchaser of its hoses. The company was one of five companies to be fined after DOJ and EU investigations concluded late last year.
Any customer who agrees to the offer will be entitled to 16 percent of the amount spent on Parker’s marine hose between 31 January 2002 and 2 May 2007. The firm administering the settlement claims that it represents “the first private resolution of a company’s global cartel liability without any arbitration, mediation or litigation.”
Parker has already settled claims against U.S. direct purchasers, and intends to sign non-U.S. claimants onto standard agreements including releases from any future court action. No such court claims had been filed at the time Parker made the offer.