Electronic components firms fined record S$19.5m for collusion

SINGAPORE — Four of the biggest manufacturers of electrical components here have been fined a record S$19.5m in total by the Competition Commission of Singapore (CCS), after they were found to have colluded with a fifth company — Panasonic Industrial Devices (Singapore and Malaysia) — to fix prices and collectively reject requests from customers for price reductions.

The five companies — Panasonic, ELNA Electronics, Nichicon Singapore, Rubycon Singapore and Singapore Chemi-con (SCC) — are all headquartered in Japan. They are also being probed for cartel activities by authorities in the United States, China, Japan, Taiwan and Europe.

The offences were committed over different periods that spanned a total of up to 16 years, going back to 1997. SCC and Nichicon were fined the highest amounts at about S$6.9 million each, followed by Rubycon at S$4.7 million, and ELNA at S$853,227.

The fine amounts were decided based on each company’s turnover and mitigating factors, among other reasons. Panasonic was not fined, as it was the first to whistleblow on the cartel in 2013. It applied for immunity under CCS’ leniency programme which give cartel members reductions in fines if they alert the CCS.

Together, the companies cover two thirds of the Singapore market for aluminium electrolytic capacitors (AECs), which are commonly found in computers and household appliances such as washing machines, televisions and refrigerators.

The total fines imposed by CCS eclipsed the previous record penalty of S$7.15 million which it meted out for a global cartel case in 2014 involving 10 freight forwarding companies.

CCS said the “long-running cartel sheltered the parties’ profitability and market shares from competition, to the detriment of their customers”. Without the agreements, the firms would have been under greater competitive pressure, the competition watchdog said on Friday (Jan 5). “This means that an individual AEC supplier may not have been able to sustain a price increase without losing market share to its competitors as its customers could switch to another AEC supplier,” CCS added. “Hence, without the cartel activity, the parties would have had to draw customers with better prices or quality of products.”

Under the leniency programme, the first to come forward gets a reduction of up to 100 per cent of the fine. Subsequent applicants can have their fines cut by as much as half.  Among the five companies, only Nichicon did not apply for leniency.

CCS’ investigation found that each company would send representatives to meet and collude in Singapore, almost on a monthly basis. When they met, they would exchange confidential information such as customer quotations and pricing strategies. They would also agree on sale prices, including various price increases between 3 to 20 per cent.

Panasonic and ELNA stopped sending representatives first — after February 2009, and the other three stopped doing so after March 2013.

Speaking at a media briefing, CCS chief executive Toh Han Li said Panasonic had conducted an internal investigation which uncovered the activities, and the firm reported the matter to authorities in various jurisdictions, including the CCS.

“It just shows that this kind of conduct can actually persist for quite a long time. They reported not just in Singapore but many other jurisdictions, so there must have been a decision made at the global level to report,” Mr Toh added.

While cartel activities begun two decades ago, the duration of infringement was calculated from January 2006 onwards. This is because Section 34 of the Competition Act, which covers anti-competitive agreements, only came into effect from Jan 1, 2006.

Mr Toh said this was the third case handled by CCS involving a global cartel. Apart from the freight forwarding case, CCS also imposed fines in 2014 against an international cartel involving ball bearings manufacturers.

“Cartels among suppliers cause serious harm to competition in the market, leaving businesses and end-consumers in a poorer bargaining position and facing less competitive prices,” he said. “Singapore being such an open market, can be impacted by such cross-border cartels. CCS will continue to take strong enforcement action to ensure that cartels do not negatively impact Singapore markets and its competitiveness.