European regulator investigates smartcard chipmakers for price fixing

The European antitrust regulator has launched a formal investigation on several smartcard chipmakers for forming a cartel to fix prices for chips used in mobile phone SIM cards, bank cards and passports.

The European Commission (EC) today said that it has a statement of objections to several suppliers of smart card chips informing them that they may have participated in a cartel, in breach of EU antitrust rules.

The EC is concerned that certain chips suppliers may have agreed or coordinated their actions in the European Economic Area (EEA) in order to keep prices up.

The EC said that it initially agreed to explore the possibility of a settlement with the companies involved but has now discontinued the talks due to lack of progress, and the normal antitrust procedure will now run its course.

EC vice president in charge of competition policy, Joaquín Almunia, said, "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".

Smart card chips are used by almost everybody in mobile phone SIM cards, bank cards, passports, identity cards, Pay TVs or in numerous other applications.

The EC had launched a probe in early 2009 and raided many chipmakers in the EU countries.

The EC did not name the suppliers under investigation but media had earlier reported that among those raided were German chipmaker Infineon Technologies, the Netherlands-based NXP Semiconductors, French semiconductor company STMicroelectronic, Atmel Corp of the US, and Renesas Technology - a joint venture between Japan's Hitachi and Mitsubishi Electric.

The EC has the power to impose a fine of up to 10 per cent of a company's global turnover should a firm be found guilty.