Amsterdam, the Netherlands – Royal Philips Electronics (NYSE: PHG, AEX: PHIA) today announced that it received a fine of EUR 313 million from the European Commission following an investigation into alleged violation of competition rules in the Cathode-Ray Tubes (CRT) industry. The fine is payable within three months. In addition, the European Commission has ordered Philips and LG Electronics to be jointly and severally liable to pay a fine of EUR 392 million for an alleged violation of competition rules by LG.Philips Displays (‘LPD’), a 50/50 joint venture.
Philips divested its CRT activities by transferring these activities to LPD in 2001, a joint venture with LG Electronics. LPD operated as an independent company and was not consolidated in Philips accounts. In 2006, LPD went bankrupt. The CRT investigation by the European Commission has been previously disclosed in Philips’ Annual Reports.
“We regret any association with this type of behavior," said Philips Chief Executive Officer Frans van Houten. "Our ethical standards as set out in our General Business Principles are very clear and must be strictly adhered to. We believe that the fine which relates to a business that has been divested in 2001 is disproportionate and unjustified. At the same time, I want to reassure our stakeholders that the fine will not deflect our focus to make Philips the leading technology company in Health and Well-being. We will continue on our Accelerate! performance improvement roadmap and reiterate our 2013 financial targets.”
Philips intends to appeal the decision by the European Commission. It is Philips’ policy to conduct business in full compliance with all applicable competition laws and the company has fully cooperated with the European Commission in its investigation, in return for which the fine applicable to Philips has been lowered.
Frans van Houten’s video quote can be downloaded here.