Philips Said to Face EU Fine Over Chips Before Deadline

European Union antitrust regulators are working to meet a deadline to fine Royal Philips NV (PHIA) for fixing the price of chips used in smart cards, according to two people with knowledge of the case.

EU investigators must make a decision to fine the Dutch company by Sept. 9 to avoid the 10-year statute of limitations on penalties for antitrust violations, said the people, who asked not to be identified because the decision isn’t public. Philips is one of three companies targeted for penalties, they said.

In a bid to delay the decision until after the deadline, Amsterdam-based Philips is arguing that the EU’s case has gaps and evidence should be reviewed, according to the people. The European Commission is seeking to address Philips’s concerns and issue the fine in time, said one of the people. Penalties in the case may come before the end of July, said another person familiar with the probe.

Samsung Electronics Co. (005930) and Infineon Technologies AG said last year they received an antitrust complaint in the smart-card case. The possible fines are set to follow the collapse of settlement talks with EU investigators. Renesas Technology Corp. is expected to avoid a penalty because it blew the whistle on the cartel, the people said.

Philips declined to immediately comment on the possible fines. Samsung, based in Suwon, South Korea, also said it had no immediate comment. Renesas declined to comment, as did the commission in Brussels.

“Infineon has supported the authorities during this investigation to the best possible extend,” said Kay Laudien, a spokesman for the Neubiberg, Germany-based company. “As this is an ongoing investigation, we cannot comment on this any further for the time being.”

Identity Cards

The commission said in 2009 it raided companies that make chips for telephone SIM cards, bank cards and identity cards because they may have fixed prices, allocated customers and exchanged commercially sensitive information.

By refusing to settle a cartel probe with the commission, companies forfeit the chance of a 10 percent discount on any fines in exchange for admitting liability. The procedure was introduced in 2008 as a way to speed up investigations as it spares the regulator the time to build up a complex case.

Chipmakers have incurred hefty punishments for past antitrust violations. Intel Corp. (INTC) was fined a record 1.06 billion euros ($1.44 billion) by the EU in 2009 for monopoly abuse.

The following year, the commission levied penalties totaling 331.2 million euros on Infineon and eight other manufacturers of dynamic random access memory, or DRAM, chips for personal computers and servers.

To contact the reporters on this story: Gaspard Sebag in Brussels at gsebag@bloomberg.net; Aoife White in Brussels at awhite62@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net Peter Chapman, Ville Heiskanen

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