EU investigates possible smart card chip cartel

The European Commission is investigating a possible cartel among manufacturers of the smart card chips used in payment cards and mobile phones.

The European Commission is investigating a possible cartel among manufacturers of the smart card chips used in payment cards and mobile phones, it said Wednesday.

Commission officials raided the offices of smart card chip producers in several European countries on Oct. 21 because it suspected them of violating European Union prohibitions on price fixing, customer allocation and the exchange of commercially sensitive information, it said. National competition authorities also took part in the raids, said the Commission, Europe's highest antitrust authority.

Raids such as this are a first step in cartel investigations and do not necessarily indicate that the companies are guilty of anticompetitive behavior.

The Commission did not name the companies under investigation and did not say when the investigation will be complete. It said that will depend on how the companies concerned conduct their defense.

Smart card chips are found in the SIMs (Subscriber Identity Modules) used for customer authentication in every GSM (Global System for Mobile Communications) phone and in recently issued bank cards compatible with the Chip-and-PIN security system now common in Europe. While consumers are unlikely to buy such chips directly themselves, any incidence of price fixing would ultimately harm European consumers by pushing up the operating costs of mobile phone networks and card-issuing banks, causing them to charge more for their services.

The Commission has taken a close interest in pricing in the technology industry in recent years, raiding the offices of microprocessor manufacturer Intel last February, CRT (cathode-ray tube) manufacturers in 2007 and RAM makers in 2006.

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Peter Sayer

IDG News Service

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