European Union imposes reduced antitrust fine on Asustek

Taipei, The European Union (EU) has imposed a fine on Asustek Computer Inc., one of Taiwan's leading PC brands, for anti-competitive practices, but said the fine was reduced by 40 percent because it cooperated in the investigation.

The EU announced on Tuesday that it was fining four companies, including Asustek, a combined 111 million euros (US$130 million) for imposing fixed or minimum resale prices on online retailers.

Asustek was fined 63.5 million euros, while the other three companies -- Dutch-based Royal Philips NV, Japan's Pioneer Corp., and Japan's Denon & Marantz -- were fined 29.8 million euros, 10.2 million euros and 7.7 million euros, respectively.

According to the EU, the four had their fines reduced by 40-50 percent depending on their level of cooperation with the investigation. Asustek's fine was reduced 40 percent.

In response to the fine, Asustek said the company assigned a provision of 65 million euros (NT$2.089 billion) in the first quarter to cover the anticipated fine from the EU.

The provision resulted in a non-operating loss of NT$760 million (US$24.76 million) for Asustek in the first quarter, dragging down its first quarter net profit to NT$2.38 billion, which was down 35 percent from a year earlier.

The company also said it will abide by EU rules when it markets and sell its products there in the future and will also strengthen employee training to avoid anti-competitive practices.

According to the EU, Asustek and the other three companies engaged in "fixed or minimum resale price maintenance," in effect demanding that online retailers keep prices for their products above a certain level or face threats or sanctions, such as cutting off supply.

Asustek intervened with retailers in Germany and France between 2011 and 2014 when they resold products at prices below those recommended by Asustek, the EU said.

The EU argued that because online retailers use pricing algorithms that automatically adapt retail prices to those of competitors, restrictions on low-price online retailers "typically had a broader impact on overall online prices for consumer electronics products."

"As a result of the actions taken by these four companies, millions of European consumers faced higher prices for kitchen appliances, hair dryers, notebook computers, headphones and many other products. This is illegal under EU antitrust rules," said EU Antitrust Commissioner Margrethe Vestager in a statement.

As of 11:45 a.m. on Wednesday, Asustek shares had fallen 1.52 percent to NT$259.50, with 1.08 million shares changing hands on the Taiwan Stock Exchange, where the weighted index was down 0.27 percent at 10,965.79.

Source: Focus Taiwan News Channel