Excessive toner prices: HP convicted of illegal cartel formation
The technology group HP and its sales partners have to pay a fine of 15 million dollars in India. The authorities are punishing years of price fixing and manipulation in government tenders.
Million dollar fine for HP in India
The Indian competition authority Competition Commission of India has imposed fines on the technology group HP and 21 of its sales partners. The total fine amounts to the equivalent of 13 million euros. The reason for the sanctions is illegal price fixing and targeted manipulation of public tenders on the government procurement platform Government e-Marketplace. The incidents date back to the period between 2017 and 2020.
The investigation found that HP strictly dictated the bidding prices of its dealers for personal computers and printer supplies. The company also specifically refused to provide important authorization documents. The company wanted to control who was allowed to take part in government tenders. The aim of the procedure was, among other things, to ensure that at least one HP partner was always represented in the final round in so-called reverse auctions.
Like the news agency Reuters reports, HP initiated the case itself. The group submitted an application for leniency to the authorities. The behavior triggered the investigation and resulted in a significant reduction in the company’s penalty. In addition to the companies involved, several executives from HP and the retailers involved were held personally liable because they had actively agreed to the violations.
Protection against counterfeit products
A central motive for the formation of a cartel was to protect one’s own business model from an impending price decline and increasing product piracy. Due to the strong competitive pressure on the market, smaller retailers are increasingly threatening to switch to cheap, counterfeit printer cartridges. To prevent this and secure sales, HP supported a binding agreement between local retailers. According to the Indian investigators, evaluated chat histories show illegal practices such as targeted bogus offers.
A dealer intentionally submitted an inflated offer for an order so that another partner would win the project. Although the measures helped HP to secure its own market position in the short term, in the long term they led to artificially inflated costs for the public purse. The companies involved must now immediately and completely stop the illegal practices. The Indian competition authority also ordered that all parties involved must undergo special training within 60 days to comply with the strict competition rules.
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