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EU investigating smart card chip suppliers in price fixing probe

The European Commission has launched an investigation into a number of smart chip suppliers who may have participated in price fixing.

The EU did not say which companies it is investigating. But German chipmaker Infineon Technologies confirmed to Reuters that it received the Commission's statement of objections.

That statement of objections officially informs them of the Commission's concerns and offers a chance to come clean about their involvement. Those that are found to have broken EU antitrust laws could be fined up to 10 per cent of their annual global turnover.

According to the EU, "almost everybody uses smart card chips," in mobile phone SIM cards, bank cards, passports, identity cards, Pay TVs, and other applications.

But that widespread usage may have led to coordinated behavior to keep prices up — a breach of the Treaty on the Functioning of the European Union (TFEU) and the Agreement on the European Economic Area (EEA), both of which prohibit cartels.

The Commission initially hoped for a pre-investigation settlement with those companies involved, but a lack of progress stymied that plan, according to the EU.

"It is not because settlement talks fail that companies get off the hook," Joaquín Almunia (pictured, top), commission vice president in charge of competition policy, said in a statement.

He continued: "The essence of settlement is to benefit from a quicker, more efficient procedure, and to reach a common understanding on the existence and characteristics of a cartel. If that is not possible, the Commission will not hesitate to revert to the normal procedure and to pursue the suspected infringement."

Reuters reported that NXP Semiconductors and the French STMicroelectronics, both of which were previously under investigation, said they have not received the EU document; Gemalto, the world's largest smart card manufacturer, also said it was not a target of the investigation.

Meanwhile, Atmel Corp and Renesas Technology confirmed that they are part of the investigation, according to Reuters.

The case dates back to January 2009, when the Commission announced that it had conducted raids on several smart card chip producers three months earlier. At the time, the Commission said it had reason to believe that the companies may have violated rules prohibiting practices like price fixing.

Price fixing investigations are not uncommon in the technology world: the EU has previously probed eBook price fixing, while a number of display manufacturers were found guilty of LCD price fixing and fined some £350 million in 2012.