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Saturday, 7 December 2013

Philips is again at the brink of ‘drowning in deep water’: four times in less than three years is not a coincidence anymore.

I see a captain on a distant shore
He's got a dream, he wants to make it law
He's got my number, he's got a plan
He try to get you any way he can
Wants to own everything he sees

And now for something completely different!

Philips, the Dutch electronics company, specialized in healthcare, lifestyle and lighting, is a company that is seemingly sliding close to the edges, when it comes to doing business in a fair manner: 

And today, the news was published by Bloomberg that a few companies had been raided by antitrust officials from the European Union: two electronics companies and two retailers (of the same family tree).

These companies are currently under suspicion of making illegal arrangements, that were meant to hamper the sales and distribution of household electronics through online shops. And guess which was one of these electronics companies?! You guessed right: Philips.

Here are the pertinent snips of this emerging story by Bloomberg:

Samsung Electronics Co. Royal Philips NV and Metro AG’s Media-Saturn were among companies raided by European Union antitrust officials as part of a probe into suspected online-sales restrictions.

Regulators said companies may have “put in place restrictions on online sales of consumer-electronic products and small domestic appliances,” according to an e-mailed statement yesterday.

Such clauses may increase consumer prices or prevent some products being sold online, it said, without citing companies involved in the probe.

The EU is “very well aware” of similar U.K. and German probes but has rarely examined so-called vertical restraints where manufacturers restrict prices or supplies, he said. He didn’t give details on the EU raids.

EU antitrust officials visited a number of companies in several European countries on Dec. 3, Antoine Colombani, a spokesman for the Brussels-based regulator, said yesterday. Philips was visited by EU officials this week, said Joost Akkermans, a spokesman for the Amsterdam-based company.

“We are fully cooperating with the European Commission but as this is an ongoing case, we cannot comment any further,” Akkermans said in an e-mail.

Media-Saturn, part of Germany’s biggest retailer, said the EU visited it on Dec. 3 and the group “is cooperating fully.”

Samsung, Asia’s largest technology company and the world’s biggest maker of mobile phones, is “cooperating fully with the European Commission,” spokeswoman Rhee So-eui said in an e-mailed statement. “We cannot comment on details at this time.”

Of course, I must emphasize that this particular case is far from being settled yet. Naturally, Philips is innocent until proven guilty (or ‘until being penalized’, as it almost never comes to a formal conviction in such a situation), just like the other companies involved.

Nevertheless, you could easily state that appearances are against Philips, Samsung and Saturn/Media Markt (see for this company the link to the aforementioned, February 25th article) in this particular case. With these three companies, a pattern of being ‘serial offenders’ emerges: companies that seemingly don’t learn from their mistakes, but just try it another time… and another.

Philips has traditionally been a company that made The Netherlands a ‘proud’ country: with their fundamental and applied research in the world-famous NatLab (i.e. “physics laboratory”), world-conquering inventions and innovative production methods, the company made products that have been in world-wide use for ages, until this very day. By doing so, the company brought employment and prosperity to many regions in The Netherlands and (far) abroad.

The same is true for Samsung in South-Korea: a company that evolved from being a producer of low price/quality household appliances, into world-leader in smart phones and LED televisions and a.o. producer of innovative washing machines, that pushed the envelope of laundry.

However, in recent times it seemed that these companies have been in the news more often for negative than for positive reasons, unfortunately. Of course, I am aware that life in 2013 can be very hard for electronics companies and retailers. Margins on the production and sales of electronics and household appliances are depleting and the competition from especially China and other retail organizations – especially in the online channel – is very hard.

This doesn’t change the fact, that the electronics production and retail business is just like the annual ‘Tour de France’ cycling competition: everybody feels betrayed when the ‘winners’ have been cheating with the rules of competition. 

And in this particular case, the European consumers, who were already hit hard by the economic crisis, might have been cheated out of a fair (and lower) price for their household appliances. And that is not how things are supposed to be.

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