Date: October 30th, 2002
Brussels, Oct. 30 (Bloomberg) -- Nintendo Co., the maker of Pokemon and Super Mario Bros. video-game software, was fined 149 million euros ($146 million) by European regulators for fixing the prices of its games.
Nintendo worked with seven distributors between 1991 and 1998 to block sales between European countries and keep prices higher, the European Commission said. The distributors, led by John Menzies Plc and Itochu Corp., were fined a total of 19 million euros.
``Millions of European families spend large amounts of money on video games -- they have the right to buy the video games and consoles at the lowest price the market can possibly offer,'' Competition Commissioner Mario Monti said in a statement.
Nintendo's fine was the fourth-biggest ever levied by European antitrust enforcers against a single company. The commission is stepping up its crackdown on cartels after imposing a record 1.86 billion euros in fines in 10 decisions involving 56 companies last year.
Separately, the commission said it has yet to make any conclusions in its probe of complaints that AOL Time Warner Inc. and six rivals colluded to inflate prices for movies on digital video discs.
In the Nintendo case, John Menzies was fined 9 million euros and Itochu 4.5 million euros. The commission set smaller fines on Linea GIG SpA, Concentra L.DA, Bergsala AB, Nortec SA and CD- Contact Data GmbH. The companies have two months to appeal. John Menzies shares fell 3 percent to 337 pence ($5.24) following the announcement.
Sales Threshold
Under EU law, the commission can fine companies accused of operating a cartel as much as 10 percent of their annual sales. It typically opts for less. The largest fine was 462 million euros levied against Hoffman-la Roche AG in 2001 for fixing the price of vitamins.
Nintendo didn't challenge the commission's finding that it broke EU antitrust law. It said it has set aside enough money to pay the fine without reducing earnings.
``Nintendo has accounted for the decision in its previous planning, so that there will be no impact on its business and financial performance this financial year,'' the company said in an e-mailed statement. ``However, in view of the size of the fine, which Nintendo finds surprising, Nintendo will lodge an appeal.''
The commission collected evidence showing that Nintendo and its distributors colluded to maintain artificially high price differences in the EU by preventing exports from one country to another via unofficial distribution channels. That meant customers couldn't take advantage of price differences of more than 65 percent between the 15 EU nations.
Market Impact
``Sentiment in the (Tokyo stock) market is bearish at present, so investors may turn sellers of Nintendo on this news,'' said Takashi Oya, an analyst at Deutsche Securities in Tokyo.
The separate digital video discs investigation, announced in June 2001, ``is going on -- I have nothing more to say at this stage,'' spokeswoman Amelia Torres told a news conference.
The others named in that probe were Walt Disney Co., News Corp.'s 20th Century Fox, Vivendi Universal SA, Metro-Goldwyn- Mayer Inc., Sony Corp. and Viacom Inc.'s Paramount Pictures.
Source: Boomberg
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It looks like Nintendo's in a bit of trouble... Hopefully, they can get out of this one by year's end.
