HP faces possible EU competition probe

Still in the throes of digesting Compaq, HP looks set for more corporate trouble after the EU signalled a potential investigation into the ink cartridge market.

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By  Neil Denslow Published  May 20, 2002

Still in the throes of digesting Compaq, HP looks set for more corporate trouble after the EU signalled a potential investigation into the ink cartridge market.

HP, the world’s largest maker of printers and cartridges, is heavily reliant on printing and imaging; indeed the company would have made a net loss in the last quarter without the profits from that division. In the three months to April 30, the company made a profit of US$414 million, with the group’s printer and imaging division recording profits of US$768 million. Nearly every other division made a loss.

The EU investigation into cartridge supply would focus on HP as well as Lexmark, Cannon and Epson. Under investigation would be whether manufacturers force costumers to buy own-brand cartridges instead of cheaper alternatives.

Mario Monti, European competition commissioner, said last week that there “is probably a case here for us ... We intend to examine this in detail.”

“This is a very important market for consumers. The sector is relatively concentrated and it is the role of our forces to remain vigilant at all times,” he added.

Printer-makers are under pressure from the rise in companies offering to refill cartridges. According the Financial Times, the “refillers” now control 11% of the market worth US$3 billion. Manufacturers are fighting back by making it more difficult to refill cartridges, for instance, by building in a “killer” chip.

HP denied the allegations. A spokesman told the Financial Times that “HP does not prevent customers from using cartridges from other suppliers.”

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