EC approves the creation of monopoly LCD maker

EUROPE yesterday hit out against Japanese competition, with the European Commission approving a joint venture between the Dutch company Philips and two French firms, Thomson and Sagem, to create a company to develop liquid crystal displays for televisions and computers.

The company, to be known as Flat Panel Display, is the first European company capable of developing active matrix liquid crystal displays for a mass market. Production is expected to start this year. The only competitor is a Japan-US joint venture.

This is the first time the EC has willingly created a monopoly to counter external competition.

In the debate on EC industrial policy the 12 member states divide into those that believe in survival of the fittest and those, like France, that favour 'picking European winners'. This means targeting research and development funds to centres of excellence and creating cross-border ventures.

The Commission reshuffle last year that saw the Belgian socialist Karel van Miert appointed competition commissioner to replace the free- trader Sir Leon Brittan has been interpreted as a sign that the Commission will show greater sympathy to the 'picking winners' policy.

A spokesman for Mr van Miert said yesterday that despite Philips' 80 per cent holding in FPD - a dominant position in what is in effect a European monopoly - it was decided the new venture 'represented a strategic move for the Community in view of competition in the world market'.

The company was assessed under the rules on unfair competition, which state that restrictions can be waived if the agreement 'contributes to improving production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit'.