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The Phoebus cartel was a cartel of, among others, Osram, Philips and General Electric from December 23, 1924 until 1939 that existed to control the manufacture and sale of light bulbs.
The cartel reduced competition in the light bulb industry for almost twenty years, and has been accused of preventing technological advances that would have produced longer-lasting light bulbs. However, the Phoebus cartel is also featured in fictionalized form as a plot element in Thomas Pynchon's novel Gravity's Rainbow, which has led to some blurring of fact and fiction.
Phoebus was officially a Swiss corporation named "Phoebus S.A. Compagnie Industrielle pour le Developpement de l’Eclairage".
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Members
Osram, Philips, Tungsram, Associated Electrical Industries, Compagnie des Lampes, International General Electric, and the GE Overseas Group were members of the Phoebus cartel.[1] They owned shares in the Swiss corporation proportional to their lamp sales.
In 1921 a precursor organisation was founded by Osram, the "Internationale Glühlampen Preisvereinigung". When Philips and other manufacturers were entering the American market General Electric reacted by setting up the "International General Electric Company" in Paris. Both organisations were involved in trading patents and adjusting market penetration. Increasing international competition led to negotiations between all major companies to control and restrict their respective activities in order not to interfere in each others spheres.[2]
Purpose
The cartel served as a convenient way to lower costs and took on considerable efforts to cap the life expectancy of light bulbs at 1000 hours[3], while at the same time hiking prices without fear of competition. Standardization of lightbulbs was another side-effect of the cartel.
The Phoebus Cartel divided the world’s lamp markets into three categories:
- home territories, the home country of individual manufacturers
- British overseas territories, under control of Associated Electrical Industries, Osram, Philips, and Tungsram
- common territory, the rest of the world
Demise
In the late twenties a Swedish-Danish-Norwegian union of companies (the North European Luma Co-op Society) began planning an independent manufacturing center. Economic and legal threats by Phoebus did not achieve the desired effect, and in 1931 the Scandinavians produced and sold lamps at a considerably lower price than Phoebus.
The original Phoebus agreement was intended to expire in 1955, however, the beginning of World War II greatly disrupted the operation of the cartel. Remnants of the Phoebus cartel were revived in 1948.
References
- ^ "A Very Tough Baby" (in English). Time Magazine www.time.com. 1945-07-23. http://www.time.com/time/magazine/article/0,9171,803625,00.html. Retrieved 2009-04-11.
- ^ http://blogs.taz.de/hausmeisterblog/2007/02/06/das-gluehbirnenkartell Extensive background information in the second half of the article - in German.
- ^ http://blogs.taz.de/hausmeisterblog/2007/02/06/das-gluehbirnenkartell
See also
External links
- Patrick Gaughen. Structural Inefficiency in the Early Twentieth Century: Studies in the Aluminum and Incandescent Lamp Markets (Adobe .pdf format)
- U K Monopolies Commission Report on the Supply of Electric Lamps 1951
Further reading
- Antitrust and the formation of the postwar world By Wyatt C. Wells, preview at Google Books
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