Phoebus cartel
Encyclopedia
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 is an important step in the history of global economy
because of their alleged involvement in the creation of great-scale planned obsolescence
.
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. The Phoebus cartel is also featured in fictionalized form as a minor 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 Développement de l'Éclairage".
, Philips
, Tungsram
, Associated Electrical Industries
, Compagnie des Lampes, International General Electric, and the GE Overseas Group were members of the Phoebus cartel. 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 other's spheres.
However, 1000 hours was a reasonable optimum life expectancy for most bulbs. A longer lifetime could be obtained only at the expense of efficiency: more electricity is wasted as heat and less light is obtained.
The Phoebus Cartel divided the world’s lamp markets into three categories:
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.
Cartel
A cartel is a formal agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production. Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve homogeneous products...
of, among others, Osram
Osram
Osram, founded 1919, is part of the industry sector of Siemens AG and one of the two leading lighting manufacturers in the world. The name is derived from osmium and Wolfram , as both these elements were commonly used for lighting filaments at the time the company was founded...
, Philips
Philips
Koninklijke Philips Electronics N.V. , more commonly known as Philips, is a multinational Dutch electronics company....
and General Electric
General Electric
General Electric Company , or GE, is an American multinational conglomerate corporation incorporated in Schenectady, New York and headquartered in Fairfield, Connecticut, United States...
from December 23, 1924 until 1939 that existed to control the manufacture and sale of light bulbs.
The cartel is an important step in the history of global economy
Economic history of the world
The Economic History Of The World is a record of the economic activities of all humans, spanning both recorded history and evidenced prehistory.-Prehistory:...
because of their alleged involvement in the creation of great-scale planned obsolescence
Planned obsolescence
Planned obsolescence or built-in obsolescence in industrial design is a policy of deliberately planning or designing a product with a limited useful life, so it will become obsolete or nonfunctional after a certain period of time...
.
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. The Phoebus cartel is also featured in fictionalized form as a minor plot element in Thomas Pynchon
Thomas Pynchon
Thomas Ruggles Pynchon, Jr. is an American novelist. For his most praised novel, Gravity's Rainbow, Pynchon received the National Book Award, and is regularly cited as a contender for the Nobel Prize in Literature...
's novel Gravity's Rainbow
Gravity's Rainbow
Gravity's Rainbow is a postmodern novel written by Thomas Pynchon and first published on February 28, 1973.The narrative is set primarily in Europe at the end of World War II and centers on the design, production and dispatch of V-2 rockets by the German military, and, in particular, the quest...
, which has led to some blurring of fact and fiction.
Phoebus was officially a Swiss corporation named "Phoebus S.A. Compagnie Industrielle pour le Développement de l'Éclairage".
Members
OsramOsram
Osram, founded 1919, is part of the industry sector of Siemens AG and one of the two leading lighting manufacturers in the world. The name is derived from osmium and Wolfram , as both these elements were commonly used for lighting filaments at the time the company was founded...
, Philips
Philips
Koninklijke Philips Electronics N.V. , more commonly known as Philips, is a multinational Dutch electronics company....
, Tungsram
Tungsram
Tungsram is a Hungarian manufacturer of light bulbs and vacuum tubes since 1896. General Electric, in 1990, acquired majority share in one of Hungary's largest, oldest, and internationally most prestigious firms, the light-source manufacturer Tungsram. Over the past six years GE has invested $600...
, Associated Electrical Industries
Associated Electrical Industries
Associated Electrical Industries was a British holding company formed in 1928 through the merger of the British Thomson-Houston Company and Metropolitan-Vickers electrical engineering companies...
, Compagnie des Lampes, International General Electric, and the GE Overseas Group were members of the Phoebus cartel. 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 other's spheres.
Purpose
The cartel served as a convenient way to lower costs and allegedly took on considerable efforts to cap the life expectancy of light bulbs at 1000 hours, while at the same time hiking prices without fear of competition. Standardization of light bulbs was another side-effect of the cartel.However, 1000 hours was a reasonable optimum life expectancy for most bulbs. A longer lifetime could be obtained only at the expense of efficiency: more electricity is wasted as heat and less light is obtained.
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 1920s 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
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
greatly disrupted the operation of the cartel. Remnants of the Phoebus cartel were revived in 1948.