The Greatest Conspiracy You've Never Heard Of

You might not know it, but an awful lot of research goes into our blog posts. Lighting is a constantly changing landscape so it doesn't hurt to double and triple check things. Take our recent post about long-lasting light bulbs for example. I spent several days scouring the Internet for information about incandescent bulbs other than the Centennial Bulb. It was during this time I noticed two terms that kept frequently popping up in my search results: "Phoebus cartel" and "planned obsolescence".

Consider my interest piqued. I stared researching and stumbled into one of the greatest conspiracies that hardly anyone has ever heard of. The conspiracy? Incandescent bulbs were purposely engineered to fail, all thanks to the efforts of the Phoebus Cartel. In today's post, we'll examine who they were, what they did, and how they changed the incandescent bulb forever.

Display of early incandescent light bulbs.

A Breeding Ground for Corruption: The Lighting Industry at the Turn of the Century

Before we can really understand who the cartel was and why they did what they did, we must first understand what was going on at the time. It was the start of the century and electric lighting was growing in both popularity and affordability. The success of Edison's light bulb had galvanized other inventors to begin marketing their own bulbs in a bid to cash in on the rapidly growing industry. The market was quickly flooded with incandescent bulbs from a wide number of manufactures.

Lighting Fact: In 1920, only 35% of US households had electricity. That percentage quickly grew to 68% by the end of the decade.

There were no set manufacturing standards for incandescent light bulbs back then. All bulbs were made from different materials and had varying looks. Since having electric lights in homes was still a relatively new idea, most customers only worried about the bulbs working. Yes, they got progressively dimmer over time, but light was light. And they were still far brighter than candles.

What stood out to manufacturers, however, was that sales weren't what they were expecting. The main issue was that incandescent light bulbs, at the time, had a very prolonged life. Many were lasting well over 2,500 hours. This meant that customers were going a long time between repeat purchases. And due to the sheer number of light bulb options, there was no guarantee that the customer would buy the same bulb again. Manufacturers quickly started seeing their profits dip.

The Formation of the Phoebus Cartel

With sales decreasing, manufacturers started getting nervous and decided something needed to be done. The heads of Philips, Tungsram, Osram, General Electric, Associated Electrical Industries, and other manufacturers in Europe got together to discuss the issue. After much debate, their solution was to create a set of incandescent lightbulb standards that effectively guaranteed the bulbs would have a shorter life. They ultimately decided that an incandescent bulb should last no more than 1,000 hours.

The Birth of Planned Obsolescence

What the cartel was proposing is a practice that is now called planned obsolescence. Also called premature obsolescence or built-in obsolescence, planned obsolescence is when someone purposely plans and designs a product in a way that it has a limited life span and will fail after a pre-determined time period. This greatly reduces the replacement cycle (or the time between repeat purchases), increasing long-term sales.

In the case of the Phoebus cartel, this also helped cartel members reduce their operational costs and allowed them to raise their prices. It also gave them another, more nefarious, benefit: near total control of the market. As courts would learn decades later, the primary goal of the Phoebus cartel was to increase profits.

Historical Fact: In 1924, planned obsolescence was also slowly being implemented by automobile manufacturers to help control over-saturation of the vehicle market.

Implementation

Implementation of their plan took several years. The first step started on January 15, 1925 in Geneiva, when the cartel incorporated under the French name Phœbus S.A. Compagnie Industrielle pour le Développement de l'Éclairage (Phoebus plc Industrial Company for the Development of Lighting).

From there, the governing body began coordinating trading patents and market penetration. If you manufactured light bulbs, you most likely used a patent owned by a member. In order to continue manufacturing your bulbs, you had to join the cartel. Members were also given market territories, but their activities were strictly controlled and restricted to ensure they didn't interfere with other members.

Meanwhile, the cartel began literally rolling back the advancements made in incandescent technology. Years of testing lead them to gradually changing the composition of filaments and adjusting both the voltage and current to decrease the useful life. There was some push-back by members still wanting to produce longer lasting products, so a supervisory body run by the heads of Osram was set up to enforce the standards. The products of cartel members were tested regularly. If they exceeded or fell under the 1,000 hour limit, the manufacturer would be fined. Companies could also be fined for exceeding their set sales quotas.

Lighting Fact: Most of the cartel's work began back in 1921 by the precursor to the cartel, the Internationale Glühlampen Preisvereinigung. This group was set up by GE.

Though all of this, the majority of customers were largely unaware of what was going on. They were paying more for bulbs that didn't last nearly as long, and had absolutely no idea. They would remain in the dark for decades.

The Fall and Legacy of the Phoebus Cartel

The Phoebus cartel had the intention of operating for at least thirty years, from 1925 to 1955. Business was good for the first several years. But by the early 30s, sales dropped despite the market continuing to grow at a rapid rate. Several of GE's light bulb patents expired, and the group was starting to face legal issues due to their practices. What ultimately killed the cartel was World War II. They were forced to cease operations in 1939 as it was impossible for members to continue to coordinate during the war.

Though they operated for only around 14 years, their impact has been a lasting one since all incandescent bulbs have continued to be manufactured to their standards. Today, we know the standard household light bulb as a pear-shaped bulb called an A19. We are also familiar with incandescent bulbs being available in specific wattage options, namely 40, 60, 75, and 100 watts. This is all part of the implemented standards set by the cartel. Other standards set by the cartel include voltage (120V), base type (medium E26), and filament makeup.

Was it Legal?

You are most likely wondering if it was legal? The answer is yes and no. The Phoebus cartel operated in a bit of a gray area. At the time, planned obsolescence didn't have a name yet and several industries were already engaging in various forms of it, most notably the automobile industry. It was also kept fairly secretive, so it took decades before anyone really took notice. As mentioned earlier, the cartel began having legal issues in the 30s. Most of these challenges came from the US government. While there are no outright laws making planned obsolescence illegal in the US then or now, there are other laws that come into play.

In the case of GE, and the rest of the cartel members, they ran afoul of the Sherman Anti-Trust Act due to what they did as part of the Phoebus cartel. Despite helping to pioneer the lighting industry, the court found that members of the cartel created a monopoly of patents, agreements, and licenses to dominate the market purely for momentary gain while keeping outside companies who might challenge them locked out.

Conspiracy Theory Proven True

Despite being guilty of violating US's anti-trust laws, the general public was still mostly unaware. Since the majority of the bulbs on the market by this point lasted 1,000 hours, it was accepted as the norm. The Phoebus cartel was generally treated as another in a long list of conspiracy theories, even though long life lamps such as the Centennial Bulb proved otherwise. It wasn't until the publication of Gravity's Rainbow in 1973 that the Phoebus cartel became known to the general public. Since then, numerous publications and studies have been done, however the cartel is still largely unknown.

Planned Obsolescence in Today's World

There are still various forms of planned obsolescence being widely used today. One example is the perceived obsolescence of mobile phones, where companies change the styling in order to get customers to purchase the latest models. Another is when you can not upgrade computer software because it is no longer compatible. But if planned obsolescence is so bad, why is it sill so widely practiced? There are actually a few reasons.

First is that these cases are notoriously hard to prove, even if a company is being pretty blatant about it. The only reason that the US government was able to prove it's case against GE and the cartel was because of the meticulous notes and correspondence kept by the participating companies. It was clear from the onset, in the members' own words, that it was done purely for revenue. And even then, it took until 1949 for the ruling to be made.

The second is that, again, there really aren't any laws outright banning planned obsolescence. Many countries have put laws into place mandating set warranties for certain products. Some countries also have laws about product durability. For instance, the US Consumer Product Safety Commission can issue durability standards when the need arises.

This is not to say that no one has been trying to get laws passed, quite the opposite. However, it's hard to get support for outlawing the practice. There is a fairly large base of supporters (businesses and manufacturers included) who list a number of benefits, including that planned obsolescence increases competition and helps drive improvements to services and goods. Detractors, on the other hand, say that the practice both exploits customers and creates unnecessary waste.

Lighting Fact: Europe has been attempting to totally ban planned obsolescence for sometime, and have been working on a proposed law since 2013.

What do you think? Share your thoughts about the Phoebus cartel and planned obsolescence in the comments below. Know of some other examples we didn't mention? Share them as well. And as always, if you have questions or need help finding the right lighting for your home or business, call 1-800-624-4488 to speak with one of our lighting experts.