The Phoebus cartel existed to control the manufacture and sale of incandescent light bulbs. They appropriated market territories and fixed the useful life of such bulbs. Corporations based in Europe and America founded the cartel on January 15, 1925 in Geneva. They had intended the cartel to last for thirty years (1925 to 1955). The cartel ceased operations in 1939 owing to the outbreak of World War II. The cartel included manufacturers Osram, General Electric, Associated Electrical Industries, and Philips, among others.
The Phoebus cartel created a notable landmark in the history of the global economy because it engaged in large-scale planned obsolescence to generate repeated sales and maximize profit. It also reduced competition in the light bulb industry for almost fifteen years. Critics accused the cartel of preventing technological advances that would produce longer-lasting light bulbs. Phoebus based itself in Switzerland. The corporation named itself Phœbus S.A. Compagnie Industrielle pour le Développement de l'Éclairage (French for "Phoebus, Inc. Industrial Company for the Development of Lighting").
Osram, Philips, Tungsram, Associated Electrical Industries, ELIN , Compagnie des Lampes, International General Electric, and the GE Overseas Group created and joined the Phoebus cartel, holding shares in the Swiss corporation proportional to their lamp sales.
Osram founded a precursor organisation in 1921, the Internationale Glühlampen Preisvereinigung. When Philips and other manufacturers entered the American market, General Electric reacted by setting up the "International General Electric Company" in Paris. Both organisations co-ordinated the trading of patents and market penetration. Increasing international competition led to negotiations between all the major companies to control and restrict their respective activities in order not to interfere in each other's spheres.
The cartel conveniently lowered operational costs and worked to standardize the life expectancy of light bulbs at 1,000 hours (down from 2,500 hours), and raised prices without fear of competition. The cartel tested their bulbs and fined manufacturers for bulbs that lasted more than 1,000 hours. A 1929 table listed the amount of Swiss francs paid that depended on the exceeding hours of lifetime. The cartel operated without the knowledge of the public, and the cartel could point to standardization of light bulbs as an alternative rationale for the organization.
Some engineers deemed the life expectancy of 1,000 hours reasonable for most bulbs, and that a longer lifetime came at the expense of efficiency. Engineers argued that longer bulb life caused the increase of heat and decrease of light if bulbs lasted longer than 1,000 hours. They argued the result of wasted electricity. Long-life incandescent bulbs were available that lasted up to 2,500 hours. These were less energy-efficient, producing less light per watt.
The Phoebus cartel divided the world’s lamp markets into three categories:
In the late 1920s, a Swedish-Danish-Norwegian union of companies (the North European Luma Co-op Society) planned 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.