Cartel fined € 992 million

15 April 2008

Otis, Kone, Schindler and Thyssenkrupp have been found by the Commission to have operated restrictive business practices between at least 1995 and 2004. Mitsubishi Elevator Europe was also found to be involved in manipulating the Dutch market.

The companies are said to have illegally allocated work, exchanged confidential information, rigged bids, fixed prices and set market quotas. Senior national executives including managing directors and sales directors are said to have participated in regular meetings to agree these illegal practices.

The fines follow an investigation initiated by the Commission in January 2004, which included raids and the confiscation of documents from several companies. The Commission says that several companies admitted a degree of guilt and applied for immunity from fines under its 2002 Leniency Notice.

As a result Kone's subsidiaries in Belgium and Luxembourg have been excused fines totalling € 74,5 million, and Otis Netherlands has been let-off a € 108 million penalty. Nevertheless, fines against Kone and its subsidiaries still come to € 142 million, and Otis' total € 225 million.

Mitsubishi has been fined € 1,8 million for its part in The Netherlands cartel, while Schindler's fines are € 144 million and ThyssenKrupp's a massive € 480 million.

ThyssenKrupp is described as a “repeat offender” by the Commission, due to fines levied against it in January 1998 for anti-competitive behaviour in the stainless steel sector. This track record prompted the Commission to increase the company's fines by +50%. Even without this addition, it would have been the most heavily penalised at € 320 million.

Commenting on the case, Europe's competition commissioner Neelie Kroes said, “It is outrageous that the construction and maintenance costs of buildings, including hospitals, have been artificially bloated by these cartels. The damage caused will last for many years because it covered not only the initial supply but also the subsequent maintenance of lifts and elevators – for these companies the memory of this fine should last just as long.”

Reaction

Kone, Schindler and ThyssenKrupp said they would examine the Commission's official notice in detail before deciding whether to appeal the fines. A statement from Schindler said it was “Very surprised at the size of the fine since the European Commission found no evidence of pan-European collusion.”

The statement also said Schindler had not participated in collusion in the German elevator market, thanks to the introduction of its Code of Conduct in 1996, and went on to underline its commitment to ethical corporate conduct. It described the offences it is being fined for as “these local infringements.”

Otis's parent company, US-based United Technologies (UTC), also said it would review the decision in detail before deciding whether or not to appeal. However, a statement by the company's Chairman and CEO, George David, set a different tone.

“We are disappointed by the conduct revealed through the Commission's and UTC's own investigations. UTC will not tolerate unethical behaviours of any kind. The nine local Otis employees who violated our Code of Ethics and regulatory compliance programmes were quickly identified and dismissed, and we have reinvigorated our ethics and compliance programmes worldwide.”

Austria

In a separate development Austria's competition authority, Bundeswettbewerbsbehörde (BWB) has applied to impose fines on several unnamed elevator and escalator manufacturers for their alleged participation in a national cartel.

BWB says it was notified of the illegal behaviour, including market sharing and price fixing agreements by two of the cartel, which came forward under leniency rules. The scope of the cartel is not clear, although BWB says it started in the late 1980s and carried on until mid-2004.

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