EU fines switchgear makers US$977 million

The European Commission shocked an intercontinental cartel of electric power switchgear makers January 24 with its toughest fine yet for a single price-fixing offence, 750.7 million euros (US$977 million).

More than half the fine, 396.6 million euros (US$516.1 million), was leveled against Siemens because of the German company’s size and its role, described by the commission as a ringleader. Japanese and European firms shared the rest.

Siemens said it would appeal to European Union courts. It said the fine would affect its profits, adding no provision had been made for such a fine.

“The fines are completely exaggerated and we cannot understand how the commission arrived at these amounts,” said Udo Niehage, president of Siemens’ Power Transmission and Distribution unit.

The cartel accounted for all European sales of gas insulated switchgear. Gas insulated switchgear is heavy, expensive equipment that controls the flow of energy in electrical power systems. It is sold as a distinct product, and as part of fully functional power substations.

“The commission has put an end to a cartel which has cheated public utility companies and consumers for more than 16 years,” Competition Commissioner Neelie Kroes said.

Commission cites encrypted e-mails, sham tenders

The commission said the cartel used encrypted e-mails sent to anonymous addresses to help coordinate global cartel quotas. European companies agreed not to sell in Japan and Japanese companies stayed out of Europe, the Commission said. Cartel members arranged sham tenders to maintain their global cartel quotas, spelled out in two written agreements, the Commission said. (HNN 12/13/06)

Japan’s Mitsubishi Electric was fined 118.6 million euros (US$154.3 million) and Toshiba Corp. 91 million euros (US$118.4 million), of which 4.7 million euros (US$6.1 million) was an overlap to be sorted out by the two firms.

France’s Alstom was fined 65 million euros (US$84.6 million). A few months before the cartel ended Alstom sold the unit involved to Areva, which knew nothing of the cartel. It and Alstom have joint liability for 53.6 million euros (US$69.7 million), which they must decide how to split.

Hitachi Ltd. was fined 51.8 million euros (US$67.4 million) and Fuji of Japan 3.8 million euros (US$4.9 million). Their joint venture Japan AE Power Systems was fined 1.4 million euros (US$1.8 million), which overlaps with the two big fines. The companies must figure out how to divide liability.

Schneider Electric of France was fined 8.1 million euros (US$10.5 million) and Siemens of Austria 22.1 million euros (US$28.7 million).

Fine of whistleblower ABB cut to zero

ABB of Switzerland had its fine reduced to zero from 215 million euros (US$279.8 million) because it blew the whistle on the cartel and turned over extensive evidence.

“ABB companies and employees are not permitted under any circumstances to engage in any anti-competitive practices,” the company said in a statement after the fines were announced.

The companies may face problems yet in other countries for their actions.

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