THE European Commission on 7 October imposed a €67.6 million fine ($99.5-million) on French, Swiss and Japanese producers of power transformers for forming a market-fixing cartel. Germany’s Siemens also participated in the illegal agreement but was granted immunity for revealing the existence of the cartel to the Commission.
The biggest single fine – €33.75 million – was slapped on Switzerland’s ABB, which had already been fined by the Commission for participating in another cartel. The other companies involved are ALSTOM SA and AREVA T&D SA of France and Fuji Electrics, Hitachi and Toshiba of Japan. ABB and Hitachi both said that they would review the Commission’s decision ahead of a possible appeal in the European courts. Siemens said in February that it had already fired its managers responsible for taking part in the cartel.
According to the Commission’s investigation, top managers from the companies involved met secretly in luxury hotels in Malaga, Singapore, Barcelona, Lisbon, Tokyo, Vienna or Zurich to reaffirm a ‘gentlemen’s agreement’ This deal, in place between 1999-2003, saw the cartel’s Japanese members refrain from selling their products in Europe. In return, the European companies would not sell their power transformers in Japan, to the detriment of consumers in both markets.
“Customers and taxpayers all over Europe suffered from this cartel for a number of years. The Commission has now put an end to this rip-off by the self-appointed ‘gentlemen’,” said Competition Commissioner Neelie Kroes. “The Commission will not hesitate to increase fines for repeat offenders until they have learned the lesson that cartels do not pay,” Kroes added.
The power transformers in question are used to modify the voltage in electricity-transmission networks. At the time of the infringement, the parties’ combined annual sales in the European Economic Area (EEA) were estimated to be worth around €100 million.