EU fines lift companies €992m for role in cartel

EU: The European Commission has levied a record €992 million fine on several lift manufacturers for illegally rigging bids and…

EU:The European Commission has levied a record €992 million fine on several lift manufacturers for illegally rigging bids and fixing prices.

The EU executive said yesterday the German firm ThyssenKrupp was given the highest penalty awarded to date in a cartel case, €480 million, because it was a repeat offender.

Four other companies were also handed multimillion euro fines.

The commission investigation uncovered evidence that lift manufacturers had operated an illegal cartel in Belgium, Germany, Luxembourg and the Netherlands between 1995 and 2004.

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It also admitted that it had fallen prey to the cartel by purchasing lifts and maintenance contracts for its own headquarters, the Berlaymont.

The European Court of Justice (ECJ) in Luxembourg had also been ripped off by the lift manufacturer's cartel. Hospitals, public authorities and private firms were also victims of the scam, according to the results of the commission's cartel investigation initiated several years ago.

"The result of this cartel is that taxpayers, public authorities and property developers have been ripped off big time," said Jonathan Todd, spokesman for competition commissioner Neelie Kroes. "Its effects will be felt for the next 20-50 years because a lot of these companies make their money from the maintenance which is done following the installation of the escalators and elevators."

The commission said that companies that had purchased maintenance contracts from the lift firms involved in the cartel could go to court to renegotiate their agreements.

Aside from ThyssenKrupp, the other parent companies implicated in the cartel are: Otis, which is owned by US firm United Technologies, the Finnish firm Kone, Schildler of Switzerland and the Japanese firm Mitsubishi Electric Corporation. The commission fined Otis €225 million, Kone €142 million, Schindler €144 million and Mitsubishi €1.8 million. Seventeen different subsidiary firms took part in the cartel.

The investigation by the commission in the four member states concerned showed that bids were allocated in similar ways by the cartel. The companies informed each other of calls for tender and co-ordinated their bids according to their pre-agreed cartel quotas.

Fake bids, too high to be accepted, were lodged by the companies who were not supposed to win the tender, in order to give the impression of genuine competition.

The companies kept and circulated amongst themselves updated project lists for Belgium, Germany and Luxembourg.

In all four cartels high-ranking national management (such as managing directors, sales and services directors and heads of customer service departments) participated in regular meetings and discussions.

There is evidence that the companies were aware that their behaviour was illegal and they took care to avoid detection; they usually met in bars and restaurants, they travelled to the countryside or even abroad, and they used pre-paid mobile phone cards to avoid tracking.