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| EU hits members of lifts cartels with €992 million fine  The European Commission has fined the Otis, KONE, Schindler and ThyssenKrupp groups €992 million for operating cartels for the installation and maintenance of lifts and escalators in Belgium, Germany, Luxembourg and the Netherlands, in clear violation of EC Treaty rules. The decision names 17 subsidiaries of the groups, together with Mitsubishi Elevator Europe B.V. which participated in the Dutch cartel. Between at least 1995 and 2004, these companies rigged bids for procurement contracts, fixed prices and allocated projects to each other, shared markets and exchanged commercially important and confidential information.The effects of this cartel may continue for twenty to fifty years as maintenance is often done by the companies that installed the equipment in the first place; by cartelising the installation, the companies distorted the markets for years to come. KONE subsidiaries received full immunity from fines under the commission's leniency programme in respect of the cartels in Belgium and Luxembourg, as they were first to provide information about these cartels. Similarly, Otis Netherlands received full immunity in respect of the Netherlands cartel. The fines imposed on the ThyssenKrupp companies were increased by 50%, as it is a repeat offender. These are the largest ever fines imposed by the Commission for cartel violations. The companies allocated tenders and other contracts for the sale, installation, maintenance and modernisation of lifts and escalators with the aim of freezing market shares and fixing prices. Business secrets and confidential information on bidding patterns and prices between the cartel participants were also exchanged. Projects that were rigged included lifts and escalators for hospitals, railway stations, shopping centres and commercial buildings. The allocation of projects was similar in all four Member States. 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 Germany and The Netherlands, it was often agreed that the company that had a longstanding or good relationship with a particular customer should secure most of that customer's contracts; referred to by the companies as the "existing customers remain" principle. 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. The companies did not contest the facts found by the Commission, and none of them requested an oral hearing. The fines take account of the size of the markets for the products, the duration of the cartels and the size of the firms involved. The fines calculated for the relevant ThyssenKrupp companies were increased by 50% each, as it is a repeat offender. write your comments about the article :: © 2007 Construction News :: home page |