Record EU Fine
February 21, 2007
The European Commission accused the companies of operating a cartel for the installation and maintenance of lifts and escalators in Belgium, Germany, Luxembourg and The Netherlands between at least 1995 and 2004.
The European Union's antitrust watchdog said it was fining them a combined 992 million euros ($1.3 billion) for rigging bids for procurement contracts, fixing prices, sharing out projects,
carving up markets and exchanging sensitive information.
The total fine also included a 1.8-million-euro penalty against Japanese company Mitsubishi for a role in the cartel limited to The Netherlands.
"It is outrageous that the construction and maintenance costs of buildings, including hospitals, have been artificially bloated by
these cartels," Competition Commissioner Neelie Kroes said.
"The national management of these companies knew what they were doing was wrong, but they tried to conceal their action and went ahead anyway," she said. "The damage caused by this cartel 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," she added.
German firm gets stiffest fine
German steelmaker ThyssenKrupp was handed the heaviest fine ever imposed by EU regulators on a single company in a cartel case because it was a repeated offender. The German group was fined 480 million euros.
Otis, a unit of US conglomerate United Technologies Corporation, was given a fine of 225 million euros for its role, followed by Schindler with a penalty of 144 million euros and Kone with 142 million euros.
EU antitrust investigators conducted so-called "dawn raids" on lift and escalator makers across Europe in January 2004 after getting a tip off about the cartel. After the raids, the companies handed over more evidence in the hope of winning leniency or reduced fines.
The European Commission said that high-ranking national-level management ran the cartel by holding secret meetings in bars and restaurants. They also visited the countryside and traveled abroad and used pre-paid mobile phone cards to avoid regulators' scrutiny.
EU campaign against illegal cartels
Kroes, Europe's top antitrust regulator, is leading a campaign against illegal cartels and has been chalking up record fines against companies targeted by her crackdown.
After bumper fines in 2006, EU regulators in January ordered 10 companies to pay 750 million euros for fixing prices and carving up the market in electrical generation equipment.
After the lift makers case, that fine is now the third biggest ever against a cartel.
Until Wednesday, the biggest fine in a European cartel case was 855 million euros in penalties imposed on eight vitamin makers in 2001. The vitamin makers' fine was later reduced to 790 million euros by an EU court.
Despite the record fine on the lift makers, higher penalties are likely in future cases after the commission tightened its rules for calculating fines, making them heavier for repeat offenders and long-lasting cartels. The reform could potentially cost guilty companies up to 10 times more than before.
The commission was also given a boost in its anti-cartel campaign earlier this month with a ruling from the European Court of Justice that gave regulators more freedom to fix fines, especially how far back regulators can take previous offences into account.