Brussels, 21/02/2007 (Agence Europe) - Following the toughening up of the anti-trust measures adopted in July 2006, which saw a total of €1.8bn in fines, the Commission announced on Wednesday 21 February that a series of fines would be imposed for illegal agreements in 2007. The €992,312,200 in fines affect four companies involved in the installation and maintenance of lifts and escalators Otis (owned by US United Technologies), ThyssenKrupp (Germany), Schindler (Switzerland) and KONE (Finland), which were dividing up the markets in Belgium, Germany, Luxembourg and the Netherlands between 1995-2005. These fines are the highest ever imposed by the Commission.
Competition Commissioner Neelie Kroes said: "It is outrageous that the construction and maintenance costs of buildings, including hospitals, have been artificially bloated by these cartels. The national management of these companies knew that what they were doing was wrong, but they tried to conceal their action and went ahead anyway”.
The Commission started the investigation on its own initiative using information brought to its attention. This led to surprise inspections in January 2004 at the premises of lift and escalator manufacturers throughout Europe. In turn, these inspections triggered many applications from the companies for immunity or reduction of fines under the Commission's 2002 Leniency Notice.
The evidence uncovered in the inspections showed that the companies ran illegal cartels in Belgium, Germany, Luxembourg and the Netherlands. This was further confirmed by numerous documents and corporate statements appealing for immunity.
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 fines reflect not just the severity of the offence but also the size of the markets in question. The companies involved are responsible for almost the entire supply and maintenance of lifts and escalators in the countries in question, essential materials for the effective functioning of almost all kinds of institution. Otis itself explained that the equivalent of the total world population uses its lifts, mechanical escalators and moving pathways every nine days. Ms Kroes also drew attention to the fact that public institutions, such as hospitals had been affected by the excessive costs of these cartels.
The situation was further worsened by the fact that ThyssenKrupp companies were repeat offenders. Part of the group had already been charged for creating illegal cartels (EUROPE 9332) and all of its subsidiaries were involved in the cases being investigated, leading to a 50% increase in the fines imposed on them, in compliance with last June's enhanced anti-trust sanctions (EUROPE 9221). Among the 18 subsidiaries under investigation, only certain Kone subsidiaries and one Otis subsidiary benefited from clemency for having cooperated with the Commission in the required time frame.
The accused did not oppose the statement of objections or call for an oral hearing. The day the Commission's announcement was made ThyssenKrupp, Schindler and Kone indicated that they would wait for an analysis of the Commission's investigation before deciding on what approach they would take. (cd)