Competition: Commission fines producers of high voltage power cables EUR 302 million for operating a cartel

The Commission has imposed fines totaling approximately EUR 302 million on six European, three Japanese and two Korean producers of underground and submarine high voltage power cables for sharing markets and allocating customers between themselves on an almost worldwide scale. The cartel operated for almost ten years and most of the world’s largest producers, namely ABB, Nexans,  Prysmian (previously Pirelli), J-Power Systems (previously Sumitomo Electric and Hitachi Metals), VISCAS (previously Furukawa Electric and Fujikura), EXSYM (previously SWCC Showa and Mitsubishi Cable), Brugg, NKT, Silec (previously Safran), LS Cable and Taihan, participated in the illegal agreements. High voltage power cables are typically used to connect generation capacity to the electricity grid or to interconnect power grids in different countries. The Commission’s investigations revealed that the cartel participants entered into mutual agreements according to which the European and Asian producers would stay out of each other's home territories and most of the rest of the world would be divided amongst them. In implementing these agreements, the cartel participants allocated important high voltage power cable projects between themselves according to the geographic region or customers. In particular, the European companies agreed to allocate projects within the European Economic Area (“EEA”). Several companies that took part in the infringement and later merged their activities into joint ventures were also held liable, as well as parent companies of the producers  involved, because they exercised a decisive influence over those companies. Such parent companies included, inter alia, the investment company Goldman Sachs, the former owner of Prysmian. ABB was not fined in the process as it received full immunity under the Commission’s 2006 Leniency Notice for being the first to reveal the cartel to the Commission. J-Power Systems and its parents Hitachi Metals and Sumitomo Electric also received a 45% reduction of the fine for cooperating with the investigation under the Commission's Leniency Notice and further partial immunity for the first two years of their cartel involvement, as they were the first to submit evidence to the Commission on the existence of the cartel during that period of time. Source: Commission Press Release 02/04/2014

Competition: Commission fines producers of steel abrasives EUR 30.7 million in cartel settlement

The Commission has imposed fines on Ervin, Winoa, Metalltechnik Schmidt and Eisenwerk Würth totaling approximately EUR 30.7 million for participating in a cartel to coordinate prices for steel abrasives in Europe for over six years. Steel abrasives are loose steel particles used for cleaning or enhancing metal surfaces in the steel, automotive, metallurgy and petrochemical industries. They are also used for cutting hard stones such as granite and marble. Metal scrap is the main raw material for steel abrasives and it is characterized by sharp price fluctuations as well as significant price differences between the European Economic Area (“EEA”) countries. To compensate such fluctuations, the cartel participants set up a specific surcharge based on a common formula. When energy prices rose sharply in 2008, the cartel members agreed that they would all introduce simultaneously an “energy surcharge” or “energy complement”. In addition, the cartelists agreed not to compete against each other on price with respect to individual customers. Ervin received full immunity from fines under the Commission’s 2006 Leniency Notice for revealing the existence of the cartel to the Commission. Moreover, the Commission reduced the fines imposed on all the undertakings by 10 % under the Commission’s 2008 Settlement Notice as they acknowledged their participation in the cartel and their liability in that respect. In the context of the same investigation, the Commission had also opened proceedings against Pometon S.p.A (“Pometon”). The investigation will continue under the standard cartel procedure for Pometon. Source: Commission Press Release 02/04/2014

Public procurement (Sweden): The Administrative Court of Stockholm fines a municipal housing company SEK 10 million for circumventing the public procurement rules

The Stockholm Administrative Court has imposed the maximum amount of SEK 10 million in fines on  the municipal housing company of Haninge (“MHCH”). In 2012 MHCH purchased the shares in another company Vega. Four days prior to the purchase Vega had entered into a works contract with the company HMB. The company HMB had in turn previously been granted exclusive rights by Haninge municipality to acquire and exploit the property that the works contract with Vega concerned. The Administrative Court of Stockholm held that the purpose of MHCH’s acquisition of Vega was to create a contractual relationship between MHCH and HMB and therefore considered the share purchase agreement as an illegal direct award of contract. Furthermore, the Administrative Court held that the arrangement was a deliberate attempt to circumvent the public procurement rules regarding a contract of a high value (SEK 136 million), and therefore imposed the maximum allowed administrative fine. The case illustrates that the courts are inclined to see through structures set up in order to circumvent the public procurement rules. A contract that has been illegally directly awarded can also be annulled by the Court. However, no request for annulment had been made in this case. Source: Stockholm Administrative Court Judgment 20749-13, 03/04/2014

In addition, kindly note the following merger control decisions by the Commission which are published on the website of the Commission’s Directorate-General for Competition:

  • Commission approves acquisition of Eurosport by Discovery
  • Commission approves acquisition of Industrial Packaging Group by Carlyle