Brussels fines cartel a record €750m

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The Independent Online

Siemens was hit yesterday with the largest fine ever imposed by the European Commission on an individual company for a single cartel offence as Brussels cracked down on 16 years of price-rigging by 11 firms in Europe and Japan.

The European regulator fined 10 companies €750m (£490m) in total for fixing prices for heavy equipment used by power utilities, with Siemens ordered to pay more than half. The ruling came as an acute embarrassment to the German engineering giant, which holds its annual shareholders' meeting in Munich today, and which promised to appeal against its €396.5m fine.

Yesterday's decision was taken after an inquiry that studied 25,000 pages of documents dating back to 1988 and covering gas insulated switchgear projects used in power substations.

Under the scam, the companies would co-ordinate their bids to secure projects for the members of the cartel according to a pre-ordained quota. Competitors would either be informed about the details of tenders submitted, or the companies would agree to adhere to a minimum bidding price.

A central element of the carve-up was an agreement that European firms would not sell in Japan and vice versa. Thus Hitachi, Japan AE Power Systems, Mitsubishi Electric Corporation and Toshiba were fined "because their agreement to abstain from bidding contributed directly to the restriction of competition on the EU market".

The European Commission said members of the cartel, which also included Alstom, Schneider and ABB, met regularly "to divide projects and to prepare sham bids by the companies not supposed to win the tender, in order to leave an impression of genuine competition".

The investigation cast light on the lengths companies now go to in order to avoid detection. Code names were used for companies and individuals. Communications were conducted via anonymous e-mail addresses and were encrypted. One message sent between cartel members made it clear that it was strictly forbidden to have "access to your [e-mail] from your home personal computer or any computer that can be easily linked to you. This will jeopardise the whole [cartel] network safety".