By Anthony Capkun
April 2, 2014 – The European Commission has found that 11 producers of underground and submarine high-voltage power cables operated a cartel from 1999 onward, for almost 10 years, sharing markets and allocating customers between themselves on an almost worldwide scale. The commission has imposed fines totalling €301,639,000 (nearly $460 million CDN).
“These companies knew very well that what they were doing was illegal. This is why they acted cautiously and with great secrecy,” said commission vice-president in charge of competition policy, Joaquin Almunia. “Despite this and through joint efforts by several competition authorities around the world, we have detected their anti-competitive agreements and brought them to an end.”
High-voltage power cable producers 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 were found to have participated in illegal agreements.
“Nexans will review the voluminous decision in detail to determine its next course of action, which could include appeal,” said Nexans in a released statement. “The group will evaluate the consequences of the decision for possible follow on claims, as well as the impact of this decision and other recent developments in the other ongoing competition authority investigations in the same cable sector in the United States, Canada, Brazil, Australia and Korea…”
Six European, three Japanese and two Korean producers were involved in the cartel, says the commission. Several companies that took part in the infringement and later merged their activities into joint ventures are also held liable, as well as parent companies of the producers involved, because they exercised a decisive influence over them. This includes the investment company Goldman Sachs, the former owner of Prysmian.
“Prysmian believes that the decision is based on a superficial and erroneous analysis of the relevant facts and, therefore, considers the decision unlawful. Accordingly, Prysmian intends to bring an appeal before the Tribunal of the European Union,” said the company in a released statement.
The investigation revealed that—from 1999 to the inspections carried out by the commission in January 2009—these producers 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, says the commission. In implementing these agreements, the cartel participants allocated projects between themselves according to the geographic region or customer.
To allocate projects successfully, the cartelists also agreed on price levels to be applied, or exchanged information on price offers to ensure the designated power cable supplier or ‘allottee’ would bid the lowest price while the other companies would submit a higher offer, refrain from bidding or submit an offer that was unattractive to the customer, the commission added.
ABB received full immunity for revealing the existence of the cartel to the commission, thereby avoiding a fine of €33 million for its participation. J-Power Systems and its parents Hitachi Metals and Sumitomo Electric received a 45% reduction of the fine for cooperating with the investigation under the commission’s Leniency Notice. This reduction reflects the timing and level of their cooperation, and the extent to which the evidence they provided helped the commission to prove the cartel. In addition, the latter three companies received 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.