BRUSSELS/TOKYO The European Commission shocked
an intercontinental cartel of electric power switchgear makers
on Wednesday with its toughest fine yet for a single
price-fixing offence, 750.7 million euros ($977 million).
More than half the fine, 396.6 million euros, was leveled
against Siemens (SIEGn.DE) because of the German company's size
and role as a ringleader. Japanese and European firms shared
Siemens, whose stock fell on an early Reuters report of the
fine, will appeal to European Union courts.
"The fines are completely exaggerated and we cannot
understand how the Commission arrived at these amounts," said
Udo Niehage, president of Siemens' Power Transmission and
Siemens said the fine would impact its profits, adding no
provision had been made for such a fine. It reports
first-quarter results on Thursday.
The cartel accounted for all European sales of gas
insulated switchgear, which is needed at sub-stations used to
carry electricity to homes, offices and factories.
"The Commission has put an end to a cartel which has
cheated public utility companies and consumers for more than 16
years," Competition Commissioner Neelie Kroes said.
The cartel used encrypted emails sent to anonymous
addresses to help coordinate global cartel quotas. European
companies agreed not to sell in Japan and Japanese companies
stayed out of Europe, the Commission said.
Cartel members arranged sham tenders to maintain their
global cartel quotas, spelled out in two written agreements,
the Commission said.
Japan's Mitsubishi Electric (6503.T) was fined 118.6
million euros and Toshiba Corp. (6502.T) 91 million euros, of
which 4.7 million euros was an overlap to be sorted out by the
Toshiba said in a statement it had not violated European
competition laws and that it planned to appeal the decision in
European courts. Mitsubishi Electric also said it may appeal.
France's Alstom (ALSO.PA) was fined 65 million. A few
months before the cartel ended Alstom sold the unit involved to
Areva CEPFi.PA, which knew nothing of the cartel. It and
Alstom have joint liability for 53.6 million, which they must
decide how to split.
Hitachi Ltd. (6501.T) was fined 51.8 million euros and Fuji
Electric Holdings Co. Ltd. (6504.T) of Japan 3.8 million. Their
joint venture Japan AE Power Systems was fined 1.4 million,
which overlaps with the two big fines. The companies must
figure out how to divide liability.
Hitachi said it may appeal. Fuji Electric said it was still
considering its response but would make efforts to see that
such an incident did not happen again.
Schneider Electric (SCHN.PA) of France was fined 8.1
million euros and Siemens of Austria 22.1 million euros.
ABB ABBN.VX of Switzerland had its fine reduced to zero
from 215 million euros because it blew the whistle on the
cartel and turned over extensive evidence.
"ABB companies and employees are not permitted under any
circumstances to engage in any anti-competitive practices," the
company said in a statement after the fines were announced.
The companies may face problems yet in other countries for
Gas insulated switchgear is heavy, expensive equipment that
controls the flow of energy in electrical power systems. It is
sold as a distinct product, and as part of fully functional
Although it is the highest fine for an individual violation
by companies, the overall fine for the sector is behind the
record 790.5 million euros imposed by the Commission on a
vitamin cartel in 2001.
As for individual company fines, the biggest was Hoffman-La
Roche's 462 million euro fine, for multiple violations.
(Additional reporting by Catherine Hornby and Jens Hack in
Frankfurt, Katie Reid in Zurich, Edwina Gibbs in Tokyo)