GO
Loading...

EU Fines Elevator Cartel a Record 992 Million Euros

The European Commission fined lift manufacturers a record 992 million euros ($1.3 billion) on Wednesday for fixing prices and carving up markets in the biggest cartel penalty in European Union history.

Germany's ThyssenKrupp incurred the highest ever fine for a single company -- 480 million euros ($630.6 million) -- raised by 50% because it was a repeat offender. The company said it would decide whether to appeal.

The companies had fixed prices, rigged bids and allocated projects to each other in Belgium, Germany, Luxembourg and the Netherlands between 1995 and 2004, the EU's competition regulator said.

"The result of this cartel is that taxpayers, public authorities and property developers have been ripped off big time," Commission competition spokesman Jonathan Todd said.

"Its effects will be felt for the next 20 to 50 years, because a lot of these companies make their money from the maintenance which is done following the installation of the escalators and elevators," he told a news conference.

Todd invited companies that had suffered at the hands of the cartel to pursue damages in national courts and seek to annul and renegotiate long-term service contracts.

The huge fines reflected the scale of the market, the size of the companies and the long-term effects, he said.

Among the many buildings affected were the headquarters of the European Commission, the Berlaymont, from which Todd was speaking, and the European Union courts building in Luxembourg.

Identified and Dismissed

The Commission fined Otis, owned by United Technologies of the United States, 225 million euros.

"The nine local Otis employees who violated our code of ethics and regulatory compliance programmes were quickly identified and dismissed," Chairman and Chief Executive George David said in a statement.

Kone of Finland was fined 142 million euros and said: "We have only received a short release and know the amount of the fine and are expecting more information."

Schindler of Switzerland was fined 144 million euros. Schindler said it was "very surprised at the size of the fine since the European Commission found no evidence of pan-European collusion." Schindler said the Commission had looked for pan-European evidence but dropped the accusation.

Mitsubishi Electric of Japan was fined 1.8 million euros for participating in the Dutch portion of the cartel.

Competition Commissioner Neelie Kroes was unapologetic for the size of the fines.

"It is outrageous that the construction and maintenance costs of buildings, including hospitals, have been artificially bloated by these cartels," she said in a statement.

"The national management of these companies knew what they were doing was wrong, but they tried to conceal their action and went ahead anyway. The damage caused by this cartel will last for many years," she said.

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More

Don't Miss

U.S. Video