Last month European antitrust authorities fined Otis Elevator Co. and ThyssenKrupp AG, the world's two largest elevator makers, and three competitors a record 992.3 million euros ($1.3 billion) for price-fixing.
The European Commission penalized ThyssenKrupp 479.7 million euros, the biggest fine against a company for a cartel, and levied 224.9 million euros on Otis, a unit of United Technologies Corp. It also fined Schindler Holding AG 143.7 million euros, Kone Oyj 142.1 million euros and Mitsubishi Elevator Europe BV 1.8 million euros for fixing prices of elevators and escalators. The penalty is the highest imposed by the Brussels-based commission for a cartel, surpassing a 790.5 million-euro fine imposed on eight companies for fixing vitamin prices in 2001. Otis, Schindler, ThyssenKrupp and Kone control about 75 percent of the global elevator and escalator market, which has annual sales of 30 billion euros. ThyssenKrupp's fine was raised by 50 percent because it was a repeat offender, the regulator said.
The commission, the EU's antitrust regulator, said the companies set prices in Belgium, Germany, Luxembourg and the Netherlands between at least 1995 and 2004. The cartel rigged contract bids, allocated projects to each other and shared confidential information. Moreover they dominated the market illegally and consumers, public authorities and property developers were “ripped off” in result.
``It is outrageous that the construction and maintenance costs of buildings, including hospitals, have been artificially bloated by these cartels,'' Competition Commissioner Neelie Kroes said in a statement. Kroes has made fighting cartels a priority for her five- year term. On Jan. 24, she fined Siemens AG, Areva SA and eight other companies that make electricity network gear 750 million euros. The commission fined seven cartels a total of 1.84 billion euros last year, an annual record.
With authorities striving to fight against price-fixing cartels, hopefully those companies that might be tempted to get involved would think twice before they do anything wrong.
On behalf of Kara Ivy Goldberg, Wei (Grace) Song, Cheung Fai Yeung, Thomas Li
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Being a monopoly is not legal. But is there any case that a monopoly could actually be beneficial? This cartel is in the elevator business and consumers, public authorities, and property developers were ripped off because of the illegal market domination – which isn’t fair. Especially because they rigged contract bids, allocated projects to each other and shared confidential information. That is basically cheating and being sneaky. So we think they deserve to be fined such an amount. Authorities are definitely trying to fight against price-fixing cartels but we bet there will always be that company that will still defy the rules. Making a business is difficult and some take the cheating route.
comment by priya, ziad, and sujin
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