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ÚOHS levies record penalty

Nine manufacturers charged with price fixing and bid rigging

By František Bouc
Staff Writer, The Prague Post
February 14th, 2007 issue

The Anti-Monopoly Office (ÚOHS) levied the highest sanction in the Czech Republic’s history Feb. 12 after fining nine power equipment manufacturers a total of 979.2 million Kč ($45 million) for their roles in a price-fixing scheme.

“The producers of so-called gas-insulated switchgears made an unprecedented cartel agreement, in terms of how sophisticated it was and how long it lasted,” ÚOHS Deputy Chairman Kamil Rudolecký said.
The ÚOHS announced that nine engineering companies have apparently colluded to keep prices artificially high since 1988 and rigged bids for procurement contracts, thus allocating projects to each other and sharing markets.
Among the victims were state-owned public utilities, municipalities and private companies that all rely on gas-insulated high-tension electric switchgears, which are used to control flow on electricity grids.
The ÚOHS issued the sanctions less than three weeks after the European Commission imposed similar fines Jan. 25 on companies based in the European Union, Switzerland and Japan worth more than 750 million euros ($975 million/21 billion Kč) — the second-highest fine for cartel agreement ever issued by the EC.
The EC kicked off its investigations in 2004, and the ÚOHS joined in last summer. Hungarian authorities also investigated the cartel.
The companies are Alstom, Areva, Fuji Electric, Hitachi, Japan AE Power Systems, Mitsubishi Electric, Siemens, Toshiba, and Nuova Magrini Galileo.
The Czech branch of Siemens, Europe’s biggest engineering company, received the heaviest fines from both the EC and the ÚOHS. The company was hit with more than 11.4 billion Kč in fines for allegedly leading the cartel.
Siemens’ Czech spokesman Petr Sedláček admitted the company breached anti-monopoly rules. He insisted, however, that an agreement about gas-insulated switchgears took place only between October 2002 and April 2004.
Siemens plans to appeal both the EC and ÚOHS decisions, Sedláček said.
“We will not oppose the fact that we were breaching anti-monopoly laws, but rather the amount of the fine,” Sedláček said. “The fine is disproportionately big.”
The highest fine previously issued by the ÚOHS was 484 million Kč to six building societies for price fixing in 2004. Following the companies’ appeal, the fine was trimmed to 210 million Kč in November 2006, and further cuts could occur, ÚOHS Chairman Martin Pecina has said.
The highest standing cartel fine is 370 million Kč, which gas importer RWE Transgas received in the summer 2006. The company challenged the ruling, and the fine could be reduced later this year.

František Bouc can be reached at fbouc@praguepost.com


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