The European Commission's highest fine ever in a consultation case

Gas insulated switchgear (GIS) is heavy electrical equipment used to control energy flows in electricity grids, and is the major component of turnkey power substations. Substations are auxiliary power stations where electrical current is converted from high to low voltage or the reverse. GIS is sold both as items of equipment to be integrated into a turnkey power substation and as an integral part of turnkey power substations. Sales of GIS normally include services such as transport, testing and insulation. Public utility companies and other clients usually organise tenders, trying to find the best GIS for their needs at the lowest price.

The investigation began with surprise inspections in May 2004, prompted by an application for immunity lodged by ABB under the 2002 Leniency Notice (see IP/02/247 and MEMO/02/23).

The cartel

The Commission concluded that the companies had participated in an illegal cartel on the basis of numerous documents and corporate statements provided by the immunity applicant (including two detailed written agreements concluded in 1988), together with documents discovered by the Commission during on-site inspections. The Commission's file includes some 25,000 pages of documents containing evidence spanning the entire period of the cartel.

From at least 1988, when a written agreement between the members was adopted, GIS suppliers informed each other of calls for tender for GIS and co-ordinated their bids in order to secure projects for the cartel members according to their respective cartel quotas. Alternatively, they would agree to respect minimum bidding prices. The companies agreed that the Japanese companies would not sell in Europe, and the European companies would not sell in Japan. European tenders were usually allocated according to the cartel rules and the European projects won by cartel members outside their home countries were counted towards the agreed global cartel quotas. Thus the Japanese companies have also been fined, despite their near total absence from the GIS market in Europe, because their agreement to abstain from bidding contributed directly to the restriction of competition in the EU market.

Members of the cartel met regularly at the management level to discuss strategic issues and at a lower level to divide up projects and to prepare sham bids by the companies not supposed to win the tender, in order to leave an impression of genuine competition.

Members of the cartel took sophisticated measures to keep their communications secret. Code names were used for both companies and individuals. In the last years of the cartel they relied on anonymous e-mail addresses for communication and used encryption for sending messages. According to a message sent by one cartel organiser to another, it was strictly forbidden to access your [e-mail] from your home personal computer or any computer that can be easily linked to you. This will jeopardise the security of the entire [cartel] network. It is absolutely forbidden to send e-mails from your company computer to any AMB [i.e. anonymous mailbox]. This will also put the security of the entire network at risk“.

Fines

These practices are a very serious infringement of the EC Treaty's anti-trust rules. The fines take into account the size of the EEA market for the product, the duration of the cartel and the size of the firms involved. The Commission increased the fines by 50% for Siemens, Alstom and Areva for their leadership role as secretary of the cartel. The fine calculated for ABB was increased by 50% for being a repeat offender. However, in this case ABB benefits from full immunity from a fine that would otherwise have amounted to € 215 156 250.

It is the Commission's practice to address its decisions to all the legal entities responsible for the illegal behaviour. In line with established case law, if the parent company within a group exercises decisive influence over the commercial behaviour of its subsidiaries, then both form part of the same economic undertaking. There is a presumption that a parent company exercises decisive influence over its wholly owned subsidiary. Legal responsibility for the infringement and the related fine can be imputed to both the subsidiary that actually participated in the cartel and the parent company or companies that exercised decisive influence over the commercial behaviour of that subsidiary at the relevant time.“

Fines imposed and reductions granted by the Commission:

(*) = fine imposed on the undertaking – some of the concerned entities are held jointly and severally liable for all or part of the fine imposed on other entities.

Except for the last four months of the infringement, the undertaking Areva was not present on the GIS market. For the period prior to 8 January 2004, Areva's liability corresponds to the infringement committed by one of its subsidiaries since 7 December 1992 (Areva T&D SA), during which time it belonged to the Alstom group.

(***) A joint venture of Fuji, Hitachi and Meidensha, Japan.

(****) Fine for the infringement committed by VA Tech, acquired by Siemens after the infringement

Action for damages

Any person or firm affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages, submitting elements of the published decision as evidence that the behaviour took place and was illegal. Even though the Commission has fined the companies concerned, damages may be awarded without these being reduced on account of the Commission fine. A Green Paper on private enforcement has been published (see IP/05/1634 and MEMO/05/489).