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Schindler hit with massive fine

Schindler's escalators and lifts are a common sight (Schindler)

The European Commission (EC) has imposed its largest-ever cartel fine for fixing lift prices against five firms including Switzerland's Schindler.

This content was published on February 21, 2007 - 15:23

The Lucerne-based elevator and escalator-maker has announced it will review the decision before it makes its appeal, but remains convinced the €144 million (SFr234 million) penalty it faces is not justified.

The accused companies fixed prices in Belgium, Germany, Luxembourg and the Netherlands from 1995 to 2004 according to the commission. It added that the firms also rigged bids and allocated projects to each other.

Besides Schindler, the EC fined Germany's ThyssenKrupp €480 million – the highest amount ever for a single company. Also sanctioned were Otis, owned by United Technologies of the United States, €225 million; Finland's Kone €142 million; and Mitsubishi Electric Corp of Japan €1.8 million.

A commission's competition spokesman said the fines reflected the scale of the market, the size of the companies involved and the long-term effects.

ThyssenKrupp fine was increased by 50 per cent because it was a repeat offender according to the EC.

Bloated

"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.

"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 added.

Companies that had suffered at the hands of the cartel were invited by the EC to seek damages in court as well as cancel and renegotiate service contracts.

Switzerland's Schindler has reacted to the sanction imposed by Brussels, saying it was surprised by the size of the fine since the commission had found no evidence of pan-European collusion among companies in the European elevator industry.

The firm's spokesman confirmed that Schindler would appeal the decision.

The company said it had been collaborating with the EC since the cartel investigation was launched in January 2004. At the time, it announced it was convinced that the claims of collusion were unfounded, but admitted later some minor indiscretions.

The group has not made any provisions for a fine in its 2006 accounting. The company figures are to be announced next week.

swissinfo with agencies

Key facts

The Schindler Group is the world number one escalator manufacturer and the second largest elevator supplier.
The group is the leading European company in both sectors.
In 2005, Schindler, which employs 40,000 people, had a turnover of SFr8.8 billion and earned SFr401 million in profit – its best-ever result.

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In brief

The sanction is the highest imposed by the EC for a cartel, surpassing a €790.5 million fine imposed on eight companies for fixing vitamin prices in 2001.

Switzerland's Roche paid the heaviest penalty at the time - €462 million.

On January 24, the EC fined Siemens, Areva and eight other companies that make electricity network gear €750 million euros. Swiss firm ABB should have been sanctioned as well (€215 million), but was let off for admitting its participation in a cartel.

The commission fined seven cartels a total of €1.84 billion last year, an annual record. Software specialist Microsoft was given the biggest individual fine ever - €497 million - in 2004 for abusing a dominant market position

Otis, Schindler, ThyssenKrupp and Kone control about 75 percent of the global elevator and escalator market, worth €30 billion in annual sales.

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