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EU Antitrust Regulators Claim Siemens, ABB, Toshiba, & Others Operating As Price-Fixing Power Transformer Cartel

December 14, 2008 by Jeff Shepard

Some of the top electricity generation equipment companies have been accused of running a cartel in Europe’s multi-billion euro power transformer market. The EU antitrust regulators have sent "statements of objections" about an allegedly illegal price-fixing agreement to an unspecified number of manufacturers of power transformers. The parties involved were not named, but at least four companies – Siemens, ABB, Toshiba and Areva – confirmed they had received copies of the charges.

Power transformers are used to control the voltage in electrical circuits and are key components in transmission and distribution networks. They are bought by major power generation and transmission companies – so higher prices may raise costs and contribute to more expensive electricity prices for households and companies.

Suspicions about a possible cartel first came to light in February last year, when antitrust officials raided the offices of groups that were thought to be involved. Those raids came just weeks after Siemens, ABB, Alstom and other engineering companies had been found guilty of operating another cartel in the electricity transmission systems sector.

The groups were fined a total of €751m ($994m) in one of the largest penalties for cartel behavior on record. The commission, however, can be particularly rough on repeat offenders, and fines can cost a company up to 10% of its global yearly revenue for each year it broke antitrust rules, often running into hundreds of millions of euros (dollars).

Siemens said that the latest allegations centered on price arrangements made between 1999 and 2003 in Germany, the Netherlands and Austria, involving its then-power and distribution unit.

Siemens said that it had suspended three employees last year that were suspected of colluding with rivals on the German market. It said this happened before it had bought the Power Transmission and Distribution Group and VA Tech EBG units in 2005. Siemens said the behavior only became known as a result of the antitrust raids – meaning it was not the first to blow the whistle on the cartel. Whistle-blowers usually win a complete amnesty from fines.

Areva also said that the events predated its acquisition, in January 2004, of the Alstom SA transmission and distribution business.

ABB revealed that it is co-operating with various antitrust authorities, including the EU. The company states that it has a zero tolerance policy for employees who broke the law or behaved unethically.