BRUSSELS, Belgium (AP) _ European Union regulators on Wednesday
fined United Technologies' Otis unit and four other elevator makers
$1.3 billion for operating cartels for the installation and
maintenance of elevators and escalators in Germany, Belgium,
Luxembourg and the Netherlands.
EU spokesman Jonathan Todd said the fines represented the
``largest ever'' for price fixing in the European Union, and EU
Competition Commissioner Neelie Kroes said the costs of buildings
and hospitals were ``artificially bloated by these cartels.''
``The result of this cartel is that taxpayers, public
authorities and property developers have been ripped off big
time,'' Todd told reporters. ``The companies ensured that by
rigging the bids and sharing the markets that the prices paid for
the installation and the maintenance were way above what they would
have been if there had been a competitive market.''
Fined were Hartford, Conn.-based United Technologies Corp., the
corporate parent of Otis Elevator; German conglomerate ThyssenKrupp
AG; Finland's Kone Corp.; Switzerland's Schindler Holding AG and
subsidiaries of Japan's Mitsubishi Elevator Europe BV.
George David, chairman and chief executive of United
Technologies, said in a statement that company officials are
``disappointed by the conduct revealed through the Commission's and
UTC's own investigations.''
Otis was fined 225 million euros ($295.8 million).
``UTC will not tolerate unethical behaviors of any kind,'' he
said. ``The nine local Otis employees who violated our code of
ethics and regulatory compliance programs were quickly identified
and dismissed and we have reinvigorated our ethics and compliance
programs worldwide.''
Otis and United Technologies disclosed the investigation in 2004
and have cooperated with the European Commission, David said. Otis
and UTC have received full or partial reductions in penalties for
its cooperation and the outcome will have ``no material impact'' on
UTC's financial condition or Otis' competitive position.
United Technologies is waiting for the full text of the decision
and will review it before reporting on its impact on its 2007
earnings guidance. In addition, David said Otis will appeal the
decision to a European court.
ThyssenKrupp was given the largest fine, just over 479 million
euros ($630 million), because the company was labeled a ``repeat
offender'' by EU regulators, Todd said.
Frankfurt, Germany-based ThyssenKrupp said it will review the
fine and then decide whether to appeal.
Schindler 144 million euros ($189.3 million), Kone 142 million
euros ($187 million) and Mitsubishi's Dutch subsidiary was fined
1.8 million euros ($2.37 million).
The European Commission said the cartel had worked to rig bids
for procurement contracts, fix prices and share markets ``between
at least 1995 and 2004.'' It said the companies ``did not contest
the facts'' found by EU regulators, adding none of the accused
requested a hearing to answer the allegations.
But Schindler said the company was ``very surprised at the size
of the fine,'' because it claimed the EU had found ``no evidence of
pan-European collusion among companies in the European elevator
industry.'' It said in a statement that it had not yet decided
whether it would appeal.
Kone also said it will ``examine the commission's decision and
decide on potential action.''
Wednesday's fine tops a 750 million euros ($978 million) fine
imposed last month against 10 companies for running a cartel to fix
prices for heavy equipment used by power utilities, reflecting
stepped-up action by Kroes against price fixing.
She has vowed a crackdown under new antitrust guidelines agreed
to last year that allow EU regulators to come down harder on repeat
offenders like ThyssenKrupp, which faces an automatic 50 percent
increase for repeated price-fixing activities.
The German company had already received a previous cartel fine,
worth 3.2 million euros ($4.2 million) in 1998 for fixing stainless
steel prices. Wednesday's punishment brings ThyssenKrupp close to
the 479 million euros fine paid by U.S. software giant Microsoft
Corp. for breaking European monopoly laws.
EU regulators found evidence from ``numerous documents and
corporate statements'' to prove the companies allocated tenders and
contracts for the sale, installation and maintenance of elevators
``with the aim of freezing market shares and fixing prices,'' the
commission said.
``Projects that were rigged included lifts and escalators for
hospitals, railway stations, shopping centers and commercial
buildings,'' it said, adding such acts were decided upon between
managing and service directors during regular meetings between
cartel members.
``There is evidence that the companies were aware that their
behavior was illegal and they took care to avoid detection,'' the
commission said, adding that the meetings usually took place in
bars and restaurants or in secret locations outside cities to avoid
suspicion.
EU officials said they even used prepaid mobile phone cards to
avoid tracking.
``The national management of these companies know what they were
doing was wrong, but they tried to conceal their action and went
ahead anyway,'' Kroes said in a statement. ``The damage caused by
this cartel will last for many years because it covered not only
the initial supply but also the subsequent maintenance of lifts and
elevators.''
The EU conducted surprise raids against the companies in January
2004 after EU regulators were tipped off.
