Commission fines transfomer cartel

The European Commission has fined six companies over €67m for operating a cartel to restrict the sale of power transformers in the European Union.


The European Commission has fined six companies over €67m (£62m) for operating a cartel to restrict the sale of power transformers in the European Union.


ABB, Areva, Alstom, Fuji Electrics, Hitachi, Toshiba and Siemens participated in the cartel, but Siemens was not fined because it revealed the existence of the cartel to the Commission. The fine for ABB was increased by 50 per cent because it had previously taken part in a similar infringement.


Between 1999 and 2003, the Japanese and European producers of power transformers operated an oral market sharing agreement, referred to as a ‘Gentlemen’s Agreement’, where they agreed that the Japanese members would not sell power transformers in Europe and that the European members would not sell power transformers in Japan.


Neelie Kroes, European commissioner for competition, said: ‘Customers and tax payers all over Europe suffered from this cartel for a number of years. The Commission has now put an end to this rip off by the self-appointed Gentlemen. The Commission will not hesitate to increase fines for repeat offenders until they have learned the lesson that cartels do not pay.’


Power transformers are used by electricity suppliers in their electricity grids for the transmission and distribution of electric power to the customer. Through the ‘Gentlemen’s Agreement’, the cartel members therefore not only harmed their direct customers but also European electricity consumers.


At the time of the infringement, the parties’ combined annual sales in the European Economic Area (EEA) were estimated to be worth around €100m (£92m).