1999/60/EC: Commission Decision of 21 October 1998 relating to a proceeding under Article 85 of the EC Treaty (Case No IV/35.691/E-4: - Pre-Insulated Pipe Cartel) (Notified under number C(1998) 3117) (Only the Danish, German, English, Italian and Finnish texts are authentic)
Date: 1998-10-21
Institutions: European Commission
Subjects: heating, infringement of EU law, market-sharing agreement, restriction on competition, restrictive trade practice, tube

30.1.1999

EN

Official  Journal  of  the  European  Communities

L  24/1

II

(Acts  whose  publication  is  not  obligatory)

COMMISSION

COMMISSION  DECISION

of  21  October  1998

relating  to  a  proceeding  under  Article  85  of  the  EC  Treaty

(Case  No  IV/35.691/E-4:  —  Pre-Insulated  Pipe  Cartel)

(Notified  under  number  C(1998)  3117)

(Only  the  Danish,  German,  English,  Italian  and  Finnish  texts  are  authentic)

(1999/60/EC)

CONTENTS  OF  THE  DECISION

I.  THE  FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

A.  Summary  of  the  infringement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B.  The  pre-insulated  pipe  industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.  The  product

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.  The  market  for  district  heating  systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.  The  producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(a)  ABB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) Løgstør . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)  Tarco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) Dansk  Rørindustri

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e)  Pan-Isovit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(f)  Henss/Isoplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(g)  KWH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(h) Local  suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(i)  Powerpipe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.  Trade  association:  EuHP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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C.  Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.  The  Powerpipe  complaint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.  The  investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.  Article  11  requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.  The  undertakings’  reactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.  The  Statement  of  Objections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.  Replies  to  the  Statement  of  Objections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

D.  Details  of  the  infringement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.  The  market  background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.  The  Danish  cartel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(a)  The  Quota  scheme  and  price  fixing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) The  operation  of  the  cartel

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.  Extension  to  other  markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.  The  Europe-wide  cartel  from  1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(a)  Initial  contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) Sharing  of  the  European  Market:  basic  agreement  on  quotas . . . . . . . . . . . . . . . . . . . .

(c)  The  European  cartel  structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(i)  The  directors’  club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(ii)  Contact  groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) Implementation  in  national  markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(i)  Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(ii)  Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(iii)  Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(iv)  Austria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(v)  Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(vi)  Sweden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(vii)  Finland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(viii) United  Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e)  Concerted  actions  to  eliminate  Powerpipe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(i)  ABB’s  strategic  plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(ii)  Hiring  of  key  Powerpipe  employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(iii)  Powerpipe  is  warned  off  the  German  market . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(iv)  The  Leipzig-Lippendorf  contract:  boycott  of  Powerpipe . . . . . . . . . . . . . . . . . . . .
(v)  Implementation  of  the  boycott . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f)  Continuation  of  the  cartel  after  the  investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.  The  role  of  EuHP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.  Assessment  of  the  role  of  each  participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.  Effects  upon  overall  price  levels

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.  Compensation  by  ABB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

II.  LEGAL  ASSESSMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

A.  Article  85 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.  Article  85(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.  Agreements  and  concerted  practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.  The  nature  of  the  infringement  in  this  case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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4.  Restriction  of  competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.  Effect  upon  trade  between  Member  States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.  Duration  of  the  infringement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.  The  addresses  of  the  present  proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(a)  General  considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) ABB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)  Henss/Isoplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) KWH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B.  Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.  Article  3  of  Regulation  No  17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.  Article  15(2)  of  Regulation  No  17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(a)  General  considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) The  individual  fines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(i)  ABB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(ii)  Løgstør . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(iii)  Tarco,  Starpipe,  Henss/Isoplus,  Pan-Isovit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(iv)  Brugg,  KWH,  Ke-Kelit  and  Sigma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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THE  COMMISSION  OF  THE  EUROPEAN  COMMUNITIES,

Having  consulted  the  Advisory  Committee  on  Restrictive
Practices  and  Dominant  Positions,

Having  regard  to  the  Treaty  establishing  the  European
Community,

Whereas:

Having  regard  to  Council  Regulation  No  17  of  6
February 1962, First Regulation implementing Articles 85
and  86  of  the  Treaty (1),  as  last  amended  by  the  Act  of
Accession  of  Austria,  Finland  and  Sweden,  and  in
particular  Articles  3  and  15  thereof,

Having regard to the Commission’s decision of 19 March
1997  to  open  a  proceeding  pursuant  to  Articles  3  and
15(2)  of  Regulation  No  17,

Having given the undertakings concerned the opportunity
to  make  known  their  views  on  the  objections  raised  by
the  Commission  pursuant  to  Article  19(1)  of  Regulation
No 17 and Commission Regulation 99/63/EEC of 25 July
1963  on  the  hearings  provided  for  in  Article  19(1)  and
(2)  of  Regulation  No  17 (2),

(1)  OJ  13,  21.2.1962,  p.  204/62.
(2)  OJ  127,  20.8.1963,  p.  2268/63.

I.  THE  FACTS

A.  Summary  of  the  infringement

(1) 

This  Decision  imposing  fines  for  an  infringement
of  Article  85 
is  addressed  to  the  following
undertakings:

—  ABB  Asea  Brown  Boveri  Ltd,

—  Brugg  Rohrsysteme  GmbH,

—  Dansk  Rørindustri  A/S  (Starpipe),

—  Henss/Isoplus  Group,

—  Ke-Kelit  Kunststoffwerk  GmbH,

—  Oy  KWH  Tech  AB,

—  Løgstør  Rør  A/S,

—  Pan-Isovit  GmbH,

—  Sigma  Tecnologie  di  rivestimento  srl,

—  Tarco  Energi  A/S;

L  24/4

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Official  Journal  of  the  European  Communities

30.1.1999

(2) 

The  infringement  consists  of  participation  in  a
complex  of  anti-competitive  arrangements  which
began with a national cartel in Denmark in about
November  1990,  was  extended  to  other  Member
States  (Italy,  Germany)  during  1991  and  in  1994
was organized so as to cover effectively the whole
of 
the  producers  of
pre-insulated  pipes  for  district  heating  who,  in
concert  and  complicity,  and  contrary  to  Article
85(1)

the  Community,  by 

—  divided  national  markets  and  eventually  the
whole  European  market  amongst  themselves
on  the  basis  of  quotas,

—  allocated  national  markets 

to  particular
producers  and  arranged  the  withdrawal  of
others,

—  Ke-Kelit  from  about  January  1995  up  to  the

same  time,

—  Sigma  from  about  April  1995  up  to  the  same

time.

(The  participation  of  Brugg,  Ke-Kelit  and  Sigma
was  confined  to  arrangements  on  their  respective
national  markets);

B.  The  Pre-insulated  Pipe  Industry

1.  The  product

—  agreed  prices 

for 

the  product  and 

for

(4) 

individual projects,

Pre-insulated  pipes,  used  principally  in  district
heating  systems,  consist  essentially  of  steel  pipes
enclosed  within  pipes,  with  a  layer  of  foam
insulation  between.

—  allocated 

individual  projects  to  designated
producers  and  manipulated 
the  bidding
procedure for those projects in order to ensure
that  the  assigned  producer  was  awarded  the
contract  in  question,

the  only 

—  in order to protect the cartel from competition
substantial  non-member,
from 
Powerpipe  AB,  took  concerted  measures  to
hinder  its  commercial  activity,  damage  its
business  or  drive 
it  out  of  the  market
altogether,

—  used  quality  norms  to  keep  up  prices  and
delay  the  introduction  of  new  cost-saving
technology;

District  heating  systems  are  commonly  employed
in  the  more  northerly  West  European  countries
and  in  the  former  Eastern  Bloc  countries,  where
the  climate  is  severe.  Water  is  heated  in  a  central
location  and  transported  via  underground  pipes
through  a  municipality  or  district  to  provide  heat
commercial
to 
buildings.

residential 

individual 

and 

have 

concerns 

environmental 

As 
grown,
particularly in connection with the efficient use of
energy,  the  potential  for  district  heating  systems
has  increasingly  been  recognised,  for  example  in
the  combination  of  powerplants  with  district
heating  systems  (‘co-generation’):  surplus  heat
generated by power stations or by industry is used
for  district  heating.

(3) 

The undertakings participated in the infringement
for  the  following  duration:

—  ABB,  Løgstør,  Starpipe,  Tarco:  from  about
November/December  1990  to  at  least  March
or  April  1996,

Given  that  the  hot  water  (or  steam)  has  to  be
transported  underground  over  long  distances,  the
temperature  is  very  high  (up  to  140  °C)  and  to
ensure  efficient  and  safe  distribution  the  pipes
have  to  be  pre-insulated.

—  Pan-Isovit  from  about  November/December

1990  up  to  the  same  time,

(5) 

Pre-insulated 
components:

pipes 

have 

three  major

—  Henss/Isoplus from about October 1991 up to

the  same  time,

—  KWH  from  at  least  March  1995  up  to  the

same  time,

—  a  steel  (or  sometimes  copper)  ‘carrier  pipe’
which  is  the  core  of  the  product  and  carries
the  hot  water,

—  a  concentrically  arranged  protective  outer

‘casing  pipe’  made  of  plastic,

—  Brugg  from  about  August  1994  up  to  the

—  a  rigid  foam  insulation  between  the  two

same  time,

pipes.

30.1.1999

EN

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L  24/5

District-heating  pipes  are  usually  produced  in
rigid lengths of 6, 12 or 16 metres. Standard pipe
diameters  run  from  250  to  800  mm  but  larger
sizes  can  be  produced.  The  manufacturers  supply
a  complete  range  of  pipes,  bends  and  special
fittings,  including  monitoring  systems  to  detect
leakage.  Some  of  the  producers  involved  in  these
proceedings also manufacture flexible pipes which
are  mainly  used 
individual
households  to  the  main  pipe  system.  Flexible
pipes  are  not  the  subject  of  this  procedure.

for  connecting 

and 

Products  are  standardised  and  have  to  comply
with  quality  norms  fixed  with  the  cooperation  of
manufacturers, 
standards
customers 
authorities,  the  principal  norms  being  EN  253,
EN  258,  EN  488  and  EN  489.  The  traditional
production  method  involves  the  lengths  of  steel
carrier pipe being gripped by spacers and covered
with  the  plastic  outer  pipe,  with  foam  then  being
sprayed  in  between  the  two  concentric  pipes.
Innovation is an important aspect of the industry.
Safety,  efficiency  and  environmental  concerns
is  the
predominate.  One  recent  development 
introduction  in  1988  of  non-CFC  material  for
insulating  foam.  The  development  at  about  the
same  time  of  a  process  for  the  continuous
production of pipes has made possible substantial
cost  savings.  In  this  technique,  pipes  are  moved
forward  throughout  the  production  stage  without
interruption,  while  under  the  traditional  route
pipes  are  taken  one-by-one  to  an  injection  site
and  filled  with  foam.  The  approval  of  this
production  method  and  its  introduction  on  a
fully-commercial scale was, however, opposed for
some  years  by  manufacturers  who  used  the
traditional  route.

2.  The  market  for  district  heating  systems

pre-insulated 

In  the  first  type  of  contract,  the  municipality  or
other  public/local  authority  engages  a  civil
engineering  contractor  for  the  particular  project
following  the  appropriate  tendering  procedure
and  the  successful  contractor  then  calls  for  offers
for 
pipe
pipes 
manufacturers.  (Contracts  for  the  supply  of  pipes
worth  over  ECU  400 000  are  also  subject  to
Community  Public  Procurement  rules (3)).  The
installation  of  the  pipes  supplied  by  the  pipe
manufacturer  is  carried  out  by  the  contractor.
This  type  of  contract  accounts  for  some  60 %  of
the  total  European  market.

from 

the 

In the case of annual contracts (also known as the
‘retail’ market) the municipality or other end-user
agrees  to  purchase  pipes  and  fittings  up  to  a
designated  value  each  year  directly  from  a  pipe
manufacturer,  usually  for  the  partial  replacement
or  maintenance  of  an  existing  district  heating
system.  (In  some  cases,  the  contractual  period
may  be  three  or  even  five  years.)

(7) 

The  Community  market  for  district  heating  pipes
in  1995  was  worth  some  ECU  400  million,
involving  an  increase  over  the  previous  year  of
15 %. The product is marketed in virtually all the
Member  States.  There  is  a  substantial  trade
between  Member  States.  ABB  has  production
facilities  in  several  Member  States.  Henss/Isoplus
produces  in  Austria  and  Germany.  Denmark,  the
main  centre  of  production,  accounts  for  around
50 % of Community pipe manufacturing capacity
and supplies the product to all the other Member
States  where  district  heating  is  used.  Germany  is
the  largest  Community  national  market  (at  some
ECU  160  million  accounting  for  40 %  of  total
Community  consumption).  At  least  two-thirds  of
the  district  heating  pipes  laid  in  Germany  are
supplied  from  other  Member  States,  primarily
Denmark,  but  also  Austria,  Finland  and  Sweden.

(6) 

In Western Europe the final customers for district
heating  pipes  are  primarily  municipally-owned
energy  or 
supply
companies. Contracts may relate either to specific
projects  or  to  annual  supply  agreements.

specialist  district  heating 

(3)  Articles 2(2)(a)(iii) and 14 of Council Directive 93/38/EEC of
14  June  1993  coordinating  the  procurement  procedures  of
entities  operating 
in  the  water,  energy,  transport  and
telecommunications  sectors  (OJ  L  199,  9.8.1993,  p.  84);
Directive  as  last  amended  by  European  Parliament  and
Council  Directive  98/4/EC  (OJ  L  101,  1.4.1998,  p.  1).

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is  the  Community’s  second 

Denmark 
largest
national market, with 20 % of total consumption.
The  Community-based  producers  together  supply
a  European  export  market  (Eastern  Europe,
Nordic and Baltic States) worth another ECU 100
million,  and  further  rapidly  expanding  markets
are  Russia  and  China.

For most of the period with which this Decision is
concerned,  the  four  business  segments  whose
Chairmen  sat  as  Executive  Vice-Presidents  on  the
Executive  Committee  were:  Power  Generation;
Power  Transmission  and  Distribution;  Industrial
and  Building  Systems,  and  Transportation (4).

(8) 

(9) 

3.  The  producers

During  the  material  period,  eight  producers
supplied 
the  West  European  market  with
preinsulated  pipes  on  an  appreciable  scale:  ABB,
Løgstør,  Dansk  Rør 
(‘Starpipe’),  Tarco,
Pan-Isovit,  Henss/Isoplus,  KWH  and  Powerpipe.
Community 
particularly
concentrated  in  Denmark  where  four  of  the
producers  are  located,  three  of  them  in  the  town
of  Fredericia.

production 

is 

(a)  ABB

The largest producer of district heating pipes (and
the  only  large  multinational  group  active  in  the
sector)  is  the  Swedish-Swiss  industrial  combine
ABB  Asea  Brown  Boveri  Ltd,  which  has  its
headquarters in Zürich. ABB was formed in 1988
as a result of a merger of the interests of Asea AB
of  Stockholm,  Sweden  and  BBC  Brown  Boveri
Ltd,  Baden,  Switzerland.  It  is  owned  in  equal
shares  by  the  two  parents,  which  now  function
purely  as  holding  companies  and  are  known  as
ABB  AB  and  ABB  AG  respectively.  ABB  Asea
Brown  Boveri  Ltd  stands  at  the  head  of  a
corporate  group  of  over  1 000  companies  with  a
consolidated  turnover  in  1997  of  some  USD  31,3
billion  (ECU  27,6  billion).  More  than  half  of  its
operations  are  located  in  Europe.

ABB’s group organisation is based on overlapping
matrices, 
other
one 
segment-oriented.

regional 

and 

the 

‘Business  Areas’ 

Each  business  segment  of  ABB  is  further  divided
(BAs)  which  have
into 
responsibility 
industrial
activity  on  a  world-wide  basis.  In  all,  ABB  now
has  some  37  business  areas,  one  of  which  is
District Heating.

their  particular 

for 

ABB  is  at  the  same  time  organised  into  three
geographic  regions  (Europe,  the  Americas  and
Asia-Pacific),  the  structure  cutting  across  business
segments  and  product  boundaries  and  being
aimed  at  dealing  with  overall  strategic  issues  and
ensuring  coordination  between  segments  and
countries.

(10) 

‘BA-VDH’)  was  part  of 

After  a  reorganisation  of  ABB’s  structure  in
August  1993,  the  District  Heating  Business  Area
(designated 
the
Transportation  Segment  and  reported  directly  to
the  Chairman  of  that  segment  (who  as  an
Executive  Vice-President  with  seat  on  the  Group
Executive  Committee  was  one  of  ABB’s  most
senior  corporate  officers).

located 

(ABB 
(formerly  Ecopipe),  Germany 

ABB’s  District  Heating  Business  Area  (BA-VDH)
includes  manufacturing  companies 
in
IC  Møller  A/S),
Fredericia,  Denmark 
Finland 
(ABB
Isolrohr  GmbH),  Sweden  and  Poland.  The
sales/distribution of preinsulated pipes is managed
in  the  Community  by  these  companies,  by  other
subsidiaries,  or  by  agents.  ABB  has
ABB 
the  overall  West
approximately  40 %  of 

The  governing  body  of  ABB  is  the  Board  of
Directors.  Under  this,  its  top  executive  organ  is
the  Group  Executive  Committee  consisting  (as  at
August  1993)  of  the  Chief  Executive  Officer  and
seven  Executive  Vice-Presidents  representing  the
three  geographical  regions  of  ABB’s  operations
and  the  four  main  business  or  product  segments.

in  a 

(4)  With  effect  from  1  January  1996  ABB’s  worldwide  activities
in  rail  transport  were  merged  with  those  of  Daimler-Benz
Transportation 
joint  venture  company  named
ADTRANZ:  see  Commission  Decision  97/25/EC  (Case  No
IV/M.580  —  ABB/Daimler  Benz);  (OJ  L  11,  14.1.997,  p.  1).
The  then  Chairman  of  ABB’s  Transportation  Segment  was
appointed Chairman and Chief Executive Officer of the new
company. The District Heating activity remained in the main
ABB  group  structure  and 
its  Power
Generation  segment.

is  now  part  of 

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European  market  in  district  heating.  It  is  the
market  leader  and  largest  supplier  in  most  of  the
countries  in  which  it  operates.  Stating  off  in
Denmark  as  ABB  IC  Møller,  ABB  has  expanded
in  this  market,  largely  through  the  acquisition  of
smaller  producers.  All  of  these  companies  were
integrated  into  ABB’s  operations.  ABB’s  Annual
Report values the ‘orders received’ by the District
Heating  Business  Area  in  1995  at  USD  283
million  (ECU  216  million).

Although IC Møller is the principal ABB company
operating  in  the  district  heating  sector,  and  its
Chairman  is  head  of  the  Business  Area  District
Heating,  in  terms  of  corporate  structure  it  does
not  act  as  a  holding  company  for  the  other
companies  in  the  District  Heating  business  area:
Isolrohr  GmbH  is,  for  instance,  a  wholly-owned
subsidiary  of  ABB’s  main  German  company.

retention  of  the  old  standards  regarding  jacket
thickness  and  foam  density.

Løgstør acquired the German producer Pan-Isovit
(also  an  addressee  of  this  Decision)  with  effect
from  1  January  1997.

(c)  Tarco

(12) 

Tarco  Energi  A/S  has  its  manufacturing  facilities
in  Fredericia,  Denmark  and  sells  principally  in
Denmark  and  Germany.  It  also  operates 
in
Scandinavia, Italy, the Netherlands and some East
European  markets.  Its  West  European  market
share  is  about  14 %.  Tarco  Energi  A/S  is  part  of
an industrial group Tarco A/S of Nyborg which is
owned  by  a  consortium  of  more  than  80  Danish
municipalities:  many  of  these  are  customers  for
district  heating.

(d) Dansk  Rørindustri

(b) Løgstør

(13)  Dansk  Rørindustri  A/S,  known  as  ‘Starpipe’  is
also  based  in  Fredericia,  Denmark.  It  has  a
market share of about 6 % in Western Europe. Its
main  markets 
other
Scandinavian  countries,  Germany  and  the  East
European  countries.

are  Denmark 

and 

(11) 

Løgstør  Rør  A/S,  the  second  largest  manufacturer
of  district  heating  pipes  in  the  Community,  is  a
family-owned  company  and  began  production  in
1960  in  the  town  of  that  name  in  Denmark.
Løgstør  underwent  a  corporate  reorganisation  in
1988,  its  activities  being  transferred  to  a  new
company.  Its  market  share  in  Western  Europe  is
about  20 %.  In  1993  it  acquired  a  small  plant  in
Finland, later known as LR Putki, which closed at
the end of 1996 after making substantial losses. It
also has a joint venture company with production
facilities  in  Italy  making  mainly  fittings.  Løgstør
was  the  first  producer  to  introduce  a  continuous
production process: it claims to have reduced cost
price  by  some  15  to  20 %  compared  with
traditional  manufacturing  techniques  using  the
batch  process.  A  thinner  outer  jacket  and  less
insulating  foam  is  required  so  substantial  savings
are  made  on  material.  According  to  Løgstør,  it
had  considerable  difficulty  in  penetrating  markets
with  the  new  product  since  its  competitors  who
produced  in  the  traditional  manner  challenged  its
compliance  with  norms:  they  insisted  on  the

(e)  Pan-Isovit

(14) 

At  the  material  time,  Pan-Isovit  GmbH,  then
based in Speyer, Germany, together with its Swiss
sister  company  Pan-Isovit,  Regensdorf,  was
owned  100 %  by  Pan-Isovit  Holding  AG,  itself  a
wholly  owned  subsidiary  of  a  Swiss  industrial
group  WMH  —  Walter  Meier  Holding  AG.  The
main plant for district heating pipe was in Speyer:
the  Swiss  factory  made  only  fittings.  Pan-Isovit,
which  had  around  12 %  of  the  West  European
market,  was  acquired  by  Løgstør  after  the
investigations  in  this  case.

(f)  Henss/Isoplus

(15) 

Isoplus  Fernwärmetechnik  Gesellschaft  mbH  has
a  manufacturing  plant  in  Hohenberg  in  Austria
and  (via  a  100 %  subsidiary)  another  plant  at
Sondershausen  in  Germany.  The  latter  Member
State  is  its  principal  market.  Isoplus  also  has

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for  Bavaria, 

manufacturing facilities in Hungary and the Czech
Republic. Isoplus was set up in 1989 and in 1990
acquired  ABB  Isolrohr’s  factory  in  Austria.  In  the
period  covered  by  this  Decision,  Isoplus’s  sales  in
Germany  were  made  exclusively  through  two
companies:  Dipl-Kfm  Walter  Henss  GmbH  of
and  Dipl-Kfm  Walter  Henss
Rosenheim 
Berlin (5).  Henss
Rohrleitungsbau  GmbH 
Rosenheim  also  acted  as  the  sales  agent  of  ABB
commercial
IC  Møller 
relationship with ABB being explained by the fact
that  the  Henss  family  had  previously  owned
Isolrohr  and  had  sold  it  to  IC  Møller  in  1987.
The  agency  agreement  with  ABB  gave  rise  to
recurring  differences  and  was  the  subject  of
arbitration  proceedings.  The  Henss  and  Isoplus
companies  together  formed  a  de  facto  group
although  according  to  public  company  registers
there  was  no  link  of  ownership  between  them.
Henss/Isoplus  has  around  9 %  of  the  West
European  market.

this 

Brugg  (Germany/Switzerland),  Sigma  (Italy)  and
Ke-Kelit 
(Austria).  Brugg  now  manufactures
flexible  pipes  only.  For  district  heating  projects
for which it competes with the other producers, it
buys  in  rigid  pipes  from  Starpipe,  having  closed
its  own  production  facilities  for  this  type  of  pipe
at  the  end  of  1994.  Ke-Kelit  is  an  independent
company  which  supplies,  in  its  own  right,  pipes
which  it  buys  from  Løgstør.

Sigma, formerly owned by the Italian State-owned
steel  group  Ilva,  was  acquired  by  the  Riva  group
on  denationalisation  in  1995.  Despite  its  being
owned  by  a  major  group,  it  operates  at  a  local
level only.

(g)  KHW

(i)  Powerpipe

(16)  Oy  KWH  Pipe  AB  of  Vaasa, 

the  only
Finnish-owned  producer,  is  principally  concerned
with  the  manufacture  and  marketing  of  plastic
(HdPE,  PVC)  pipes  for  civil  engineering  and
municipal applications. KWH Tech is the division
for  manufacturing
alia, 
responsible, 
inter 
(the
for  district  heating 
pre-insulated  pipes 
‘Thermopipe’  business;  its  other  business  unit  is
the  ‘Machine  Unit’  which  produces  and  sells
machinery  equipment  and  technology  for  pipes).
KWH, whose district heating activities in Western
the  Scandinavian
Europe  are 
countries,  has  some  2 %  of  the  total  Western
European market. Since 1992 it has specialised in
setting  up  joint-venture  companies  for  promoting
district  heating  in  non-Community  markets  to
which  it  transferred  technology  and  know-how.

confined 

to 

(h) Local suppliers

(17) 

There are a number of suppliers of district heating
which  primarily  serve  their  own  national  market:

(5)  Henss  Rosenheim 

changed 

Isoplus
Fernwärmetechnik Vertriebsgesellschaft mbH as of 1 January
1997,  and  on  6  August  1997  absorbed  Henss  Berlin  which
no  longer  exists  as  a  separate  legal  entity.

name 

its 

to 

(18) 

Powerpipe  AB  was  formed  in  1986  by  former
employees  of  the  Swedish  producer  Ecopipe  after
that  company’s  acquisition  by 
the  Finnish
company  Uponor.  Following  a  composition  with
in  1988  and  financial  restructuring
creditors 
guaranteed  by  a  private  investment  company,
Birka  Business  Development  AB,  Powerpipe  was
taken  over  by  Birka  and  became  a  wholly-owned
subsidiary  of  that  company.  In  1988  Powerpipe
was  one  of  the  first  producers  to  develop  a
CFC-free  insulation  foam  for  pre-insulated  pipes
(using  CO2-based  technology).  Powerpipe’s  share
of 
for
the  overall  West  European  market 
pre-insulated  pipes  in  1994  was  about  2 %,  its
activities  being  principally 
in  Sweden  and
Finland.

From about 1993, Powerpipe pursued a policy of
expansion into other European markets, including
Germany.  One  reason  stated  for  this  change  in
strategy  was  what  Powerpipe  described  as  the
inexplicably  low  price  level  obtaining  in  Sweden
(where  ABB  was  the  market  leader).  Powerpipe
believed 
larger  producers  were
deliberately  depressing  the  prices  in  Sweden  in
order  to  damage  its  business.

that 

the 

to 

established
Powerpipe, 
According 
producers  had  from  the  very  beginning  sought  to
eliminate  or  neutralise  it  as  a  competitive  threat.
From  1991  onwards  the  other  producers  made
persistent approaches to Birka and its owner with

the 

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a  view 
negotiations  were  never  successful.

to  acquiring  Powerpipe,  but 

the

In  January  1997  Birka  sold  the  business  of
Powerpipe  to  a  new  company  owned  by  a
Danish-French investment group which specialises
in  small  and  medium-size  industrial  companies.
The  corporate  entity  Powerpipe  AB  changed  its
name  and  remains  in  the  Birka  group.  The  new
company  has  continued  the  business  under  the
name of Powerpipe AB. It has no connection with
Birka.

EuHP  as  of  31  December  1997.  Other  producers
have 
their
also 
membership.  The  precise  status  of  EuHP  at  the
time  of  the  Decision  is  not  known.

terminated 

apparently 

C.  Procedure

1.  The  Powerpipe  complaint

4.  Trade  association:  EuHP

(20) 

By  letter  dated  18  January  1995  Powerpipe  made
a  complaint  to  the  Commission,  the  essential
content  of  which  was  as  follows:

(19) 

In  1991,  at  the 
initiative  of  ABB,  a  trade
association  was  set  up  and  named  the  European
District  Heating  Pipe  manufacturers  Association
(‘EuHP’  for  short).  According  to  EuHP’s  statutes,
its  primary  objective  was  to  ensure  the  quality  of
the product itself as well as of installation, service
and  training.  EuHP  has  laid  down  its  own
technical  standards  and  also  required  compliance
with  the  European  norms  (EN)  for  the  product.

The  other  stated  objects  of  EuHP  included:

—  promotion 

of 

research 

and 

technical

development,

—  promotion  of  the  use  of  district  heating,

—  participation 

in 

environmental 

and

standardisation  work,

—  providing  technical  assistance  and  advice.

controlled 

The  moving  force  behind  EuHP  was  ABB,  which
effectively 
the  organisation  and
provided  its  staff.  Originally  the  only  members
were  the  individual  ABB  companies  in  the  sector
and  the  three  Danish  producers.  KWH  joined
EuHP  somewhat  later  (in  April  1992)  and  the
following  year  Pan-Isovit  also  became  a  member.
Henss/Isoplus  made  determined  efforts  (including
threatening  legal  action  on  the  basis  that  EuHP
was  a  cartel  from  which  it  was  excluded)  to  be
admitted  to  EuHP  from  1993  onwards  and  was
finally  allowed  to  join  in  mid-1995.  Powerpipe
has  never  been  a  member.

the  course  of 

During 
this  procedure,  ABB
announced  that  it  had  decided  to  withdraw  from
EuHP.  Løgstør  terminated  its  membership  of

—  that 

the  other  manufacturers/suppliers  of
pre-insulated  pipes, 
in  particular  ABB,
Løgstør,  Tarco,  Starpipe,  Pan-Isovit  and
Isoplus  had 
formed  an  unlawful  and
clandestine  cartel  by  which  they  had  divided
the European market amongst the participants
on  the  basis  of  a  quota  system,  agreed  prices
for  the  product  and  for  individual  projects
and  cooperated  in  manipulating  the  bidding
procedure  for  individual  projects  so  as  to
ensure  that  the  contract  in  question  was
in
to 
awarded 
advance  by  the  cartel,

the  producer  designated 

—  that  in  order  to  protect  the  cartel  from
competition  and  maintain  its  control  of  the
market 
taken
the  above  producers  had 
concerted  steps  to  damage  the  business  of
Powerpipe  and/or  confine  its  activities  to  the
Swedish market and/or drive it out of business
altogether  by  (inter  alia)  systematically  luring
away  key  management  personnel 
and
unlawfully 
its  contractual
interfering  with 
relations  with  customers  and  suppliers.

(21) 

The  owner  of  Birka 
(Powerpipe’s  parent
company)  had  on  two  separate  occasions  in  early
1994  brought  the  matter  to  the  attention  of  ABB
by  writing  personally  to  the  Chairman  of  the
Transportation  Segment  (see  (10))  in  Zürich  and
proposing  a  meeting.  The 
latter  rejected  as
completely  unfounded  the  allegations  of  unfair
and  anticompetitive  behaviour,  and 
indeed
declined  to  meet  Powerpipe’s  owner  on  the
grounds that his letters could be construed by the
competition  authorities  as  an  attempt  to  induce
into  unlawful  arrangements.
ABB 
informed  a
Subsequently,  Powerpipe’s  owner 
member  of  ABB’s  Board  of  Directors  of  the
activities  of  the  cartel  and  the  effects  it  was
having  on  Powerpipe’s  business,  and  requested
the Board of ABB to act immediately to cease the

to  enter 

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in 

any 

1994, 

infringement. 
after
In  December 
Powerpipe’s  legal  advisers  had  once  more  raised
the  matter  with  ABB,  ABB’s  Head  Office  in
Zürich  denied  emphatically  that  the  Group  was
concerted  practices  or
‘engaged 
arrangements  which  would  distort,  restrain  or
otherwise affect competition in the district heating
and  pipe  systems  business’.  It  asserted  that
Powerpipe’s  allegations  as  to  illegal  behaviour
were  entirely  unfounded  and  warned  that  ‘ABB
improper  action  or
will  fiercely  defend  any 
interference  with 
seek
business 
its 
indemnification  for  any  damages  it  may  suffer’.

and 

Following  this  reaction  from  ABB,  Powerpipe
lodged  its  complaint  with  the  Commission.

2.  The  investigations

(22)  On  28  June  1995,  acting  under  a  Community
Decision  of  12  June  1995,  officials  of  the
Commission  and  representatives  of  the  national
competition  authorities  of  the  Member  States
concerned 
and
out 
unannounced 
following
investigations  at 
undertakings  or  associations:

simultaneous 
the 

carried 

—  ABB  IC  Møller  A/S,  Fredericia,  Denmark,

—  Dansk 

Rørindustrie 

A/S, 

Fredericia,

Denmark,

—  Løgstør  Rør  A/S,  Løgstør,  Denmark,

—  Tarco  Energie  A/S,  Fredericia,  Denmark,

—  European District Heating Pipe Manufacturers

Association, Fredericia, Denmark,

—  Dipl-Kfm  Walter  Henss  GmbH,  Rosenheim,

Germany,

—  Dipl-Kfm  Walter  Henss  Fernwärmerohr-

leitungsbau  GmbH,  Berlin,  Germany,

—  Pan-Isovit  GmbH,  Speyer,  Germany,

—  Isoplus  Fernwärmetechnik  GmbH,  Hohen-

berg, Austria,

—  Oy  KWH  Pipe  AB,  Vaasa,  Finland.

memoranda,  working  documents,  tables  and  lists
all of which tended to confirm the facts alleged by
Powerpipe.

3.  Article  11  requests

(23)  On  13  March  1996  the  Commission  addressed
requests  for  information  under  Article  11  of
Regulation  No  17  to  ABB  IC  Møller,  Løgstør,
Tarco,  Starpipe,  Pan-Isovit  and  four  individual
companies  of 
the  Henss/Isoplus  group.  The
requests  required  the  undertakings  in  question  to
provide  additional 
information  and  detailed
explanations  regarding  the  documents  found  at
their  premises  during  the  investigations  made  the
previous  year  under  Article  14(3).

4.  The  undertakings’  reactions

(24) 

the 

requests 

they  had 

approached 

After 
for
received 
information  under  Article  11,  a  number  of  the
the  Commission
undertakings 
admitting  in  general  terms  their  participation  in
serious  violations  of  Article  85  of  the  Treaty  and
informing  it  of  their  intention  to  cooperate  fully
with the investigation and to provide information
relating  to  the  infringements  over  and  above  the
scope  of  the  requests  for  information  under
Article  11  (which  had  each  been  almost  entirely
confined  to  the  specific  documents  found  in  the
possession  of  the  producer  in  question).

Most  of  the  undertakings  involved  subsequently
provided  to  the  Commission,  of  their  own
volition,  information  and  documentary  evidence
which  not  only  confirmed  and  corroborated  the
evidence  found  during  the  investigation  but  also
disclosed  that  the  cartel  had  originated  with
market-sharing  and  price-fixing  arrangements
between 
the  Danish  producers  as  early  as
November  or  December  1990  and  had  continued
to  operate  almost  unabated  for  at  least  nine
months  after  the  date  of  the  investigations,  with
additional  precautions  being  taken  in  order  to
conceal  its  existence  from  the  Commission  (such
as  holding  meetings  outside  the  territory  of  the
Community).

The  investigations  resulted  in  the  Commission,
obtaining  a  considerable  volume  of  documentary
evidence  at  most  of  the  undertakings  visited,
including  detailed  notes  of  meetings,  internal

Having  first, 
in  response  to  the  Article  11
requests, denied all knowledge of or participation
in any infringement and/or declined to address the

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relevant  issues,  the  Henss/Isoplus  undertakings
subsequently  admitted  limited  participation  (by
Isoplus only) in an infringement of Article 85 and
also  provided  certain  documentary  evidence.

6.  Replies  to  the  Statement  of  Objections

(25) 

5.  The  Statement  of  Objections

that  beginning 

In  its  Statement  of  Objections  of  20  March  1997
in
the  Commission  alleged 
Denmark  in  or  about  November  1990,  and
progressively  extending  first  to  Germany  in  or
about  October  1991  and  by  late  1994  to  the
whole  of  the  common  market  the  addressees  had
infringed  Article  85(1)  by  participating  in  a
they  eventually
clandestine  cartel  by  which 
divided  the  European  market  and 
individual
national markets amongst themselves on the basis
of  a  quota  system;  had  agreed  prices  for  the
individual  projects;  had
products  and 
allocated 
to  designated
producers and manipulated the bidding procedure
in  order  to  ensure  that  the  designated  producer
was  awarded  the  project  in  question;  and,  in
order  to  protect  the  cartel  from  competition,  had
taken  concerted  steps  to  damage  Powerpipe’s
business, confine its activity to Sweden or force it
out  of  business  altogether.

individual  projects 

for 

The Statement of Objections  defined  the duration
of  the  participation  of  the  various  producers  as
follows:

—  ABB,  Løgstør, 

from
November  1990  to  at  least  March  or  April
1996,

Starpipe,  Tarco: 

—  Pan-Isovit  from  about  December  1990  up  to

the  same  time,

—  Henss/Isoplus from about October 1991 up to

the  same  time,

—  KWH from about March 1995 up to the same

time,

—  Brugg  from  about  August  1994  up  to  about

the  same  time,

—  Ke-Kelit and Sigma, from about the beginning
of  or  early  in  1995  up  to  the  same  time.

The  alleged  participation  of  Brugg,  Ke-Kelit  and
Sigma  was  limited  to  arrangements  on  their
respective  national  markets.

(26) 

In their replies to the Statement of Objections, the
majority  of  the  producers  admitted  taking  part  in
an  infringement  of  Article  85  but  with  the
exception  of  ABB  (which  did  not  contest  the
essential  facts  alleged  by  the  Commission  or  its
conclusions)  argued  that  the  duration  of  the
infringement  and  the  extent  of  their  participation
was  less  than  alleged  and  denied  taking  part  in
any  scheme  to  damage  or  eliminate  Powerpipe.

Løgstør  and  Tarco  claimed  that  rather  than  one
infringement  there  had  been  two
continuous 
entirely  separate  cartels,  the  first  being  confined
to Denmark and running from the end of 1990 or
beginning of 1991 to early 1993, while the second
covered  a  wider  market  and  had  begun  only  in
late  1994.

For  its  part  Starpipe  did  not  specifically  address
this  issue  but  claims  to  have  played  only  a  minor
role in attempts by ABB and Løgstør to dominate
the  market.

formed 

companies 

Although  the  Commission  had  alleged  that  the
Henss/Isoplus 
single
undertaking, in the absence of an identified group
holding  company  it  addressed  the  Statement  of
Objections  to  the  Henss  and  Isoplus  companies
and  in  the  procedure  Henss  and  Isoplus  were
separately represented.

a 

Isoplus,  which  strongly  denied  that  it  formed  a
group  or  had  any  links  of  ownership  with  the
Henss  companies,  said  it  took  no  part  in  any
market-sharing  arrangements  before  the  end  of
1994/beginning  of  1995.

The  two  Henss  companies  argued  that  although
their  owner  took  part  in  occasional  discussions
with  producers  from  1991  onwards  aimed  at
ending a price war, these were totally inconclusive
until the end of 1994. If after that date there had
been  a  cartel  in  which  the  principal  owner  of
Henss  was  mandated  by 
to  attend
meetings  on  its  behalf,  no  infringement  was  ever
committed  by  the  Henss  companies  since  they
were only the sales agents of Isoplus, and as such
could  not  be  a  party  to  a  ‘producer  cartel’:  any
infringement  of  Article  85  was 
sole
responsibility  of  Isoplus.

Isoplus 

the 

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Pan-Isovit also insisted that whatever the contacts
it  may  have  had  with  other  producers  before  the
end  of  1994,  it  did  not  joint  the  cartel  before
1994/1995.

producer  IC  Møller  (later  to  become  ABB  IC
Møller  A/S)  embarked  on  a  strategic  programme
of  acquisition  of  district  heating  pipe  producers
across  Europe, 
including  Isolrohr  (now  ABB
Isolrohr)  in  Germany,  Austria  and  Hungary  and
Ecopipe  and  Dyrotan  in  Scandinavia.

(27) 

KWH  did  not  substantially  contest  the  facts  on
which  the  Commission  based  its  statement  of
objections but claimed it was coerced by ABB into
joining  the  cartel  in  May  (not  March)  1995  and
only  cooperated  with 
to  avoid
systematic  reprisals  from  the  other  producers.

the  cartel 

Brugg  admitted  a  limited  participation  in  the
cartel  (a  role  which  the  Statement  of  Objections
had fully acknowledged) but only from December
1994 instead of August as alleged; it also claimed
to  have  attended  meetings  to  avoid  eliminated
from  the  market  by 
larger  competitors,
particularly ABB.

its 

Ke-Kelit  minimised  its  role  and  said  it  was
presented  by  the  others  with  a  fait  accompli  and
had  no  alternative  but  to  accept  the  quota  for
Austria  allocated  to  it  by  the  others.

While  Denmark  was  the  ‘home  base’  of  the
district  heating  industry,  Germany  was  already
the  largest  single  national  market,  but  by  the  end
of  the  1980s  it  was  regarded  as  a  mature  market
with  few  opportunities  for  new  installations  as
opposed  to  maintenance  and  updating  of  existing
district  heating  systems.

According  to  the  larger  producers,  the  district
heating  market  in  general  was,  at  the  time,
characterised by strong competition which tended
to  drive  price  levels  down.

Sigma (which seems to equate participation in the
cartel with membership of EuHP, which it did not
join)  said  that  in  most  cases  its  participation  in
meetings concerning Italy was limited to technical
matters, 
that
the 
anti-competitive  arrangements  were  mooted,  it
had  accepted  no  restrictions  on  its  commercial
freedom.

cases 

rare 

and 

in 

As regards the actions detailed in the Statement of
Objections  which  were  aimed  at  the  elimination
of Powerpipe as a competitor, apart from ABB all
the  producers  against  which  the  allegation  was
raised  (which  excluded  Ke-Kelit  or  Sigma)  denied
taking  part 
implementing  any  such
it  came  under
measures.  KWH  argued  that 
pressure  to  comply  with  a  collective  boycott  of
Powerpipe  but  defied  the  instructions  of  the
cartel.

in  or 

to  bear  all 

the  cost  of 

ABB  for  its  part  considers  that  it  was  unfairly
having 
industry
reorganisation while the other producers obtained
a  ‘free  ride’  (ABB’s  Article  11  Reply,  p.  14).  Its
perception  is  that  in  the  latter  half  of  the  1980’s
there  was  irresponsible  price  cutting  by  suppliers
attempting  to  improve  their  share  of  a  market
which  was  not  expected  to  grow  appreciably  in
the  foreseeable  future.

pipes  whose 

ABB  says  that  restructuring  was  essential  as  there
were  too  many  small  producers  making  poor
durability
quality 
‘undermined 
for  district
the  economic  case 
heating’:  systems  which  did  not  adhere  to  CEN
quality  norms  might  be  10  to  20 %  cheaper  than
approved  material  but  lasted  only  ten  instead  of
twenty  years.

lack 

of 

D.  Details  of  the  infringement

1.  The  market  background

(28) 

In  1987,  just  before  the  merger  with  ASEA,
Brown Boveri Company, which owned the Danish

(29) 

In  Germany,  the  German,  Austrian  and  Swiss
manufacturers  set  up  a  trade  association  known
as  BFW  (Bundesverband  Fernwärmeleitungen)
which they claimed to group the companies which
alone  were  qualified  to  meet  the  exacting  quality
standards  of  the  German  market.  Producers
which  did  not  have  manufacturing  facilities  in
Germany  were  not  permitted  to  join.  The  Danish

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producers  (which  included  ABB  IC  Møller)  were
excluded,  but  were  eager  to  gain  greater  market
penetration  in  Germany;  Løgstør  states,  however,
that  once  Brown  Boveri  had  acquired  Isolrohr  in
1987  it  relaxed  the  pressure  since  it  could  now
itself  produce  in  Germany  (Løgstør,  Article  11
Reply,  Statement  II,  p.  87).

Price  tables  produced  by  ABB  show  that  the
market price in Germany remained fairly stable in
the  period  1985  to  1990:  with  slight  fluctuations
the  price  level  was  the  same  at  the  end  of  this
period  as  it  had  been  at  the  beginning,  while
market  volumes  were  stagnating.

The  Danish  market  which  was 
supplied
exclusively  by  the  four  domestic  producers  was,
considered  a  high-price
however,  generally 
market;  the  stability  of  price  levels  on  the  home
market  provided  the  local  producers  with  a  firm
foundation 
to  neighbouring
exporting 
countries.

for 

The  main  reasons  for  the  continuing  low  level
prices  in  Germany  were  identified  by  ABB  as
essentially structural, particularly:

(i) 

the  concentration  of  Federal  Government
investment  in  the  former  East  Germany;

(ii)  the  fact  that  the  growth  in  Eastern  Germany
was  almost  exclusively  project-based  as
opposed  to  replacement  business:  the  direct
customers were thus contractors (rather than
the  local  authorities)  who  stimulated  price
competition  amongst  the  producers  in  order
to  increase  their  own  margins;

(iii)  resort  to  loss-leading  by  producers  to  gain

customers  in  a  new  market.

In addition the shift to the public works tendering
procedure  as  the  basis  of  allocation  for  most
projects  may  have  led  to  greater  competition
between  the  producers.

(30) 

In  1988/1989,  ABB  initiated  a  series  of  meetings
between itself, Løgstør, Tarco and Starpipe with a
view  to  finding  a  ‘solution’  to  the  perceived
problems  of  the  industry  (Løgstør,  Article  11
Reply,  Statement  I,  p.  72;  Statement  II,  pp.  86
and  87).

2.  The  Danish  cartel

(a)  The  quota  scheme  and  price  fixing

Soon  after 
the  discussions  began,  market
conditions  changed  dramatically.  The  opening  to
trade  of  the  former  Eastern  bloc  countries  in
1989  meant  a  massive  increase  in  demand:  the
total  potential  market  for  the  West  European
suppliers increased from some DKK 2 500 million
(ECU  315  million)  in  1988  to  DKK  3 500  to
3 700  million  (ECU  440  to  470  million)  in
1991.

(31) 

Although  as  early  as  30  October  1989  ABB
(Appendix X1 to the Statement of Objections (*))
had  assessed  a  number  of  possibilities  including
(1)  an  offer  by  Løgstør  to  confine  its  activities  to
Denmark,  Germany,  Finland  and  Sweden  and  (2)
a  ‘peace  agreement’  in  Denmark  covering  all  four
producers with a freeze on market shares, the first
clearly-defined  market-sharing  arrangements  of
which  the  Commission  is  apprised  came  into
effect  for  the  year  1991.

All  producers  increased  their  production  capacity
to meet the new demand, which came particularly
from  the  former  East  Germany  where  the  Federal
Government  and  the  new  Länder  were  investing
in  the  replacement  of  sub-standard  infrastructure.
If  the  German  market  grew  by  20 %  in  only  one
year,  prices  did  not  however 
increase,  and
according  to  the  producers  they  actually  fell  in
Germany  by  10 %  in  1991  compared  with  the
previous year.

Agreement  was  reached  between  the  four  Danish
producers  on  the  basic  principles  for  general
cooperation  on  their  domestic  market  at  a
meeting in Jutland at the end of 1990. At the time
imports  from  Germany 
into  Denmark  were
negligible.  The  participants  were  all  senior

(*) All references in this Decision to numbered appendices are to

the  appendices  to  the  Statement  of  Objections.

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company  officers  holding  the  rank  of  managing
director  or  above  (ABB’s  Article  11  Reply,  p.  49;
Løgstør,  Article  11,  Reply,  Statement  I,  p.  72;
Tarco  statement  of  26  April  1996,  p.  2).

One of the first actions was to coordinate a price
increase  which  was  due  to  come  into  effect  in
Denmark in two steps totalling 10 to 12 % (there
were  different  dates  for  the  different  producers)
and  on  export  markets  between  6  and  10 %
(Appendix  19).

To  finalise  the  detailed  terms  of  the  agreement,
which  was  to  include  a  quota  and  customer
allocation  system,  there  followed  several  more
meetings:  the  managing  directors  (who  adopted
the  sobriquet  ‘the  Popes’)  met  on  16  January
1991.

(b) The  operation  of  the  cartel

(33) 

A  retired  business  executive  with  close  personal
connections  to  ABB  who  had  formerly  been  on
the  Board  of  IC  Møller  was  engaged  as  a
consultant  to  act  as  the  ‘coordinator’  of  the
cartel.

The  Contact  Group,  which  allocated  the  business
amongst  the  cartel  members,  maintained  a  data
base  of  projects  and  customers  on  a  lap  top
computer.  It  was  decided  in  advance  who  was
going  to  ‘win’  the  contract  in  question.  For  each
project,  the  ‘favourite’  (that  is,  the  firm  to  which
the  contract  was  assigned)  informed  the  other
participants  of  the  price  which  it  intended  to
quote and they then submitted tenders at a higher
price  in  order  to  ‘protect’  the  supplier  designated
by  the  cartel.

(32)  Quotas  —  supposed  to  be  valid  for  the  next  two
years,  1991  and  1992  —  were  agreed  in  the  16
January  meeting  but  were  modified  two  months
later (on 4 March 1991) to give ABB and Løgstør
a slightly larger  allocation.

The  quotas  definitively  agreed  on  4  March  were:

—  ABB:

—  Løgstør:

—  Tarco:

41 %,

27 %,

18 %,

—  Starpipe:

14 %;

for  Denmark  was  based  was 

The  basic  principle  on  which  the  market-sharing
system 
the
observance of ‘established customer’ relationships:
each supplier kept its existing customers and there
was  to  be  no  aggressive  targeting  of  another
producer’s  customers.

(34) 

The  quota  scheme  agreed  by  the  managing
directors  was  implemented  and  monitored  by  the
lower-tier  group  of  sales  managers  (the  ‘Sales’  or
‘Contact’  group)  which  met  once  (per  Tarco)  or
even  twice  (per  ABB)  a  month.

The  managing  directors  met  about  every  three
months  to  resolve  difficulties  or  disputes.

for  direct 

Usually  the  project  was  allocated  by  the  cartel  to
the  customer’s  traditional  supplier.  Denmark
being  a  mature  market,  the  majority  of  the
contracts  are 
to  existing
customers.  The  20  to  30  ‘new’  projects  put  out
for  tender  each  year  (with  a  value  ranging  from
DKK  500 000  to  DKK  30  million)  were  assigned
among  the  four  producers  so  as  to  ensure  that
their  total  sales  were  in  line  with  the  agreed
quotas.

sales 

The  market-sharing  arrangements  in  Denmark
was  supported  by  a  compensation  scheme.  The
auditors  of  each  producer  certified  the  total  sales
of pipes during the year, and the certificates were
then  exchanged  among  the  cartel  participants.

At  the  end  of  1990,  the  four  Danish  producers
had  concerted  on  increases  in  their  domestic  and
export price lists as well as on the timing and the
stages  of 
from
producer  to  producer  (see  p.  (31)).

increases  which  varied 

the 

To  facilitate  the  operation  of  the  scheme,  the
producers  exchanged  their  individual  price  lists,
which  ABB  compiled  into  a  single  reference
document  on  23  January  1991.  Later  on,  in
March 1991, the amount of discounts from listed
the  agreement  was
prices  was  agreed  and 

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the  sales  managers 

implemented  by 
issuing
instructions  to  their  sales  personnel  showing  the
scale  of  permitted  rebates:  compliance  was
ensured  by  the  producers’  exchanging  copies  of
(Tarco  statement,
these 
p.  3).

instructions 

internal 

their  annual 

Price  increases  were  agreed  from  time  to  time.  In
the  autumn  of  1991  the  four  Danish-based
producers  discussed 
list  price
increases  for  both  Denmark  and  for  export.  By
October,  the  two  German  producers  joined  them
in  regular  meetings  (point  41).  As  a  result,  an
and
agreement  which 
Henss/Isoplus  was  reached  to  raise  prices  outside
Denmark  by  about  6  to  8 %  with  effect  from  1
January 1992 (ABB’s Article 11 Reply, pp. 18 and
19; Løgstør Reply to Statement of Objections, pp.
30  to  31).

included  Pan-Isovit 

(35)  During  the  first  year  of  the  Danish  quota  scheme
(1991),  ABB  was  on  target  but  Løgstør  took
significant  market  share  from  the  two  smaller
producers  (Appendix  22).  Any  dissatisfaction  on
the  part  of  the  latter  was  muted,  since  prices  had
gone  up  and  all  producers  had  seen  a  substantial
rise  in  earnings.  In  any  case,  according  to  Tarco,
the  compensation  mechanism  applied.

deliveries 

There 
is  no  dispute  that  the  compensation
mechanism  was  operated  at  the  end  of  1991
(there is considerable  documented evidence of the
calculations)  but 
the  exact  details  of  how
compensation  was  paid  are  unclear.  Tarco  (the
main beneficiary of compensation) has stated that
cash was paid, the transfer being accounted for in
the  company  books  by  the  issuing  of  invoices  for
non-existent 
(Tarco’s
Statement,  p.  4;  Reply  to  second  Article  11
request, p. 1). Løgstør strongly denies this version
of  events  and  claims  that  Tarco’s  demand  (for
some  DKK  4,5  million)  was  settled  by  (a)  taking
into  account  orders  for  plastic  covers  and  other
materials  which  Løgstør  had  already  placed
during  the  year  with  Tarco  and  which  gave  that
company  a  positive  contribution  and  (b)  its
relinquishment in favour of Tarco of its share in a
joint  project  in  Iceland  (Løgstør  reply  to  Article
11  request  of  26  August  1997).

pipes 

of 

Whatever 
for  settling
the  precise  procedure 
compensation  had  been  in  1991,  it  was  agreed
that  for  1992  a  new  system  would  apply:  surplus
market 
‘rolled  over’  and
re-assigned  to  the  producers  who  were  below
their  allocated  quota.

share  would  be 

(36) 

Although  the  quotas  agreed  for  Denmark  in
March  1991  had  been  intended  to  apply  for  two
years  (1991  and  1992),  they  were  renegotiated
after  only  nine  months.

In  a  series  of  meetings  at  the  end  of  1991  and
beginning  of  1992,  a  new  market  allocation  was
agreed  to  run  for  1992  and  1993.

The  new  quotas  for  Denmark  were:

—  ABB:

41,5 %,

—  Løgstør:

28,5 %,

—  Tarco:

16 %,

—  Starpipe:

14 %.

It  is  not  clear  whether  achieved  market  shares  in
1992  were  in  line  with  targets  (Løgstør  says  its
share  was  close  to  35 %  but  its  own  internal
Strategic  Plan  for  1994  to  1997  records  its  1992
share as 29,5 %; see also Appendices 24 and 49).
It  was  however  expected  that  Løgstør  would  be
substantially above quota for 1993, owing in part
to  its  introduction,  despite  difficulties  in  getting
approval  in  EuHP,  of  the  lower-cost  continuous
production  process.

formally 

In 
late  1992  and  early  1993  Løgstør  was
demanding  that  its  improved  performance  and
the
potential  be 
attribution  of  a  higher  quota  (this  would  free  it
from  liability  to  compensate  the  others),  which
led  to  ABB  offering  it  1,5 %  from  its  own  share
and  another  1 %  to  be  divided  between  the  two
smaller  producers,  who  predictably  demurred.

recognised  by 

(37) 

Løgstør claims (Reply to Statement of Objections,
p.  22)  that  already  in  late  1992  it  threatened  to
leave the cartel unless it was given a higher quota.
It  was 
in
Denmark for 1993 should remain the same as for

intended  that  the  market  shares 

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1992  (Annex  8  to  ABB’s  Article  11  Reply).
Whether  or  not  Løgstør  made  such  a  threat,  the
fact  is  that  it  remained  in  the  cartel  (it  claims,
however,  to  have  been  forced  into  doing  so  by
ABB: Reply to Statement of Objections, p. 24). In
March  1993  Løgstør  was  still  demanding  a  new
quota  of  34 %,  while  ABB  was  accusing  it  of
breaking  the  agreement  by  ‘dumping’  the  price
level  in  Denmark.

Relations  between  the  Danish  producers  at  the
end  of  1992  and  beginning  of  1993  were
complicated  by  two  additional  factors:

—  a demand by ABB for a shareholding of up to

10 %  in  Løgstør,

(Løgstør  Reply 

to  discipline  the  other  producers  and  force  them
to  continue  in  the  cartel.  It  says  it  was  even  told
by  ABB  that  the  latter  had  allocated  a  credit  line
of  DKK  50  million  to  eliminating  Løgstør  in  a
to  Statement  of
price  war 
Objections,  pp.  22  to  24,  32,  40  and  42).  ABB,
however,  attributed 
to  Løgstør’s
demands  for  an  increase  in  its  quota,  a  view
apparently 
judged
(Minute  of  Beiratsitzung  of  3  February  1994,
included  in  Isoplus  Article  11  correspondence)
that  Løgstør  had  taken  a  major 
‘traditional
customer’  from  ABB  at  low  prices  in  order  to
persuade  ABB  to  give  up  market  share  in  favour
of  Løgstør.

shared  by  Henss  which 

the  blame 

—  increasingly 

from
Henss/Isoplus and Pan-Isovit to be allocated a
share  of  the  Danish  market.

insistent 

pressure 

Whatever disagreements may have arisen between
the  producers  at  the  time,  Løgstør  itself  admits
that  ‘the  coordination  in  early  1993  was  mainly
based  on  an  understanding  of  respect 
for
traditional  customer  relationships’.  (Reply  to
Statement  of  Objections,  p.  23).

The  Commission  has  obtained  from  Tarco  a
detailed  table  (dated  25  March  1993)  of  projects
for  1993,  showing  not  only  the  successful  bidder
and  the  price  for  tenders  already  awarded  for  the
year,  but  also 
‘expected  supplier’  and
‘expected  price’  for  procedures  that  were  still
open  and  for  projects  that  were  likely  to  be
announced.  The  above  data  was  collated  in
connection with the exercise described in point 33
and  shows  that  at  that  date  the  cartel  was  still
very  much  in  operation  (Appendix  23).

the 

Since  spring  is  the  ‘high  season’  when  most
tenders  are  being  awarded  this  meant  that  the
majority  of  the  business  for  the  year  had  already
been  allocated  by  this  time.

It  is  accepted,  however,  by  the  Commission  that
from  about  March-April  1993  prices  for  new
business  in  Denmark  began  to  fall.  There  where
also  examples 
in  the  year  where  the
‘traditional customer’ understanding for Denmark
broke  down.

later 

There were mutual recriminations: Løgstør claims
that  ABB  engineered  the  whole  situation  in  order

towards  an 

On  either  version  of  events,  the  price  fall  in
Denmark  was  the  result  of  a  trial  of  strength
inside  the  cartel,  not  of  its  abandonment.  Indeed
at  the  very  same  time,  Løgstør  and  ABB  were
‘overall  solution’  and
working 
agreements  were  being  made  for  Germany  (see
(49) 
the
disagreements  on 
the  Danish  market  were
combined  with  those  for  Germany  and  formed
part  of  a  single  process  (ABB’s  Article  11  Reply,
p.  59).

(51)).  Discussions 

resolve 

to 

to 

3.  Extension  to  other  markets

(38) 

The  cooperation  between  the  Danish  producers
had  not  been  confined  to  their  national  market:
the  first  concerted  price  increase  applied  also  to
export markets, effective from 1 January 1991. In
Germany,  ABB’s  increase  was  7 %,  Tarco  and
Løgstør 10 % and Starpipe 6 % as of 1 December
1990  (Appendix  19).

Further,  at  the  same  time  (late  1990,  early  1991)
as  the  Danish  producers  were  finalising  their
secret  arrangements  to  control  the  market  in
Denmark,  initiatives  had  already  begun  to  extend
the  cooperation  on  market-sharing  to  other
markets  and  to  bring  in  the  German  producers.

Such  moves  were  at  first  relatively  fragmented.
ABB  —  which  had  taken  over  Isolrohr  in  1987
and  so  had  a  foot  in  both  German  and  Danish
camps  —  was  involved  in  bilateral  discussions
with  Pan-Isovit  in  December  1990  to  January

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1991  on  forming  an  ‘informal  strategic  alliance’
(Appendices  30  and  31,  ABB’s  Article  11  Reply,
pp  7-9).  These  two  producers  together  supplied
the major part of the German market at the time:
Isoplus, which had only recently bought Isolrohr’s
Austrian  factory,  was  still  in  the  process  of  being
set up as a serious contender to enter the German
market,  with  Henss  as  its  commercial  agents.

(40) 

The  arrangements  between  the  Danish  producers
extended  to  Italy,  even  if  in  March  1991  Tarco
was  reporting  that  on  price  ABB  IC  Møller  and
Løgstør were ‘not behaving entirely in accordance
with  the  agreements  for  the  Italian  market’:  ABB
had  only  applied  the  6 %  increase  in  the  second
half  of  the  year,  while  Løgstør  had  increased  its
list  prices  but  simultaneously  given  rebates  which
kept  prices  at  1990  levels  (Appendix  33).

There  was  no  question  at  this  time  of  a  formal
alliance  being  formed  between  all  four  Danish
producers  and  Pan-Isovit:  the  latter  regarded
Løgstør,  Tarco  and  Starpipe  as  ‘pirates’  who  had
attempted  to  seize  market  share  in  Germany  by
low  prices.  ABB  as  the  owner  of  Isolrohr  in
Germany  was  its  natural  partner.  It  no  doubt
served  ABB’s  strategic 
to  have  an
understanding  with  both  sides.

interest 

to 

cooperation, 

In  addition 
the
technical 
discussions  between  ABB  and  Pan-Isovit  covered
the  framework  for  a  division  of  the  market
largest  producers
between  them  as  the  two 
supplying  in  Germany.  The  underlying  idea  was
to  divide  client  areas  and  to  maintain  existing
market  shares.

(39) 

It  was  agreed  that  a  structure  would  be  set  up,
involving the formation of a ‘Board Group’ and a
‘Strategy  Group’,  to  coordinate  the  activities  of
the 
joint
domination  of  the  German  market.

two  producers  and  ensure 

their 

Pan-Isovit  also  expressed  its  support  for  the  6  to
8 %  price  increases  which  ABB  (and  the  Danish
producers)  had  recently  agreed  on  their  export
markets,  including  Germany.

According  to  ABB,  Pan-Isovit  subsequently  had
reservations  regarding  the  technical  cooperation
proposed  and,  after  it  had  also  declined  an
join  EuHP (6), 
invitation 
the  bilateral
discussions on market cooperation lapsed in April
1991.

to 

As  regards  the  allocation  of  projects,  a  major
contract  in  Turin,  which  was  regarded  by  the
industry  as  a  ‘flagship’  for  the  market,  was  the
subject of a ‘one for all and all for one’ agreement
in  October  1991  by  which  the  producer  winning
the  contract  would  share  it  with  the  others  in
certain  agreed  proportions.  (In  the  event,  the
agreement  was  not  applied  because  an  outsider
put in the lowest bid: ABB’s Article Reply, pp. 53
to  55;  Appendix  32).

Pan-Isovit  was  also  involved  in  discussions  with
its  Danish  competitors  on  sharing  the  Turin
project  in  July  1991.  There  is  some  indication
that  reciprocity  was  already  a  feature  of  the
market:  ABB  is  reported  as  having  told  other
participants  in  a  meeting  that  Løgstør  had  given
up  the  Turin  project  in  favour  of  IC  Møller
‘against  some  other  international  compensation’
(Additional  documents,  Nos  1  to  4).

(41) 

By  the  autumn  of  1991,  the  institutionalised
cooperation  between  the  Danish  producers  was
being  extended  on  a  more  formal  basis  to  the
German  market,  and  from  October  the  two
German  producers  Pan-Isovit  and  Henss/Isoplus
(the  latter  now  established  in  Germany)  joined
them  in  the  collusion.  From  this  time  on,  regular
meetings were held between all six main suppliers
to the German market with the aim of improving
the  low  price  levels  (ABB’s  Article  11  Reply,  pp.
31  and  51).

(42)  Meetings  of 

(or
equivalent)  are  known  to  have  been  held  on  at
least  the  following  occasions:

the  managing  directors 

(6)  EuHp  was  set  up  on  29  April  1991,  holding  its  inaugural
meeting  in  Billund,  Denmark.  While  Pan-Isovit  had  initially
declined to join, Isoplus (to its considerable displeasure) was
not  invited.

—  9  (or  10)  October  1991,

—  10  December  1991,

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—  19  February  1992,

—  6  March  1992,

—  1  April  1992,

—  30  June  1992,

—  11  August  1992,

—  11  November  1992,

—  20  April  1993,

—  30  June  1993,

list prices was agreed. (Only the previous day, the
Danish  producers  had  agreed  that  the  managing
directors  would  discuss  the  situation  in  Germany
and  other  export  markets:  ABB’s  Article  11
Reply,  p.  51).

The  price  agreement  was  confirmed  in  a  later
meeting  in  Hamburg  on  10  December  1991,  the
upshot  being  the  following:

—  all producers were to implement an immediate

6 %  price  rise,

—  a  ‘hot  line’  was  to  be  established  between  the

participants,

—  further  meetings  were  to  be  held  once  a

—  18  (or  19)  August  1993,

month,

—  8  (or  9)  September  1993.

—  a  minimum  price  list  was  to  be  prepared  by

13  January  1992.

(43) 

There had been obvious tensions between the two
national groups: Henss/Isoplus accuses the Danish
producers  of  using  the  profits  generated  by  the
well-established  cartel  on  their  local  market  to
finance  a  ‘price  war’  designed  to  gain  market
share in Germany for themselves at the expense of
Henss/Isoplus.

At  this  time  the  collusion  between  the  producers
outside  Denmark  had  not  reached  the  level  of
sophistication that was to be achieved three years
later.  The  participants  had  different  objectives  in
seeking  an  overall  dispensation  on  the  market.
ABB’s  interest  was  a  grand  plan  for  securing
strategic  control  of  the  industry,  while  Tarco’s
aggressive  pricing  in  Germany  had  provoked  the
German  producers  into  prospecting  the  Danish
market, 
the  displeasure  of  Løgstør  and
Starpipe.  The  German  companies  were,  however,
clearly  interested  in  reaching  a  market  share
agreement  in  order  to  protect  their  position
against  the  Danish  producers.

to 

ABB  considered  it  folly  for  the  producers  to  fight
each other on price when the market was in rapid
expansion,  and  regarded  it  as  vital  for  action  to
be  taken  at  top  level  (Appendix  35).

According to ABB, the participants also discussed
whether  market-share 
be
exchanged  (Appendix  36,  ABB’s  Article  11,
Reply,  pp.  18  and  19).

should 

figures 

(45)  Over  the  next  year  meetings  at  senior  level  were
held at fairly regular intervals ‘to discuss issues of
common  interest’  (as  it  was  put  in  one  of  the
invitations) (7).

The coordinator of the Danish cartel also acted as
an  ‘honest  broker’  for  the  Germany  group  with
the  function  of  summoning  the  meetings  and
facilitating  agreement  in  order  to  raise  price
levels.

It  may  well  be  that  lower-level  meetings  of
managers  for  Germany  were  also  held  but  no
details  are  available  (see  (69)).

As  previously  agreed,  a  price  list  was  drafted  by
an  employee  of  ABB  IC  Møller  based  on
information  provided  by  Henss  and  on  ABB’s
1992  ‘K3’  price  list.  (Løgstør  describes  ABB  and
Henss as the ‘driving force’ in the German round:

(44) 

ABB  was  pressing  for  an  agreement  on  prices  in
Germany,  which  would  serve  the  dual  purpose  of
reining  in  the  activities  of  Tarco  and  allowing
ABB to raise its price to its agents. In a meeting in
Frankfurt  on  9  or  10  October  1991,  attended  by
all  six  producers,  an  increase  of  around  6 %  in

(7)  According  to  Løgstør,  there  were  discussions  for  the
Netherlands,  Austria  and  Sweden  as  well  as  Germany  but
apart  from  the  fact  that  the  participants  were  the  same,  no
further details are available. At the time Austria and Sweden
were  not  Member  States  of  the  European  Community.

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Reply to Statement of Objections, p. 28). The list
in question was intended to be used as a guide for
setting  individual  price  levels  as  part  of  the  plan
of  raising  overall  prices.  It  was  to  be  distributed
by  10  April  1992  at  the  latest.

consideration  about  the  size  of  the  market  share
company  would  be  able  to  gain  on  their  own’.
(Løgstør  adds  that  the  German  manufacturers
were  not  satisfied  with  the  way  in  which  the
market  shares  were  distributed,  and  the  efforts
were  a  failure).

(46) 

At  this  stage,  no  final  agreement  had  apparently
yet  been  reached  on  market  shares,  and  complex
negotiations  took  place  on  the  division  of  the
German market between the two national groups.
investigations
The  Commission  during 
obtained  hand-written  notes  of  some  of  these
meetings  made 
Starpipe
(Appendices  37,  44  and  45).

by  Tarco 

and 

its 

The  producers  did  decide  to  exchange  details  of
market  shares  (see  (44)  as  can  be  seen  from  a
note  made  by  Starpipe  of  one  of  the  earlier
meetings  (Appendix  37).  Against  the  name  of
each  of  the  six  participants,  it  gives  under  the
heading  ‘previous’  (tidligere)  the  value  of  its  sales
and  a  corresponding  percentage  share  of  the
market,  and  under  the  heading  ‘new’  (ny),  a
different  set  of  percentages.  The  year  in  question
appears  to  be  1991  but  is  not  possible  to
‘new’
conclude  with  certainty  whether 
percentages  given  are  targets  or  simply  estimates
of  sales.  The  German  producers  are  said  to  have
wanted  sales  of  DEM  130  million  (Henss  valued
the total market at DEM 180 million) and a price
increase  of  15 %.

the 

In  a  later  meeting  held  in  Brussels  in  November
1992,  a  table  was  drawn  up  of  the  producers’
sales and market shares in Germany for that year,
presumably  as  a  step  towards  a  quota  agreement
(Appendix  44).  The  Danish  producers  Løgstør,
Tarco  and  Starpipe  were  demanding  40 %  of  the
German  market  between  them.

Løgstør says (Statement I, p. 73) that during 1991
and  1992,  despite  distrust  between 
the
manufacturers,  an  effort  was  made  to  implement
a  Danish  Model  in  several  countries,  including
Germany.

The  distribution  of  market  shares  was  based  on
the  various  producers’  achieved  market  shares  in
‘together  with
the  preceding 

years 

two 

and 

indeed  ABB  was 

By  the  beginning  of  1993,  the  major  producers
were  looking  to  an  overall  settlement  in  the
industry, 
already
adumbrating (Appendix 48) a ‘European solution’
covering  Denmark,  Sweden,  Finland,  Germany,
Austria, 
Italy
(together  referred  to  as  the  ‘old  West  European
domestic  heating  market’),  under  which  it  would
have  a  42 %  market  share  and  Løgstør  25 %.
With  a  market  share  between  them  of  67 %,  the
two producers would effectively control the whole
market.

the  Netherlands,  France  and 

that 

ABB  believed 
situation  could  be
its 
consolidated by its taking a shareholding of up to
10 %  in  Løgstør,  in  return  for  which  it  would
secure  an  increased  quota  for  Løgstør  within  the
cartel.  (This  idea  never  in  fact  became  a  reality).

(47) 

By  this  time,  the  two  principal  markets  —
Germany  and  Denmark  —  were  being  regularly
discussed  in  the  same  forum  (ABB’s  Article  11
Reply  pp.  58  and  59).

to 

secure 

tactics 

agreement  were
ABB’s 
characterised  by  Løgstør  (Reply  to  Statement  of
Objections, p. 37) as a ‘carrot and stick’ approach
—  holding  out  inducements  while  making  threats
if  its  proposals  were  not  accepted.

The  Commission  fully  accepts  that  during  much
in  question  and  despite  the
of  the  period 
agreement  reached  to  increase  prices  as  of  1
January  1992  general  price  levels  in  Germany
remained  low,  as  each  producer  wanted  a  higher
market  share.

The  German  producers  had  tried  to  induce  the
four  Danish  suppliers  to  sell  in  Germany  at  the
same  prices  as  those  they  could  obtain  on  their
home  market.  For 
the  Danish
producers  had  in  early  1993  attempted  to  secure
the agreement of Isoplus to stay out of Denmark,

their  part, 

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30.1.1999

apparently  as  a  quid  pro  quo  for  Tarco  and
Starpipe’s abandoning or refraining from entering
the  Austrian  market.

under  Article  11  indicates  nonetheless  that  its
sales  director  attended  a  ‘European  meeting’  on
that  date.

(48) 

ABB continued to take the leading role. Its policy
was  to  consolidate  its  position  as  market  leader
via  the  cartel,  in  combination  with  a  strategic
alliance with at least one of its competitors. Apart
from  its  demanding  a  shareholding  in  Løgstør
(and  offering  it  an  increased  quota  within  the
cartel)  ABB  attempted  —  unsuccessfully  —  via
agents  to  buy  out  Isoplus  and  later  warned  it  to
stay  out  of  the  Danish  market  (Isoplus  Statement
of  10  October  1996,  p.  23).

In  mid-1993  Pan-Isovit  and  Isoplus  lost  patience
with the negotiations and in order to obtain more
‘leverage’  decided  to  enter  the  Danish  market.
They  argue  that  this  foray  was  proof  that  no
cartel  existed  but  it  is  clear  it  was  a  negotiating
ploy to persuade the Danish producers to increase
their  prices  in  Germany.

Thus  the  Henss/Isoplus  plan  for  Denmark  was  to
obtain individual business only by agreement with
ABB  or  Løgstør:  the  idea  was  to  manifest  ‘a
certain  solidarity’  with  ABB  but  to  wait  for
Løgstør  to  approach  it  (Isoplus  ‘Beiratsitzung’
minute,  see  (37).

(49)  Whatever 

their  disagreements,  and  however
robust  the  nature  of  their  diplomacy,  the  six
producers were still working towards a resolution
of  their  differences  and  the  reaching  of  a
settlement.

Representatives of the  major  producers again met
in  Hamburg  on  20  April  1993  to  restart  progress
towards  a  common  price  list  and  to  agree  a
common  price 
increase  for  Germany  (ABB’s
Article  11  Reply,  pp  32  and  33).  Løgstør  had
summoned  the  meeting  in  its  capacity  as  the
Chairman  of  the  Danish  producers’  association.

The day before the meeting, Tarco had distributed
to  the  other  Danish  producers  tables  (Appendix
49) showing the sales and market shares of all the
suppliers  (including  the  German  producers)  in
each  national  market  for  1992,  the  information
having  been  compiled  from  information  provided
by  the  sales  managers  in  an  earlier  meeting.  On
Tarco’s  own  admission  (Reply  to  first  Article  11
letter, p. 8) its purpose was to assist in calculating
the  overall  European  market  (presumably  for
1993);  the  connection  of  this  exercise  with  some
market-sharing  scheme  cannot  be  contested.

On  30  June  1993  a  meeting  in  Copenhagen
attended  as  usual  by  the  managing  directors  of
ABB,  Løgstør,  Tarco,  Starpipe, 
Isoplus  and
discussed  market-sharing
Pan-Isovit, 
again 
arrangements 
the
for  Germany, 
proposed  60/40  split.  According  to  ABB’s  note  of
only a few days later (Appendix 48), this division
was  ‘almost  agreed’  but  Løgstør  says  it  was
unacceptable  to  the  German  producers.  What  the
six  definitively  agreed  was  to  commission  an
independent  audit  of  1992  sales  which  would
serve  as  the  basis  for  an  agreement  on  market
quotas  in  Germany.

including 

The  extension  of  discussions  from  attempts  to
create  a  common  price  list  to  a  ‘more  structured
attempt  at  market-sharing’  from  June  1993
resulted  from  a  realisation  that  attempts  to  raise
prices  without  a  market-sharing  or  quota
agreement  would  always  fail  (ABB’s  Article  11
Reply,  p.  35).

ABB  says,  however,  that  Løgstør’s  representative
was  apparently  unable  to  attend  the  meeting,  a
statement which Løgstør echoes in its reply to the
Statement  of  Objections  (p.  35):  the  information
which  it  had  earlier  provided  to  the  Commission

ABB’s  preparatory  note  for  a  meeting  in  Zurich
on  5  and  6  July  1993  between 
its  senior
executives  and  those  from  Løgstør  predicted  with
some  confidence  that  a  comprehensive  European
solution  would  soon  be  reached  (Appendix  48).

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(50) 

As part of the moves towards a global settlement,
Løgstør  promised 
the  parent  company  of
Pan-Isovit  in  a  meeting  on  18  August  1993
(Appendix  52)  that  it  would  combine  with  ABB
to  bring  Tarco  ‘under  control’  in  Denmark  and
Germany.  (Løgstør  was  said  to  be  interested  in
principle 
in  Germany
provided  it  was  given  the  right  quota.)

in  a  price  agreement 

the  audit 

Following 
(carried  out  by  Swiss
accountants),  which  ascertained  the  figures  for
each  producer’s  1992  revenue  (Appendix  53),  the
producers  met  in  Zurich  on  18  or  19  August
1993  and  reached  agreement  on  the  following
points:

—  the  market  shares  achieved  in  Germany  for
1992  were  to  be  maintained  for  1994  with
slight  adjustments,

—  a  new  uniform  price  list  was  to  be  drafted,

—  Pan-Isovit  was  to  prepare  a  scheme  for
sanctions  in  case  of  deviation  from  agreed
quotas.  (ABB’s  Article  11  Reply,  pp.  34  and
35).

(51) 

The  agreed  ‘targets’  for  the  German  market  for
1994  were:

—  Pan-Isovit

26 %,

—  ABB

—  Tarco

25 %,

17 %,

—  Henss/Isoplus

16 %,

—  Løgstør

—  Starpipe

12 %,

4 %.

The solution was in effect to allocate to the three
Danish  producers  a  33 %  quota  as  the  cartel
coordinator  had  earlier  suggested.

Tarco  is  said  to  have  had  ‘reservations’  as  it
wanted  another  1 %  added  to  its  quota.

Further  meetings  on  the  quota  system,  including
discussions about machinery for fining those who
exceeded  the  quota,  were  held  on  8  or  9
September  1993  in  Copenhagen  and  Frankfurt.

A  general  consensus  appears  to  have  emerged.
Tarco’s  share  was  increased  to  17,7 %  (Annex  7
to  Løgstør’s  Reply 
the  Statement  of
Objections) and a penalty scheme was devised, an
initiative  which  Løgstør  attributes  to  ABB  ‘with
the  strong  support  of  Henss’.

to 

The  plan,  due  to  come 
into  effect  on  15
September  1993,  was  to  have  involved  monthly
reporting  by  each  producer  and  quarterly  audits
of  their  return  by  the  firm  of  Swiss  accountants
which  had  conducted  the  earlier  audit.  Fines  for
exceeding  quota  were  to  be  paid  into  the  Swiss
bank  account  of  a  new  trade  association  which
was  to  be  set  up  ostensibly  for  the  promotion  of
district  heating.

The  uniform  price  list  was  to  be  used  as  a  target
to  bring  general  price  levels  up,  in  progressive
steps,  by  some  25 %  over  six  months.

(52) 

Is was envisaged that the agreement was to be put
in  writing  and  signed,  but  this  final  step  was
apparently  never  taken.  Løgstør  claims  it  refused
to  sign  because  it  never  wanted  to  make  any
agreement  for  Germany,  but  this  assertion  leaves
unexplained  Løgstør’s  willing  participation  in  the
audit  by  the  Swiss  accountants  and  is  contrary  to
Pan-Isovit’s 
that  Løgstør  was
interested  in  a  quota  system  (Appendix  52).

assessment 

The other producers were not willing to go ahead
on  the  basis  of  handshakes.

Løgstør  claims  that  in  a  meeting  in  Denmark  on
29  September  1993  it  was  pressurised  by  ABB  to
sign  up  to  the  compensation  scheme,  this  being
demanded  by  ABB,  Henss/Isoplus  and  Pan-Isovit
as  the  condition  for  cooperation  in  Germany.

Its  refusal  to  sign  (says  Løgstør)  provoked  a
strong  negative  and  personal  reaction  from  ABB.
In  a  high-level  meeting  in  Copenhagen  —  which
Løgstør  places  on  2  December  —  the  then
Chairman  of  ABB’s  Transportation  Segment
(whose  active  role  in  promoting  the  cartel  is
amply  documented)  allegedly  criticised  Løgstør
executives 
language  for  their
perceived  failure  to  cooperate  (Løgstør  Reply  to
Statement  of  Objections,  page  39).  ABB  has  not

immoderate 

in 

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disputed  Løgstør’s  graphic  account  of 
incident.

this

in 

Although 
the  market
terms  of  volume 
continued to expand, particularly in Germany, the
producers  say  that  a  ‘price  war’  broke  out  again:
price  levels  in  the  major  markets  indeed  fell  by
20 % in a few months. ABB states that there was
a  ‘breakdown  in  confidence’  which  effectively
ended  the  attempts  to  seek  a  comprehensive
settlement  of  the  German  market.  However,  the
producers  continued  to  meet,  even  if  for  some
time  the  multilateral  meetings  were  replaced  by
bilateral  and  trilateral  contracts.  It 
is  most
probable  that  such  contacts  involved  efforts  by
ABB  to  broker  a  new  dispensation  to  restore
‘order’  in  the  market  (see  Isoplus  Article  11
Reply,  p.  25).

Indeed,  as  early  as  21  December  1993  Løgstør’s
Chairman was arranging a meeting with ABB and
the  cartel  coordinator  for  28  January  1994
(Appendix  X1):  Løgstør’s  list  of  contacts  with
competitors, supplied under Article 11, shows the
scheduled  meeting  took  place  on  that  date.

(54) 

Further  bilateral  meetings  took  place  between
ABB  and  Løgstør  (on  23  February  and  11  March
1994)  Løgstør  and  Tarco  (8  January  and  19
March  1994)  and  Tarco  and  Pan-Isovit  (22
February  1994).  ABB  says  there  were  also  a
number  of  bilateral  meetings  between  ABB
managers  and  representatives  from  Pan-Isovit,
Tarco and Henss (ABB’s Article 11 Reply, p. 44).
However,  apart  from  Løgstør’s  claim  that  Tarco
had  unsuccessfully  demanded  compensation  from
Løgstør  of  DKK  16  million  (its  1993  deficit)  as
the  pre-condition  for  ‘peace  talks’  (Reply  to
Statement  of  Objections,  p.  25)  no  details  are
available.

4.  The  Europe-wide  cartel  from  1994

(a)  Initial  contacts

(53) 

Plenary  meetings  of  the  six  producers  restarted
with the participation of Managing Directors and
Sales  Managers  of  7  March,  15  April  and  3  May
1994.

ABB  explains  that  the  ‘price  war’  of  late  1993
and  early  1994  had  resulted  in  such  heavy  losses
for nearly all the district heating suppliers that the
smaller  producers  amongst  them  were  forced  to
seek a concerted effort to return the price level to
the  status  quo  ante  bellum.  (ABB’s  Article  11
Reply,  p.  62).

Løgstør’s  assessment  is  that  the  producers  had
‘spent the whole of 1993 trying to get in position
to tackle a new situation like the one that used to
rule  in  Denmark  . . . .  Several  agreements  were
made but never carried through because the main
principle  was  that  those  who  didn’t  speak,
disagreed.’  During  1994,  however,  with  a  change
in managing directors at many of the producers, a
new  climate  prevailed:  ‘ABB  put  a  lot  of  effort
the  Danish
into 
manufacturers  backed 
(Løgstør
Article 11 Reply, Statement I, p 74, and Appendix
55).

all 
the  attempt’ 

project, 

and 

this 

inconclusive.  A 

in  March  and  April 

The  meetings 
involved
discussions  on  price  increases  but  seem  to  have
been 
letter  from  Løgstør  to
Ke-Kelit  of  17  March  1994  refers  to  meetings
with ‘colleagues’ to discuss the price situation but
was  not  optimistic  about  finding  a  solution  until
later 
the  year:  Appendix  55.  However,
following  the  meeting  on  3  May  1994  at  the
Hanover  Trade  Fair  attended  by  ABB,  Henss,
Pan-Isovit  and  Løgstør  a  price  list  was  drawn  up
which was to be used as the basis for all supplies
to  the  German  market  (Appendix  56;  ABB’s
Article  11  Reply  pp.  42  and  43).

in 

for 

individual  projects,  although 

It  would  seem  that  the  common  price  list  was
immediately  put  into  use  to  coordinate  price
offers 
its
employment  was  problematic.  The  invitation  sent
out  on  10  June  1994  for  a  directors’  meeting  on
18  August  1994  refers  to  the  ‘list  of  9  May’
stating  that  as  it  had  in  some  respects  been
‘confrontation  an
led  to 
incomplete,  having 
differences  of  interpretation’  when  offers  were
being  compared.  The  cartel  coordinator  therefore
attached a modified and extended price list to the
invitation  (Appendix  56).

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(55) 

Although Henss and Isoplus in their replies under
Article  11  of  Regulation  No  17  originally  denied
all  knowledge  of  such  a  price  list,  Henss  later
claimed  that  the  list  was  distributed  by  other
producers as part of a plan of force Isoplus out of
Denmark, although precisely how it was intended
to  produce  that  result  was  not  explained.

The  meeting  considered  proposals  to  bring  up
price levels in Germany, and it seems likely that it
was  agreed  to  prepare  a  new  common  price  list
and to limit discounts to an agreed level (15 % or
30 %).

Tarco states that is was in fact Henss which drew
up  the  list,  possibly  in  collaboration  with  ABB’s
adviser who acted as the coordinator of the cartel
(Article  11  Reply,  pp.  8  and  9).

Løgstør  also  attributes  the  authorship  of  the  list
to  Henss  and  the  cartel  coordinator  (Reply  to
Statement  of  Objections,  pp.  41  and  42).  Their
account  of  the  provenance  of  the  price  list  is
corroborated  by  other  documents,  the  most
striking  being  a  fax  of  28  June  1994  from  the
executive  vice-president  of  ABB  who  headed  the
Transportation  Segment  in  Zürich  (see  points  10,
24, 52) to the newly-appointed managing director
of  ABB  IC  Møller  in  Denmark  endorsing  the
latter’s  instructions  to  the  cartel  coordinator  and
confirming  that  he  (the  executive  vice-president)
had  called  both  the  coordinator  and  Henss  ‘to
state  that  your  instructions  had  to  be  followed.
(The  coordinator)  expressed  that  he  had  now
clearly understood the message and is setting up a
meeting  in  Germany  in  August’  (Appendix  X9).

(56) 

direct 

reported 

The  new  managing  director  of  ABB  IC  Møller
(who 
executive
vice-president referred to above) regarded it as his
first  priority  to  bring  order  to  the  district  heating
market in Western Europe (KWH Statement of 29
November  1996,  p.  6).

the 

to 

later  (on  23  August) 

At  this  time  KWH  was  a  member  of  EuHP  but
had  not  yet  been  admitted  to  the  cartel  and  was
not present. In any case it had almost no presence
in Germany. At an EuHP technical meeting a few
its  representative
days 
became aware of some understanding between the
other  participants,  and  wrote  in  his  diary  ‘the
boys  met,  it  seems  as  if  the  market  has  been
agreed?’  (translated  from  original  Finnish:  KWH
Statement,  p.  7;  KWH  Schedule  B.2.b;  Appendix
185).

Løgstør  attempts  to  minimise  its  role  and  says  it
‘kept  a  low  profile’  in  the  meetings  concerning
Germany  as  it  had  no  major  interest  in  that
market.  It  says  that  it  was  only  because  of  the
adverse  effects  of  the  price  war  that  it  was
compelled to contact the cartel coordinator at the
end  of  June  and  sue  for  peace.  Indeed  it  even
claimed in its reply to the Statement of Objections
(p.  42)  not  to  have  attended  the  meeting  of  18
August,  but  this  assertion  is  refuted  by  the
information  provided  by  Løgstør  itself  under
Article  11,  showing  that  its  sales  director  had
attended the meeting in question on that date. (In
fact Løgstør had already been actively involved in
the initial contacts in March-April and on its own
admission  attended 
in
Hannover  and  received  the  price  list  which  was
subsequently  drawn  up  and  distributed  by  Henss
and  the  cartel  coordinator).

the  3  May  meeting 

(b) Sharing  of 

the  European  market:  basic

agreement  on  quotas

The meeting of 18 August 1994 (see ABB’s Article
11  Reply,  pp.  43-44)  on  the  German  market  was
in  fact  held  in  Copenhagen  and  was  attended  by
senior  representatives  of  the  six  major  firms  plus
(for  the  first  time)  a  representative  of  Brugg.
Brugg  had  not  officially  been  invited  by  the
coordinator  but  attended  at  the  suggestion  of
Henss.  (Brugg  says  that  it  had  been  given  to
understand  that  if  it  did  not  align  itself  with  the
cartel 
its  main
customers).

it  might  suffer  reprisals  via 

(57) 

Following  their  initiatives  on  the  crucial  German
market,  the  managing  directors  of  ABB,  Løgstør,
Tarco,  Starpipe,  Pan-isovit  and  Henss/Isoplus  did
not  take  long  to  reach  an  overall  settlement  on
the sharing of the European market in the autumn
of  1994.  (The  aspirations  of  KWH,  whose
activities  were  mainly  in  Scandinavia  and  Eastern
European,  appear  to  have  been  accommodated
somewhat  later).

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This  market-sharing  agreement  covered  not  only
the  Community  but  also  Switzerland, 
the
non-member  Nordic 
the  Baltic
republics  and  several  Eastern  Europe  countries.

countries, 

After  that  there  were  plenary  ‘strategic’  meetings
of all six producers on 30 September, 12 October
and  16  November  1994  in  which  the  overall
quotas  for  the  European  market  were  negotiated
and  settled  in  principle.

Quotas  (in  %)  for  the  total  market  were  agreed
for  each  producer.  The  value  of  the  total  market
(in  DKK)  was  calculated  and  the  percentage
Europe-wide  quotas  of  each  producer  were
translated  into  money  terms.  Individual  national
markets  were  then  divided  accordingly  with  the
producers  having  different  quotas  in  each.

At  the  first  meeting  on  30  September  in  which
ABB’s  proposals  were  discussed  it  was  decided
that ABB should visit all the participants and also
seek  to  bring  KWH  and  Brugg  formally  into  the
European  quota  scheme.

(58) 

to 

‘was 

prices 

increase 

The  fundamental  aim  of  the  scheme  was  to  raise
price  levels.  It  was  realised  by  all  that  this
objective could only be achieved by an agreement
on  quotas.  Tarco  states  that  the  purpose  of  the
agreement 
by
approximately 30 to 35 % within a period of two
years.  It  was  expected  there  would  be  gradual
increases  every  quarter  . . . .  Not  all  companies
were  supposed  to  increase  their  prices  but  the
same  percentage  at  the  same  time.  The  usual
practice  was  to  have  a  6  to  8 %  increase  per
quarter  depending  on  the  individual  company
price  list’  (Tarco’s  Reply  to  second  Article  11
request,  p.  18).

It was at this meeting that agreement was reached
in principle that an overall quota system be set up
for  Scandinavia,  the  rest  of  Western  Europe  and
Eastern  Europe  with  detailed  figures  for  each
national  market  to  be  agreed  and  passed  to  the
lower 
for
marketing 
implementation  (ABB’s  Article  11  Reply,  pp.  62
and  63).

meetings 

level 

that 

ABB  says 
the
the  global 
European-wide  quotas  were  agreed  in  the  (third)
strategic  meeting  on  16  November  (ABB’s  Article
11  Reply,  p.  64).

figures 

for 

Pan-Isovit’s notes setting out details of the scheme
(Appendix  60)  confirm  that  the  plan  was  to
increase  prices  by  at  least  25 %  in  1995.

The  minutes  of  an  ABB  Business  Group  meeting
held  on  30  September  1994  refer  to  the  wish  of
ABB  and  its  competitors  to  get  prices  up  and
continues:  ‘Relative  price  increases  of  10 %  and
another  10 %  to  cover  the  increase  of  material
prices  can  be  expected’  (Appendix  61).

(59) 

From  the  version  of  evens  given  by  the  different
producers (such as ABB’s Article 11 Reply, pp. 62
to  65;  Løgstør’s  Reply 
to  Statement  of
Objections,  pp.  43  to  45.  Tarco’s  Reply  to  first
Article  11  request,  p.  5;  Tarco’s  letter  of  10  July
1996;  Pan-Isovit’s  Article  11  Reply,  pp.  54  and
55) it appears that there was first a meeting of the
in  Billund  on  16
four  Danish  producers 
September  1994,  when  ABB  explained 
its
proposal  for  a  new  European  arrangement.

(60) 

Tables found at Pan-Isovit (Appendix V to Article
11  request  to  Pan-Isovit;  Appendix  60)  indicate
that  at  this  stage  the  basic  quotas  (‘earlier
decisions’)  were  agreed  as  follows:

—  ABB:

37 %,

—  Løgstør:

20 %,

—  Tarco:

10 %,

—  Pan-Isovit:

10 %,

—  Isoplus:

10 %,

—  Starpipe:

6 %,

—  Others:

2 % (8).

(8)  Løgstør  in  its  Article  11  Reply  (Statement  I,  p.  74)  gave  a
slightly  different  version  of  the  agreed  quotas  with  ABB  at
37 %,  itself  at  18 %,  9 %  each  for  Tarco,  Pan-Isovit  and
Isoplus and 5,5 % for Starpipe; in its Reply to the Statement
of  Objections  (p.  45)  it  claims  that  these  shares  were  finally
agreed  on  20  March  1995.  In  fact  the  basic  quotas  had
already  been  agreed  much  earlier.

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Pan-Isovit’s  note  (Appendix  60)  which  sets  out
the  details  of  the  cartel  agreement  shows  the
scheme  as  coming  into  effect  as  from  1  October
1994.

KWH  was  drawn  into  the  scheme  of  collusion
earlier  than  it  admits.  At  the  end  of  1994  it  had
already  met  ABB’s  Finnish  subsidiary  ‘regarding
expectations 
(ABB’s
volume’ 
Supplementary  Article  11  Reply,  p.  26).

for  market 

(61) 

KWH  and  Brugg  were  not  present  at  the  meeting
of  16  November  but,  since  ABB  was  optimistic
that  they  could  be  accommodated  in  the  scheme,
it was mandated by the cartel to work out a final
agreement  with  these  two  producers  and  report
back  n  early  1995  (Løgstør’s  Reply  to  Statement
of  Objections,  p.  45).

specific  allocation.  Not 

Brugg  —  which  had  been  in  the  Copenhagen
meeting  on  18  August  and  attended  the  local
meetings  for  Germany  from  December  1994  —
seems  to  have  been  accommodated  first:  it  says
that  it  was  told  in  December  that  there  was  a
quota  agreement  for  Germany  but  as  yet  it  did
not  have  a 
long
afterwards  (it  says)  it  was  informed  by  ABB  that
it had been given its own quota (corresponding to
4 %  in  Germany)  by  the  directors’  club  (Article
11  Reply,  p.  6).  Løgstør  (Statement  I,  p.  74;
Reply 
to  Statement  of  Objections,  p.  45)
attributes  a  somewhat  more  active  role  to  Brugg:
it  says  that  Brugg  had  demanded  a  2 %  share  of
the  market  overall  and  4 %  of  the  German
market.  Brugg  also  wanted  flexible  pipes  to  be
excluded from the agreement and a guarantee that
there  would  be  no  new 
in
Switzerland.  Its  conditions  seem  to  have  been
accepted; at any rate, only those projects in which
Brugg  was  competing  with 
the  other  pipe
producers  counted  towards  its  quota.

competitors 

(62) 

to 

come 

entirely  or 

According  to  KWH,  it  came  under  sustained
pressure  from  the  other  producers  either  to  quit
the  market 
to  an
accommodation with the cartel. This may well be
true,  but  there  is  also  considerable  evidence
suggesting  that  KWH  was  hoping  to  secure  a
larger  share  of  the  market  than  the  others  were
willing to give it. KWH was also prepared to quit
the district-heating market entirely if it were given
a  five-year  guarantee  that  the  others  would  buy
pipes  from  it,  and  detailed  discussions  took  place
on  this  proposal.

The  managing  director  of  KWH  Pipe  Oy  (who
was  also  Chairman  of  KWH  Tech)  attended  a
meeting  with  ABB  on  19  January  1995 
in
Copenhagen  at  which  on  its  own  admission
‘market  trends’  were  discussed.  (KWH’s  Article
11  Reply,  p.  9).

KWH first attended the Danish contact group (see
(77)  on  4  April  1995  (ABB’s  Supplementary
Reply,  p.  7).

The  evidence  found  at  Pan-Isovit  (Appendix  60)
indicates  that  by  this  time  KWH  had  already
made  known  its  aspirations  for  an  allocation
under  the  quota  system.  KWH  also  admits
attending  a  ‘working  dinner’  on  14  March  1995
with  the  managing  director  of  ABB  IC  Møller  to
discuss  market  shares  (KWH  Statement,  p.  8;
KWH  Schedule  B.2.a.).

to 

the  detailed  note  made  by
According 
Pan-Isovit’s  managing  director  of  a  Directors’
Club  meeting  in  March  or  April  1995  (Appendix
60)  the  initial  reaction  to  KWH’s  demands  for
quotas  in  various  markets  was  ‘Can’t  do!’

(63) 

In late April 1995 KWH took the decision to join
the  directors’  club  (KWH  Statement,  p.  10).  As  a
result, ABB was able to produce a definitive table
of  market  shares  for  each  national  market,
including  the  Baltic  and  East  European  countries.
The first meeting which KWH attended was on 5
May.  At,  or  just  before,  that  meeting  its  quota  in
the  cartel  was  doubled  from  the  proposed  DKK
76  million  to  DKK  144  million  (3,8 %).

The  Commission  has  obtained  from  both  Tarco
(Appendix  62)  and  KWH  (Appendix  186)  the
table  setting  out  the  quotas  for  each  country  in
percentage  and  money  value  based  on  an
estimated  total  market  of  DKK  3 794  million
(ECU  513  million).

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It  was  approved  at  the  directors’  meeting  in
Budapest  on  5  May  1995.

(64) 

The  principle  underlying  the  quota  system  was
that,  in  future,  market  share  could  only  be
‘bought’.  Løgstør  explains  (Statement  II,  p.  90)
that  ABB  insisted  on  a  ‘deadlock’  in  the  market:
market  shares  were  to  be  frozen.  If  a  producer
wanted  to  increase  its  overall  market  share,  it
could  do  so  only  via  the  acquisition  of  a
competitor.  This  is  corroborated  by  a  Pan-Isovit
note:  ‘Market  shares  can  only  be  bought  —  not
taken’  (Appendix  60).

shares 

Those  producers  whose  market 
in
particular countries were considered too low were
encouraged  or  required  to  withdraw  from  those
their  marginal  commercial
markets  because 
presence  tended  to  push  down  price 
levels.
(Appendices  63,  64:  Løgstør  Statement  II,  p.  90;
Starpipe’s  Article  11  Reply,  sub  K(g);  Pan-Isovit
Article  11  Reply,  pp.  28-32).  In  return  for  giving
up  this  business,  they  received  compensation  in
the  form  of  an  increase  of  their  quota  allocation
in  other  markets  in  which  they  were  already
present.

In  practice,  the  ‘swap  deals’  were  made  on  a
bilateral basis. Pan-Isovit left the Netherlands and
was  compensated  in  Italy;  Isoplus  was  the  other
way  round.

(65) 

To  police  the  quota  system,  a  compensation
scheme  was  conceived,  ABB  says  (Article  11
Reply,  p.  63)  that,  when  the  arrangements  were
being  discussed  in  1994,  Henss  had  strongly
advocated  a  system  of  fines  for  non-compliance
but  agreement  was  not  reached  on  this  point.

Detailed  notes  of  a  directors’  club  meeting  in
March  or  April  1995  made  by  Pan-Isovit
for  a
(Appendix  60) 
compensation  mechanism  which 
penalises
‘cheating’  on 
individual  projects,  namely  by
taking  the  contract  from  the  designated  favourite
by  undercutting  the  agreed  price:

the  basis 

sets  out 

‘—  min  price  level  —  not  to  go  under  in  any
case/any  market  (except  when  decided,  e.g.
Powerpipe),

—  penalty 

if 

lower  price 

in  any  one

object/customer,

—  obj/customer  subtracted  from  market  share
that year (if 11 million project is taken for 8,
penalty  is  4).’

Tarco  says,  however,  that  the  compensation
system did not in fact operate at this level, namely
for  individual  projects:  the  producers  had  in  fact
envisaged  equalisation  on  a  comprehensive  basis
to  adjust  for  deviation  from  quotas.  The  basic
principle  was  that  at  the  end  of  the  year  the
performance  of  each  producer  against  quota  was
be
ascertained 
and 
regularised  either 
the
following  year’s  quotas  or  by  payment  of
compensation.

discrepancies  would 
the  allocation  of 
in 

(c)  The  European  cartel  structure

(i)  T h e   d i r e c t o r s ’   c l u b

(66) 

The  pan-European  cartel 
structure  on  the  Danish  model.

involved  a  two-tier

The  supervisory  body  consisting  of  the  chairman
or  managing  directors  of 
the  participating
producers  was  known  as  the  ‘directors’  club’.

The  participants  in  the  directors’  club  were:

—  ABB,

—  Løgstør,

—  Starpipe,

—  Tarco,

—  Henss/Isoplus,

—  Pan-Isovit,

—  KWH  (from  5  May  1995).

(67)  Having  agreed  the  quotas  in  the  global  market,
the  directors’  club  (now  also  called  the  ‘Elephant
group’)  met  subsequently  to  fix  the  individual

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market-share  allocations  in  the  different  national
markets,  including  Germany,  Denmark,  Austria,
the  Netherlands,  Finland,  Sweden  and  Italy.  It
was at this time (November-December 1994) that
the
Powerpipe  had  brought 
attention  of  ABB’s  executive  committee  and  had
been  warned  to  refrain  from  making  ‘unjustified’
allegations  (Appendices  8  to  16).

the  matter 

to 

The directors continued to meet at approximately
monthly  intervals  at  various  locations  both  inside
and  outside  the  Community.  KWH  joined  the
club  and  attended  its  meetings  from  5  May
1995.

The  directors’  club  was  also  the  forum  for
agreeing overall price increases.

In  the  case  of  new  tenders  for  large  projects
where  there  was  no  firm  existing  customer
relationship,  the  contract  was  allocated  to  one  or
other  producer  in  accordance  with  the  remainder
its  agreed  annual  quota.  Any  project
of 
announced  which  was  worth  more 
than  a
specified  amount  had  to  be  registered  with  the
‘coordinator’  appointed  by  the  cartel  for  the
market  in  question.  In  Germany  this  threshold
was  DEM  50 000.

for 

some  non-member 

Contact  groups  were  set  up  for  (at 
least)
Germany,  Denmark,  Austria,  Italy,  Sweden,  the
Netherlands,  the  United  Kingdom  and  Finland  as
well  as 
countries
(Appendix  67).  In  the  main,  the  members  were
the  local  sales  managers  or  directors  but  on
occasions  more  senior  executives  participated.
Details  of  how  the  contact  groups  operated  in
each  Member  State  are  set  out  in  the  following
section.

Detailed  contemporaneous  notes  of 
several
meetings of the directors were found at Pan-Isovit
(Appendices  60,  65  and  66).

(d) Implementation  in  national  markets

(i)  G e r m a n y

(ii) C o n t a c t   g r o u p s

(68) 

‘Marketing’ or ‘contact’ groups consisting of local
sales  managers  were  set  up  in  each  important
national  market  and  were  given  the  task  of
administering  the  cartel  arrangements  under  the
overall  supervision  of  the  directors’  club.  The
national  contact  groups  did  not  decide  quotas:
these  were  fixed  for  each  country  at  the  more
senior  level.  Their  task  was  to  assign  individual
projects  and  coordinate  the  collusive  bidding
procedure.

The  ‘established  customer’  principle,  which  had
been  the  basis  of  the  Danish  cartel  was  again
employed.  For  most  projects,  the  traditional
supplier  was  designated  the  ‘favourite’  and  the
other  producers  had  to  either  decline  to  bid  or
give a higher ‘protect’ quote so as to ensure that it
received  the  contract.  In  the  case  of  major
projects,  where  there  might  be  several  suppliers,
the  producers  which  normally  supplied 
the
customer  were  supposed  to  bid  and  to  share  the
contract  between  them.

(69) 

The  contact  group  for  Germany,  where  the
market  for  1995  was  initially  estimated  at  almost
ECU  180  million  (later  revised  to  ECU  160
million),  met  every  week  or  fortnight.  Its  first
meeting under the new arrangements was held on
7  October  1994,  the  six  major  producers  (and
Brugg)  having  met  in  Copenhagen  on  18  August
to  decide  the  measures  which  could  be  taken  to
increase  the  price  level  in  Germany.

The  usual  participants  were:

—  ABB  (Isolrohr),

—  Løgstør,

—  Tarco,

—  Starpipe,

—  Henss/Isoplus,

—  Pan-Isovit,

—  Brugg  (from  7  December  1994).

(ABB’s Article 11 Reply, p. 67: Tarco’s Statement,
p  7;  Brugg’s  Article  11  Reply,  Annex  2;  Henss’
Supplementary  Statement,  Annex  7).

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long 

probably 

before.  ABB 

The  managers  of  the  German  producers  had,
however,  already  been  meeting 
to  examine
individual  projects  in  Germany  from  May  1994
and 
says
(Supplementary  Article  11  Reply,  p  10)  that  in
contrast  to  the  other  contact  groups  the  German
marketing group was not a new group established
by  the  director’s  club,  but  the  reconstitution  of  a
body which had previously ‘convened periodically
earlier
over  an 
incarnation, this group had been organised by the
same  retired  business  executive  who  had  been
engaged as the ‘coordinator’ of the cartel and had
the  regular  meetings  of  managing
arranged 
directors  in  1991-1993  (see  (33),  (42)  and  (45)).

extended  period’. 

its 

In 

(70) 

The  quotas  on  the  German  market  (Appendices
62,  68  and  69)  were  originally:

—  ABB:

24 %,

—  Pan-Isovit:

21 %,

(72) 

—  Isoplus:

18,5 %,

—  Tarco:

—  Løgstør:

17 %,

11 %,

—  Starpipe:

3,5 %,

—  Others:

5 %.

provide  him  every  month  with  details  of  their
turnover  figures,  the  value  of  orders  supplied  and
their offers for individual projects including those
in  which  the  bidding  had  not  closed.  Firms  were
also  required  to  report  all  known  projects  during
contact  groups  meetings.  The  information  was
kept  on  a  data  base  on  a  portable  computer  and
an  updated  list  of  projects  was  produced  by  ABB
Isolrohr  for  each  meeting.  By  January  1995
meetings  were  being  held  virtually  every  week.
The  participants  had  to  notify  ABB  Isolrohr  each
Wednesday of the projects for which they had bid
and  the  sum  they  had  quoted  for  each.  This
computerised list kept by ABB indicated the value
of  projects,  the  ‘favourite’  (meaning  the  supplier
designated  by  the  cartel)  and  the  firm  to  which
the  contract  was  actually  awarded.

This  complex  mechanism  enabled  the  German
Contact  Group  to  monitor  some  1 400  to  1 500
projects  per  year  which  were  over  the  DEM
50 000  threshold.  Examples  of  the  project  lists
the  Article  14(3)
were  obtained  during 
investigations  at  both  Henss  in  Berlin  and  Tarco,
and  further  examples  have  been  provided  to  the
Commission  by  the  latter  (Appendices  68,  71,  72
and  73).

Brugg,  first  included  among  ‘others’  (‘Sonstige’)
was  subsequently  given  a  quota  of  4 % 
in
Germany  or  2 %  overall.  (Løgstør  Article  11
Reply,  Statement  I,  p.  74;  Brugg’s  Article  11
Reply,  p.  6).

Other  lists  (headed  ‘Favorit  +  Angebotsumme’
and  ‘Auftrag  +  Angebotsumme’)  used  for  control
purposes  were  maintained  both  for  the  German
market  as  a  whole  and  for  each  of  the  Länder
(Appendices  74,  75  and  76).

(71)  Once  the  reconstituted  German  contact  group
was  fully  operational,  its  main  function  was  to
allocate individual projects in accordance with the
‘established  customer’  principle  and  the  annual
quotas,  and  to  coordinate  and  monitor  the
bidding  procedure  for  each  project  to  ensure  that
the  agreement  was  respected.  All  projects  worth
over  DEM  50 000  were  to  be  subject  to  the
allocation  and  bid-rigging  procedure.

Similar tables and lists relating to the allocation of
projects 
in  Germany  were  provided  to  the
Commission  by  Henss  on  10  October  1996
(Appendices  77,  77  and  79).

The  new  ‘coordinator’  for  the  German  market
was  the  managing  director  of  ABB  Isolrohr
GmbH  (the  retired  Danish  executive  who  had
previously performed this role having by this time
ceased  to  play  an  active  part  in  the  cartel).  The
various  suppliers  were  originally  required  to

(73) 

As  the  basis  for  their  pricing  calculations,  the
members  of  the  German  Contact  Group  used  as
so-called  ‘Europa-Preis  Liste’  (also  called  the
‘EU-list’  or  ‘Euro  price  list’)  which  was  intended
to  serve  as  a  common  price  list  for  all  supplies.

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The  producers  say  that  despite  its  name,  it  was
intended  for  the  German  market  only.

This  Euro  price  list  was  in  essence  the  one  which
had  been  referred  to  in  the  invitation  to  the
Copenhagen meeting (Appendix 56) as the ‘list of
9  May’,  presumably  enlarged  and  updated.  By
most  accounts  it  was  drawn  up  by  ABB  and
Henss.  As  originally  conceived  it  gave  prices
which  were  some  30 %  above  the  then-prevailing
price levels, the idea being that it should provide a
target  price  or  point  of  reference  with  the
progressive  reduction  of  discounts.

were  not  allocated  a  particular  contract  could
quote  at  5 %  below  the  list-price,  while  the
‘favourite’  could  go  down  to  10 %  below.  At  the
meeting on 10 January 1995 ABB says that it was
agreed  that  all  orders  below  the  Euro  price  list
would  be  written  up  to  list  price  (See  also
Starpipe’s  note  of  the  meeting,  Appendix  70).

There  were,  however,  still  complaints  about
indiscipline  and  low  prices,  and  on  20  March
1995  the  directors  decided  that  as  from  10  a.m.
the next day the Euro price list was to be applied
without  exception 
the  German  market
(Starpipe’s  Article  11  Reply,  under  J,  K  and  L;
Appendices  83  and  84).

in 

There were numerous references to this list in the
documents  found  at  various  undertakings  during
the  investigations,  but  it  was  only  in  April  1996
that a copy was obtained from Tarco (Appendices
80-81).

(75)  During the regular meetings of the contact group,
individual  projects  were  monitored  and 
the
progress  of  the  bidding  procedure  and  the  offers
of  each  producer  scrutinised  so  as  to  ensure
compliance.

it  was 

employed, 

Whereas  in  their  replies  under  Article  11  of
Regulation  No  17  in  early  1996,  ABB,  Tarco,
Starpipe  and  Brugg  all  described  in  some  detail
how 
the  Henss/Isoplus
companies  originally  denied  all  knowledge  of  it
and  even  of  the  German  contact  group  (Henss’
Reply  to  Article  11  request,  pp.  14  and  15).
Isoplus  finally  admitted  the  existence  of  the  Euro
price  list  in  its  Statement  of  10  October  1996  (p.
26)  and  indeed  provided  a  copy.

(74) 

Soon  after  the  German  Contact  Group  began  to
meet,  it  was  agreed  (4  November  1994)  that
orders  taken  prior  to  15  October  could  be  at
Euro price list levels, minus 30 %, orders after 15
October  at  list-price  minus  15 %,  and  that  no
discounts at all were to be granted after 1 January
1995.  (ABB’s  Article  11  Reply,  pp.  67  and  68;
Appendix  82,  found  at  Pan-Isovit).  Brugg,  which
says  it  was  given  the  Euro  Price  list  when  it
started  coming  to  contact  group  meetings  at  the
end  of  1994,  recalls  that  the  producers  which

Hand-written  notes  which  relate  to  this  control
mechanism were discovered at Henss’ premises in
Rosenheim,  Germany.  For  each  of  a  series  of
pending  projects,  the  ‘list  price’  (presumably  less
the  appropriate  discount)  is  compared  with  the
offers  which  the  different  producers  had  declared
in  accordance  with  the  reporting  procedure
described at point 71. Clearly, the producers were
required  to  explain  themselves  if  any  deviation
from  the  agreement  was  suspected  (Appendix
85).

There  is  a  considerable  amount  of  documentary
evidence  that  where  —  contrary  to  the  rules  of
the cartel — a rival submitted an offer below that
of  the  ‘favourite’,  pressure  was  exerted  on  it  to
withdraw  its  offer.  Henss  in  particular  was  eager
to  enforce  the  agreements.  Thus  for  two  projects
(Stassfurt,  Zeitz)  Starpipe  had  to  promise  Henss
in  writing  that  it  would  not  quote  below  a
particular  price  (Appendices  86  and  87);  in  the
case  of  Erfurt-Tiergarten,  Løgstør  had  (at  Henss’
behest)  to  withdraw  its  offer  and  give  an  excuse
(Appendices  92  and  93);  where  Tarco  had  in
Henss’view  undercut  the  ‘Euro  price’  and  thereby
been  promised  a  project  (Straubing)  which  Henss

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that 

had  claimed,  the  managing  director  of  Henss
Rosenheim  ‘reacted  in  an  uncontrolled  fashion
and  demanded 
I  withdraw  our  offer’
(Appendices 88 and 89). In other cases Tarco did
indeed  withdraw  from  certain  projects  following
pressure  from  Henss  (Tarco’s  first  Article  11
Reply,  p.  4;  Appendix  91).  Tarco  was  one  of  the
main offenders and claims to have misrepresented
the  real  prices  it  quoted.  However  (says  Tarco)
Henss  was  always  able  to  discover  what  the  true
prices and orders were and in telephone calls and
at  meetings  of  the  directors’  club  repeatedly
accused  Tarco  of  cheating.  Henss  and  ABB  kept
special lists of projects where Tarco had allegedly
cheated  (Appendix  90).

(76) 

Contact  group  meetings  for  Germany,  as  well  as
other  cartel  meetings,  continued  long  after  the
Commission  carried  out  its  investigations  at  the
end  of  June  1995.

Following the Commission’s investigations, it had
been  considered  prudent  to  hold  the  meetings
outside  the  Community,  and  they  were  moved  to
Zurich.  (According  to  Løgstør,  it  was  principally
ABB  which  pressed 
to
continue).

the  meetings 

for 

The  meetings  in  Zurich  continued  with  all  the
same  participants  as  before  until  25  March  1996
—  some  days  after  the  undertakings  had  received
the  Article  11  requests  from  the  Commission.

(78) 

Løgstør (Reply to Statement of Objections, p. 51)
states  that  in  January  ABB  had  proposed  setting
up  a  permanent  secretariat  in  Zurich  for  the
German cartel, and that as late as May/June 1996
ABB’s  German  operation  was  still  contacting
Løgstør’s  local  subsidiary  company.

(ii) D e n m a r k

The  members  of  the  group  were:  ABB,  Løgstør,
Tarco,  Starpipe,  Isoplus,  Pan-Isovit  and  KWH.
(See  Tarco’s  Statement,  p.  7;  ABB’s  Article  11
Reply,  p.  66;  ABB’s  Supplementary  Article  11
Reply,  p.  7).

Tarco  says  that  when  the  contact  group  was
originally  set  up,  the  four  Danish  producers  first
met  together  privately  and  afterwards  they  either
let  KWH,  Isoplus  and  Pan-Isovit  join  them  or
delegated  one  of  their  number  to  meet  the  three
non-Danish  manufacturers;  later,  however,  all
firms participated in the Danish contact group on
an  equal  footing.  Pan-Isovit  claims  (Article  11
Reply,  p.  63)  that  the  Danish  market  was
dominated  by  the  four  local  producers  and  that
the  other  three  rarely  attended  meetings:  they
simply  met  the  new  producers  (from  Løgstør)
who  told  them  what  projects  had  been  allocated
to  them.  (This  account  appears  to  be  confirmed
by  ABB’s  Supplementary  Article  11  Reply.)
Indeed,  it  seems  that  in  August  1994  the  four
Danish  producers  had  met  and  agreed  that
Pan-Isovit  ought  to  withdraw  from  Denmark
(Appendix  98).  Since  75 %  of  sales  in  Denmark
are  made  direct  to  established  customers,  the
market-sharing  agreement  was  implemented  here
principally  on  the  basis  of  respect  for  existing
relationships.

The  fidelity  arrangement  operated  well  and
according  to  ABB  (Article  11  Reply,  p.  66)  was
complied with in 70 to 80 % of cases. There were
therefore  only  a  limited  number  of  cases  in
Denmark where a new project had to be allocated
among  the  producers.  If  a  competitor  underbid
the  usual  supplier  and  ‘stole’  the  business,  this
was  generally  corrected  by  the  allocation  to  the
in
aggrieved 
compensation.

favourite  of  another  project 

A  reporting  system  similar  to  that  used  (on  a
much larger scale) in Germany seems to have been
employed  (Appendices  99  and  100).

(77) 

The  new  Danish  contact  group  was  set  up  in
October  1994.  It  met  approximately  once  a
month,  usually  in  hotels  in  Jutland.

The  cartel  originally  estimated  the  total  market
for  1995  at  some  DKK  640  million  (almost  ECU
90  million),  a  figure  which  was  later  revised  to
DKK  610  million  (ECU  83  million).

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The last full meeting of the Danish contact group
was  held  on  11  March  1996,  but  two  short
meetings  took  place  on  18  April  1996  between
executives  of  ABB  and  Løgstør:  each  blames  the
initiative  to  call  these
other  for  taking  the 
meetings  so  as  to  find  a  way  to  continue  the
cooperation 
(ABB’s
other 
Supplementary  Article  11  Reply,  p.  9;  Løgstør’s
Reply  to  Statement  of  Objections,  p.  52).  By  this
time,  the  participants  had  received  the  requests
for  information  under  Article  11,  and  indeed
ABB’s  legal  advisers  had  twice  written  to  the
Commission 
their  clients’
willingness  to  cooperate  with  the  investigations.

informing 

means 

it  of 

by 

—  Tarco:

14 %,

—  Starpipe:

5 %,

—  Isoplus:

5 %,

—  Pan-Isovit:

4 %.

(iii) N e t h e r l a n d s

(79) 

The  Netherlands  contact  group  was  originally
supposed  to  meet  only  twice  a  year.  (ABB’s
Article 11 Reply, p.70) The first meeting was held
on  14  March  1995  in  Amsterdam.  According  to
other producers, ABB took the initiative in setting
up the group and chairing the meeting (Starpipe’s
Article 11 Reply, under H; Pan-Isovit’s Article 11
Reply,  p.  59).  Participants  at  this  meeting  were
from  ABB,  Løgstør,  Tarco,  Starpipe  and
Pan-Isovite  together  with  local  representatives.
(ABB’s 
includes  a
representative  of  Isoplus;  this  company  hand  quit
the  Italian  market  in  return  for  an  increased
quota  in  the  Netherlands).

list  of  participants  also 

During the investigation the Commission obtained
both  Starpipe’s  contemporaneous  note  of  the
meeting  of  14  March  1995  (Appendix  101),
together  with  a  table  setting  out  contracts  and
projects  for  1995  (Appendix  102)  and  how  they
were  to  be  allocated  and,  from  Pan-Isovit  a
virtually  identical  table  (Appendix  103).

(80) 

The  total  market  (worth  around  ECU  22,5
million)  was  to  be  divided  up  according  to  the
following  quotas  (Appendices  102  and  103:  also
Appendix  62):

—  ABB:

45 %,

—  Løgstør:

25 %,

These  were  the  original  quotas  allocated  by  the
Directors’  Club.  Actual  market-shares  anticipated
for  1995  were  somewhat  different:  ABB  was
expected  to  take  50 %  of  the  expected  business
and  Løgstør  28 %,  while  the  three  smaller
producers  were  below  their  quota.  Starpipe  says
that  the  table  of  projects  was  compiled  from
figures supplied by the participants who indicated
their  budget  for  the  year.  (Starpipe’s  Article  11
Reply,  under  H).  If  (as  expected)  there  was  a
deviation  from  quota  at  the  end  of  the  year  it
would  have  had  to  be  dealt  with,  although
precisely how this equalisation was to be achieved
is  not  specified.

(81) 

Pan-Isovit’s  expected  market-share  being  only
2,5 %,  it  was  decided  in  the  first  meeting  that  it
should  quit  the  Dutch  market  and  cede  its  share
to  Isoplus  in  return  for  an  increase  by  an
equivalent sum of its allocated share in Italy (and
Austria):  see  Pan-Isovit’s  Article  11  Reply,  pp.  58
to  60;  Appendices  64  and  103.  This  would
explain why Pan-Isovit attended only one meeting
and was replaced by Isoplus. Regular participants
thereafter were ABB, Løgstør, Tarco, Starpipe and
Isoplus.

After the first meeting, it was agreed that Løgstør
should  replace  ABB  as  the  coordinator  of  the
group.

Although ABB said it was only due to meet twice
a year, the Netherlands contact group had at least
another  six  meetings  during  1995  (see  ABB’s
Supplementary  Reply,  pp.  13  to  17)  and  a
meeting  scheduled 
for  13  May  1996  was
cancelled  only  because  of  the  Commission’s
Article  11  requests.

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(iv) A u s t r i a

(82) 

in  Austria  predated 

There  is  substantial  evidence  that  arrangements
for  market-sharing 
the
setting-up  of  the  contact  group  and  the  accession
of  Austria  to  the  European  Union.  However,  any
local  cartel  arrangements  in  this  market  prior  to
the  accession  of  Austria  are  outside  the  scope  of
this  procedure.

After  the  setting-up  of  the  Europe-wide  cartel  in
late 1994 the contact group for Austria met every
three  or  four  weeks.  The  participants  took  it  in
turn  to  organise  the  meetings.  The  first  meeting
between  Austria  sales  directors  and  more  senior
management  from  ABB  and  Henss/Isoplus  took
place  in  December  1994.  (ABB’s  Supplementary
Reply,  p.  24)  It  was,  according  to  Pan-Isovit,
(Article  11  Reply,  p.  62)  organised  by  the  local
producer Ke-Kelit, apparently at the instigation of
ABB. 
independent  Austrian
supplier  of  district  heating  which  uses  Løgstør  as
a  subcontractor  for  its  pre-insulated  pipes).

(Ke-Kelit 

is  an 

(83) 

The quotas originally proposed for Austria by the
directors’  club  and  communicated  to  Ke-Kelit  By
ABB  (Appendices  106,  107)  were:

(85) 

—  Isoplus:

—  ABB:

37 %,

28 %,

—  Ke-Kelit  (LR):

23 %,

—  Pan-Isovit:

—  Starpipe:

—  Tarco:

5 %,

3 %,

2 %.

(See  Appendix  64,  fount  at  Pan-Isovit,  and
Appendix  62,  supplied  by  Tarco.)

The sales of Ke-Kelit in Austria were attributed to
Løgstør  as  part  of  its  overall  European  quota.

The  total  market  in  Austria  was  estimated  by  the
cartel  at  about  ECU  18  million  for  1995.

necessary  adjustments 
individual
projects  in  order  to  keep  market-shares  in  line
with  quotas  (Appendices  108  and  109).

concerning 

Pan-Isovit  identifies  the  participants  in  meetings
(Article  11  Reply,  p.  62)  as  ABB,  Ke-Kelit,
Isoplus,  Pan-Isovit  and  Tarco.  Starpipe  was
represented  by  its  agent,  Gruner  &  Krobath.

to  Pan-Isovit 

the  contact  group
According 
continued  to  meet  throughout  1995  and  two
meetings were even held at the beginning of 1996.
The last meeting was in April 1996. Tarco claims
to  have  withdrawn  from  the  Austrian  market  in
1995.

(v)  I t a l y

The  contract  group  for  Italy  originally  consisted
of  ABB,  Socoløgstør  (a  Løgstør  joint  venture
company) (9),  Tarco  and  Pan-Isovit  who  were
soon joined by Sigma. It first met in Milan on 21
March 1995. A note made a few days later by the
Managing  Director  of  Pan-Isovit  concerning  the
Italian market (Appendix 111) shows that already
large  projects  had  been  allocated  to
several 
Løgstør  and  Pan-Isovit.  (see  also  Pan-Isovit’s
Article  11  Reply,  pp.  26  to  28).

Sigma  had  not  attended  the  first  meeting  but
came to the next one on 12 April 1995 (Appendix
187).

A report made to the Managing Director of Tarco
by  the  local  sales  director  of  the  meeting  held  on
local
12  May  1995  and  attended  only  by 
representatives  (Appendix  112),  shows  that  a
compensation mechanism had already been agreed
to  reinforce  the  quota  system:  if  a  company
exceeded  its  allocation  it  would  pay  a  penalty  to
the  other  participants.  At  the  end  of  the  year,  an

(84) 

The  Austrian  group  met  regularly  in  order  to
implement  the  agreed  market-share  division,  with
discussion  of  prices  and  market-shares  and  if

(9)  Løgstør sales in Italy via Socoløgstør were part of its overall
European  quota  and  the  Commission  rejects  Løgstør’s
contention that ‘the Italian market is not relevant to the case
against Løgstør’. Løgstør is also identified as a participant in
the  first  meeting  of  the  contact  group  for  Italy,  as  well  as  in
a  meeting  concerning  Italy  held  in  Zurich  on  9  June  1995.

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external  auditor  would  be  engaged  to  check
observance  of  the  agreed  quotas.  Sigma,  the  local
Italian  producer,  was  to  have  a  market-share  of
10 %  on  new  projects.

(86) 

The  original  quotas  assigned  to  each  producer  in
Italy wee given in a Pan-Isovit note (Appendix 64)
as  follows:

these  two  producers  had  85 %  of  the  market
(worth around ECU 35 million). Tarco and KWH
were  less  frequent  participants  and  Starpipe  may
have  attended  one  meeting.  The  group  met  on
seven or eight occasions to discuss the ‘established
customer’  principle.  (ABB’s  Article  11  Reply,  p.
69:  Supplementary  Reply,  pp.  21  to  23).  Five  of
these  meetings  took  place  after  the  date  of  the
Commission  investigations,  between  June  and
December  1995.

—  ABB:

—  Løgstør:

—  Tarco:

—  Pan-Isovit:

—  Starpipe:

36 %,

26 %,

12 %,

9 %,

2 %,

—  Sigma  and  others:

15 %.

As  part  of  the  overall  settlement,  Isoplus  was  to
leave  the  Italian  market  and  make  over  its  share
to  Pan-Isovit  (See  also  Pan-Isovit’s  Article  11
Reply, pp. 30 to 32). It would seem that Starpipe
also  agreed  to  quit  the  market  at  an  early  stage
since  (like  Isoplus)  it  did  not  attend  meetings  of
the  contact  group.

table  of  quotas  obtained  by 

the
later 
A 
Commission 
that
following  the  withdrawal  of  Starpipe  some  minor
adjustments  were  made.

(Appendix 

shows 

188) 

The  Italian  district  heating  market  was  originally
estimated  by  the  cartel  at  about  ECU  25  million
for  1995.

Individual  projects  were  allocated 
the
participants  in  accordance  with  their  quotas,  and
developments  were  monitored 
in  periodic
the  meetings  were
that 
It  seems 
meetings. 
characterised by frequent disputes, allegations and
counter-allegations.

to 

The  Italian  contact  group  met  on  seven  occasions
in  1995  and  held  four  meetings  after  the
Commission’s  investigations  in  June  of  that  year.
The last known meeting was held on 9 June 1996
in  Zurich  (ABB’s  Supplementary  Reply,  p.  17).

(vii)  F i n l a n d

(88) 

A  number  of  national  meetings  concerning  the
market 
in  Finland  (worth  around  ECU  15
million)  were  held  during  the  relevant  period
between  ABB,  Løgstør  and  KWH.  Tarco  and
Starpipe  do  not  supply  in  that  market.  The
subject  matter  of  the  meetings  included  expected
market  volume,  prices  and  individual  projects.
(ABB’s  Supplementary  Reply,  pp.  26  to  27).

(viii) U n i t e d   K i n g d o m

(89) 

A  contact  group,  organised  and  led  by  ABB,  was
set  up  in  the  United  Kingdom.  Members  were
ABB,  Løgstør,  Tarco,  Starpipe  and  Pan-Isovit
(Pan-Isovit’s  Article  11  Reply,  p.  62).  Pan-Isovit
said  it  met  four  times,  but  ABB  admits  to
organising  only  one  meeting.  The  United
Kingdom  market  is  worth  approximately  ECU
4  million  annually.

(e)  Concerted  actions  to  eliminate  Powerpipe

(i)  A B B ’ s   s t r a t e g i c   p l a n

(90) 

The  elimination  of  Powerpipe  as  a  competitor
formed  an  essential  part  of  ABB’s  long-term
strategy  of  market  control  from  at  least  1992.

(vi) S w e d e n

(87) 

For  Sweden  the  regular  members  of  the  contact
group  were  ABB  and  Løgstør.  Between  them,

Powerpipe claimed in its complaint (p. 10) that at
this  time  the  other  producers  selling  in  Sweden
were  maintaining  an  artificially  low  level  of
pricing  for  district  heating  pipes,  in  order  to
damage 
its  business.  Corroboration  for  this
suspicion  is  provided  by  the  report  of  ABB’s

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Swedish  management  group  meeting  of  10
February  1992:

various  combinations  to  buy  out  Powerpipe’s
owners,  but  negotiations  were  never  successful.

that 

‘Everyone  was  of  the  opinion  that  it  was  an
action  against  Powerpipe 
should  be
undertaken  (instead  of  a  September  campaign
against  Løgstør  because  Løgstør  has  the  financial
strength to withstand it). Backing from the Board
of  Directors  is  requested  for  ABB,  Ecopipe  and
Løgstør  to  attempt  to  price  out  Powerpipe.  Were
Powerpipe  to  be  forced  into  bankruptcy,  then
ABB  would  be  the  only  company  producing  on
that  market  and  a  powerful  sales  argument  could
be built up, and we can go after Løgstør in Phase
2.’

The  1992  to  1996  Strategic  Plan  of  ABB  of  June
1992  (Appendix  116)  is  also  very  specific:

(92) 

‘Powerpipe (Sweden) is dumping prices in Sweden
very severely and now also in Finland and “Neue
Bundesländer”.  ABB  and  Løgstør  will  try  to
squeeze  him  out  of  the  market’.

(91) 

In  July  1992  Powerpipe’s  first  appearance  on  the
German market led to its owners being invited by
ABB  to  a  meeting  in  Billund  which  was  also
attended  by  Løgstør  and  the  coordinator  of  the
Danish  cartel.

Powerpipe’s  account  of  this  meeting  (Appendix
119)  has  the  two  main  producers  proposing  that
it  should  confine  its  activities  to  Sweden  and  stay
out of the German market in particular, in return
for which they would raise price levels in Sweden
to  an  acceptable  level  and  give  Powerpipe  a
guaranteed  quota.

When  this  offer  was  rejected  by  Powerpipe,
Løgstør  (says  Powerpipe)  offered  to  purchase
Birka’s  shares  in  the  company.  (This  account  is
not  substantially  denied  by  Løgstør,  although  it
attributes  the  main  role  in  the  initiative  to  ABB).

This  was  one  of  a  number  of  occasions  when
Løgstør  offered  to  buy  out  Powerpipe.

Numerous  passages  in  ABB  strategy  documents
during  the  period  covered  by  this  Decision  refer
to  plans  to  force  Powerpipe  into  bankruptcy.

(ii) H i r i n g   o f   k e y   P o w e r p i p e   e m p l o y e e s

salaries  and 

In 1993 ABB embarked on a systematic campaign
of  luring  away  key  employees  of  Powerpipe,
including  its  then  managing  director,  by  offering
them 
conditions  which  were
apparently  exceptional  in  the  business.  According
to Powerpipe the prime purpose of this tactic was
to  hamper  Powerpipe  in  the  market  by,  first,
obtaining 
its
strategies  and  markets  and,
manufacturing, 
secondly,  adversely  affecting  its  relations  with
customers  until  such  time  as  a  replacement  could
be  found.

information 

regarding 

internal 

ABB  and  Løgstør  had  already  agreed  in  their
meeting  on  13  November  1992  to  hire  the  then
managing  director  of  Powerpipe  and  share  the
cost  of  employing  him  as  a  ‘consultant’  operating
out  of  ABB’s  lobbying  office  in  Brussels.  (ABB’s
original idea had been to make him vice-president
of ABB Motors in Spain: Appendix 27.) It is clear
that  this  arrangement  was  directly  aimed  at
Powerpipe:

‘We  agreed  on  a  common  action 
towards
Powerpipe  in  Sweden  by  employment  of  [X]’ (10)
(Appendix  48).

ABB admits (Article 11 Reply, p. 26) that, in their
November  1992  meeting,  it  and  Løgstør  had
shelved  plans  jointly  to  acquire  Powerpipe  as  a
going  concern.  Hiring  its  managing  director  was
seen  an  ‘interim  step’  which  would  hasten  what
was  perceived  by 
inevitable
insolvency of Powerpipe. Its customers could then
be  divided  between  ABB  and  Løgstør 
in
accordance  with  their  agreed  shares  on  the
Swedish  market.

them  as 

the 

Indeed  at  various  times  ABB,  Løgstør,  Pan-Isovit,
Tarco and Isoplus have all tried either alone or in

(10) The  full  name  appears  in  the  original  document.

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(93) 

The  employment  of  Powerpipe’s  Managing
Director  was  regarded  by  ABB  as  part  of  the
overall European settlement which it  envisaged in
mid-1993:

October  1994,  Powerpipe  Fernwärmetechnik
GmbH  was  for  the  first  time  involved  in  the
bidding 
contract
(Neubrandenburg).

important 

for 

an 

in 

‘The  situation 
[Denmark,  Germany  and
Poland] will probably be settled by a reduction of
ABB’s  market-share  in  Denmark  by  1,5 %  and
in  Løgstør’s
acceptance 
market-share  in  Poland  in  the  long  term,  as  well
as  the  fact  that  we  have  employed  [X].’

increase 

an 

of 

Løgstør  was  to  pay  40 %  and  ABB  60 %  of  the
cost  of  employing  him  (Appendix  120).  He  left
Powerpipe 
joined  ABB.
late  1993  and 
Subsequently,  at  least  part  of  his  duties  was  to
provide 
intelligence  to  ABB  on  Powerpipe’s
activities.

in 

Løgstør  attempts  to  minimise  its  role  in  this
venture but accepts that the ‘joint’ employment of
this  key  Powerpipe  employee  was  an  ‘unwise
decision’:

(95) 

‘We  have  not  gained  much  from  [X’s]  activities
. . . We knew that the appoint(ment) of [X] could
be regarded as a negative act towards Powerpipe.’
(Article  11  Reply,  Statement  I,  p.  76).

The  plan  to  damage  Powerpipe  by  hiring  its
managing  director  was  known  to,  and  approved
by,  ABB’s  senior  management  at  a  high  level.

Two  other  important  Powerpipe  employees  were
hired  by  ABB  within  the  year,  on  conditions  of
employment  which  Powerpipe  claimed  were  far
more attractive than any normal industry practice.
idea  of  damaging
Even 
Powerpipe  by,  inter  alia,  hiring  its  key  employees
was  still  being  discussed.  Meeting  notes  found  at
Pan-Isovit read: ‘Power-pipe — how to counteract
—  hire  salesman  D!’  (Appendix  122).

in  early  1995  the 

(iii)  P o w e r p i p e   i s   w a r n e d   o f f   t h e   G e r m a n

m a r k e t

(94) 

Powerpipe  continued  its  efforts  to  enter  the
German  market  as  a  serious  contender  by  setting
up  a  German  sales  subsidiary  in  April  1994.  In

The bidding procedure for this contract coincided
with  the  first  meeting  of  the  German  contact
group under the new arrangements on 7 October.
The  sequence  of  events  which 
is
described  by  Powerpipe  in  a  memorandum  dated
(Appendix  124).  The
13  December  1994 
Neubrandenburg  contract  (which  was  to  be
carried  out  in  four  phases:  BA  6  Los  1  —  Los  4)
was  allegedly  valued  by  the  cartel  at  about  DEM
980 000  in  total.

followed 

After  it  became  known  that  Powerpipe  was
bidding  for  the  project,  Powerpipe’s  German
subsidiary  was  telephoned  on  10  October  by
Henss  which  demanded  that  Powerpipe  should
position  its  bid  at  such  a  level  that  Isoplus  was
awarded the contract. Isoplus’s bid for the project
was  dated  11  October  —  that  is,  the  next  day
(Appendix  125).

According to Powerpipe, a whole series of threats
was  made  and  various  inducements  were  offered
in an attempt to ‘persuade’ Powerpipe to abandon
the  contract.  When  Powerpipe  proceeded  with  its
bid  (which  was  substantially  below  the  price
agreed by the cartel) the matter was taken up at a
higher  level,  with  senior  executives  of  Henss  and
telephoning  both
Løgstør 
(among  others) 
Powerpipe’s  Managing  Director  and 
its  then
owner  on  numerous  occasions.  Powerpipe  made
contemporaneous  minutes  of  these  conversations
(Appendices  126  to  133).

These  notes  show  that  Powerpipe  was  given  the
alternative  of  abandoning  the  Neubrandenburg
contract  in  favour  of  Isoplus  which  had  been
allocated  the  contract  by  the  cartel  —  in  return
for  which  Isoplus  would  arrange  for  Powerpipe’s
admission  to  the  cartel  —  or  bringing  upon  itself
a  price  war  with  the  other  producers.  When
Powerpipe  did  not  comply  with  an  ultimatum  to
withdraw  from  the  Neubrandenburg  project  by
4  p. m.  on  25  October,  it  was  accused  of  bad
faith  and  a  proposed  crisis  meeting  with  ABB,
Løgstør  and  Henss  was  called  off.

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Demands  were  also  made  that  Powerpipe,  which
had  informed  a  manager  at  Neubrandenburg  of
the cartel’s activities, should contact him again to
apologise  and  change  its  story  so  as  to  exonerate
the  there  producers.

(96) 

In  the  various  telephone  calls  to  Powerpipe  and
its  then  owner,  the  other  producers  confirmed
that  a  cartel  had  been  organised  to  control  the
market,  not  only  in  Germany  but  also  in  Europe.
In  these  convesations,  ABB  was  identified  as  the
leader  of  the  cartel  and  senior  officials  of  that
company  were  named  as  the  driving  force  behind
it. One of these telephone calls was monitored by
Powerpipe’s legal adviser.

evidence 

Although  no  direct 
corroborating
Powerpipe’s account of these threats was found at
the  undertakings,  there  is  no  reason  to  doubt  the
accuracy of Powerpipe’s  detailed  account  of these
conversations.

First,  the  description  of  the  salient  features  of  the
cartel  which  Powerpipe  attributed  to  its  rivals
corresponds  in  almost  every  material  particular
with  the  evidence  found  subsequently  by  the
Commission  during 
investigations  under
the 
Article  14(3).

(98) 

the 

Secondly, 
insistence  which  Powerpipe
attributed  to  the  representatives  of  Henss/Isoplus
in their efforts to make Powerpipe withdraw from
the  Neubrandenburg  project  are  mirrored  in  the
documented demands  of  that producer  that cartel
members  which  had  obtained  business  where
Henss/Isoplus  had  been  designated 
‘favourite’
should  withdraw  their  offer.  (Appendices  88  and
91;  see  also  Tarco’s  first  Article  11  Reply.  pp.  4
and  5).

itself  not 
that 

to  have
Løgstør,  while  claiming 
threatened  Powerpipe,  admits 
its  Sales
Director telephoned the complainant as a result of
from  Henss  which  wanted
strong  pressure 
Powerpipe to  withdraw  from the  contract. (Reply
to  Statement  of  Objections,  p.  58).

(97) 

Shortly after the Neubrandenburg events, the then
owner  of  Powerpipe  brought  the  matter  to  the
personal attention of a member of ABB’s board of

directors  —  who  was  unconnected  with  and
presumably  unaware  of  the  cartel  —  and  sought
his  intervention  to  end  the  campaign  against
Powerpipe.  (Appendix  8)  There  followed  an
internal  investigation  by  ABB’s  general  counsel,
and  a  meeting  between  him  and  Powerpipe’s
lawyers. Subsequently, at the prompting of senior
executives  of  ABB  who  had  in  fact  personally  set
up  the  cartel,  ABB  wrote  to  Powerpipe  on  16
emphatically  denying  any
December  1994 
misconduct  or  illegal  behaviour  and  threatening
to  bring  legal  proceedings  were  Powerpipe  to
continue 
to  make  allegations  against  ABB.
(Appendices  9  to  16.

Powerpipe  thereupon  made  its  complaint  to  the
Commission.

(iv)  T h e   L e i p z i g - L i p p e n d o r f  
b o y c o t t   o f   P o w e r p i p e

c o n t r a c t :

After  Powerpipe  had  lodged  its  complaint,  but
before the carrying-out by the Commission of the
investigations  on  29  June  1995,  the  efforts  of  the
cartel to eliminate Powerpipe were intensified: the
event  which  sparked  off  the  reaction  of  the  other
producers  was  the  award  to  Powerpipe  of  the
the
largest  single  district-heating  project 
German market for ten years: Leipzig-Lippendorf.
This  contract  was  worth  around  DEM  30
million.

in 

The  customer  was  VEAG-Vereinigte  Energie
Aktien-Gesellschaft,  which  was  building  a  power
station at Lippendorf and was also responsible for
the associated district heating network connecting
the  generation  plant  to  the  city  of  Leipzig.

und 

Journal  of 
the 

the  Official 
in 

The  invitation  to  tender  was  published  by  VEAG
in 
the  European
Communities 
summer  of  1994.  A
consortium of a Deutsche Babcock subsidiary IKR
Kraftwerksrohrleitungsbau
(Industrie 
Bitterfeld  GmbH)  and  Mannesmann-Seiffert  was
engaged to lay the district heating system, and the
sub-contract  for  the  supply  of  pipes  was  put  out
the
to 
pre-qualifications  stage,  six  potential  suppliers  —
all  members  of  the  German  Contact  Group  —
were  admitted  to  bid:  ABB,  Løgstør,  Tarco,
Starpipe,  Isoplus  and  Pan-Isovit.

the  end  of  1994.  At 

tender  at 

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(99) 

Løgstør  has  admitted  (Statement  I,  p.  77)  that
when  tenders  were  invited  ‘in  order  to  create  a
sensible  situation  and  reestablish  trust  among  the
suppliers,  it  was  agreed  that  the  three  German
manufacturers  should  win  the  tender  and  that  we
others  would  respect  their  price’.  A  note  of  a
German  contact  group  meeting  of  10  January
1995  found  at  Starpipe  (Appendix  70)  provides
confirmation:

‘The three German firms ABB Isolrohr, Pan-Isovit
and  Henz  [sic]  are  to  have  the  project.  Value
approximately  DKK  120 000 000  DKK.’

ABB  Isolrohr,  Pan-Isovit  and  Henss  Berlin  put  in
their  bid  of  DEM  32  million  as  a  consortium
which was coordinated by the Managing Director
of ABB Isolrohr. (The project monitoring list kept
by ABB updated as at 22 March 1995 still shows
the three German producers at the ‘favourites’ for
the  Leipzig-Lippendorf  project).

for 

besides 

quoting 

Starpipe and Tarco did not submit bids within the
proper  time  limit  but  on  being  pressed  by  VEAG
submitted  what  were  clearly  ‘protection’  offers  of
DEM  33  and  34  million  respectively.  Løgstør,
supplying
however, 
traditionally-produced pipes, put in an alternative
bid  for  continuous  pipes  which  was  almost  the
same  as  the  consortium’s  offer.  It  later  withdrew
its  bid  on  the  ground  that  it  could  not  produce
the  20-metre  pipes  which  the  project  required,  A
proposed  new  bid  for  18-metre  continuous  pipes
was  never  submitted.  It  is  reasonable  to  assume
that Løgstør’s withdrawal was in part at least as a
result  of  pressure  from  the  other  producers.

(100)  The 

reaction  of 

the  other  producers  was
immediate.  Three  days  later,  on  24  March,  the
German Contact Group met in Düsseldorf. Those
present were: ABB, Brugg, Henss/Isoplus, Løgstør,
Pan-Isovit,  Starpipe  and  Tarco  (Brugg  Article  11
Reply,  Annex  2).  A  collective  boycott  of
Powerpipe’s 
suppliers  was
envisaged.  The  note  of  this  meeting  made  by
Tarco  could  not  be  more  clear:

customers 

and 

‘Powerpipe 
been 
Leipzig-Lippendorf  contract.

has 

awarded 

the

—  No  producer  to  supply  at  all  to  L-L,  IKR,

Mannesmann-Seiffert,  VEAG,

—  . . .

—  None  of  our  sub-contractors  may  work  for
Powerpipe; if they do, further cooperation will
be  stopped,

—  We  shall  try  to  prevent  Powerpipe  from
obtaining  supplies  of  (for  example)  plastic,

—  EuHP  shall  check  whether  we  can  complain
about  the  contract  going  to  an  unqualified
from.’  (Appendix  143).

the 

‘pressed 

Løgstoø  (which  again  attempts  to  minimise  its
own  role)  states  that  at  the  Contact  Group
meeting  Henss/Isoplus 
issue  of
to  Statement  of
(Reply 
collective  actions’ 
Objections,  p.  60).  It  alleges  that  at  a  later
meeting  on  5  May  1995,  ABB  and  Isoplus  urged
concerted  action  against  Powerpipe,  and  ABB
decided to go to the suppliers of foam and plastic
pipes  and  put  pressure  on  them  to  cut  off  its
supplies.

(iv) I m p l e m e n t a t i o n   o f   t h e   b o y c o t t

At  the  final  round  of  bidding  VEAG,  which  was
clearly  annoyed  by  the  reluctance  of  the  six
producers  to  bid  against  each  other,  invited
Powerpipe  to  submit  a  bid.  Following  receipt  of
Powerpipe’s  offer  of  around  DEM  26  million
VEAG  decided  on  21  March  to  award  the
contract  to  that  company.

(101)  Shortly after the meeting ABB’s principal German
company Asea Brown Boveri AG wrote to VEAG
at  a  high  level  protesting  against  the  award  to
Powerpipe. (Løgstør admits this step was taken at
its 
at
Henss/Isoplus  is  also  indicative  of  determined
efforts  to  persuade  VEAG  to  drop  Powerpipe
(Appendices  147  to  150).

suggestion).  Documentation 

found 

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Further  confirmation  that  following  Powerpipe’s
winning  of  the  Leipzig-Lippendorf  project  the
other  producers  did  indeed  decide  to  boycott  the
project  comes  from  KWH  (KWH  Statement,  pp.
13  and  14).  The  conclusions  of  the  meeting  held
in  Düsseldorf  on  24  March  were  expressly
maintained  by  the  directors  in  a  meeting  of  13
June  1995  in  Stockholm  and  were  reiterated  by
ABB  in  a  subsequent  telephone  call  to  KWH.

and  ABB  had  decided  ‘to  go  to  the  foam  and  PE
suppliers  and  put  pressure  on  them’.

One  of  Powerpipe’s  sub-suppliers  of  plastic
components  was  Lymatex,  a  Danish  plastic
component  manufacturer  which  in  fact  sold  most
of  its  production  to  Løgstør.

As  part  of  the  boycott  of  the  Lippendorf  project,
the producers were not to supply contractors with
component  parts  which  they  could  not  get  from
Powerpipe.

the 

supply 

including  ABB 

DSD  (Dillinger  Stahlbau  GmbH)  was  engaged  as
the  consortium  ARGE
a  sub-contractor  by 
Leipzig-Lippendorf 
of
for 
large-diameter  sleeves  which  Powerpipe  did  not
manufacture.  (Without  these  components,  the
pipes  could  not  be  installed).  DSD’s  attempts  to
obtain  deliveries  of  these  fittings  from  a  series  of
pipe  manufacturers, 
Isolrohr,
Henss,  Pan-Isovit,  Tarco  and  Løgstør  were
initially  unseccessful.  Documentation  found  at
Pan-Isovit (Additional document 8) shows that its
managing director was in contact with Henss and
ABB  Isolrohr  about  DSD’s  efforts  to  obtain  the
fittings, and the subject was to be discussed in the
directors’  club  (‘Zur  Diskussion  4.5.95’).  In  fact
the  directors’  meeting  took  place  on  5  May,  and
according to Løgstør ‘ABB and Isoplus urged that
a  concerted  action  was  taken  against  Powerpipe
to  make  it  difficult  for  Powerpipe  to  get  supplies’
(Reply  to  Statement  of  Objections,  p.  61).

According  to  KWH  (Reply  under  Article  11,  p.
13;  Reply  to  Statement  of  Objections,  p.  24),  it
was  specifically  warned  by  ABB  not  to  supply
components  for  the  project  but  chose  to  ignore
the  boycott.  It  was  finally  KWH  which  supplied
the  parts  in  question  to  DSD,  as  well  as  certain
welding  equipment  needed  by  Powerpipe.

On  10  May  1995,  only  a  few  days  after  the
directors’  club  meeting  of  5  May  described  by
Løgstør,  Lymatex  informed  Powerpipe  that  it
could  not  accept  any  further  orders  from  it  until
September  at 
(Appendix  153).
Powerpipe  alleged  that  the  refusal  to  supply  was
made at the behest of Løgstør and ABB. It said it
had  been  informed  that  the  sales  director  of
Løgstør  (Lymatex’s  biggest  customer)  had  given
instructions 
to
Powerpipe  (Appendices  151  and  152).

to  Lymatex  not 

the  earliest 

to  deliver 

Løgstør  claims  it  must  have  been  misinterpreted:
it says that, as Lymatex’s largest customer, it had
suffered  delivery  delays  and  had  simply  pressed
Lymatex  to  deliver  to  it  (Løgstør)  on  time  and
was  not  interested  in  how  Lymatex  was  going  to
cope with the demands of other customers (Reply
to  Statement  of  Objections,  p.  62).

specifically 

contemplated.  During 

This explanation is disingenuous. Løgstør was not
merely  worried  about  delays  in  its  own  orders;  it
was  Lymatex’s  relations  with  Powerpipe  which
were 
the
investigation at Løgstør the Commission found an
(unsigned)  draft  of  Lymatex’s  letter  to  Powerpipe
which  had  been  faxed  to  Løgstør  some  hours
before  the  letter  itself  was  faxed  to  Powerpipe.  It
is  clear  that  Lymatex  had  sent  the  draft  to
Løgstør  for  approval  or 
information  before
sending  it  to  Powerpipe.

(102)  The  Düsseldorf  meeting  of  24  March  had  also
decided  to  attempt  to  stop  Powerpipe  obtaining
supplies of plastic. By Løgstør’s own account (see
(100))  the  Directors  had  on  5  May  revisited  the
question  of  concerted  action  against  Powerpipe

(103)  The implication that it was Løgstør which secured
Lymatex’s  refusal  to  supply  is  reinforced  by  the
circumstances  surrounding  another  order 
(in
Denmark)  which  Powerpipe  had  succeeded  in
taking  from  the  cartel  at  about  the  same  time  as
Leipzig-Lippendorf.

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The business of Århus Kommunale Værker (ÅKV)
had  traditionally  been  reserved  by  the  Danish
cartel for ABB and Løgstør, but in February 1995
Powerpipe obtained a small part of ÅKV’s annual
requirements  for  replacement  pipes.  When  it  was
awarded the contract, Powerpipe learned that this
had  caused  anger  among  the  Danish  producers.
The  jointing  technique  used  at  Århus  included
certain  material  supplied  by  a  Swedish  company
Nitto  (in  which  Løgstør  claimed  to  have  design
rights)  as  well  as  other  components  supplied  by
Lymatex. Nitto refused to supply the materials to
Powerpipe.

(104)  To  circumvent  this  refusal,  Powerpipe  prevailed
on  its  contacts  at  another  Swedish  company,
Permatek,  which  was  not  involved  in  district
heating, to obtain the components from Løgstør’s
own  Swedish  subsidiary  (ETF),  which  was  quite
willing  to  sell  to  Permatek.  The  ruse  clearly
infuriated Løgstør (Powerpipe Reply to Article 11
request  of  16  September  1997,  p.  1;  Løgstør
Løgstør
1996; 
25  April 
statement 
memorandum  of  21  November  1997).

of 

found  out  on  8  May  1995 

Løgstør 
that
Powerpipe  had  obtained  components  for  Århus
from  its  own  Swedish  subsidiary  and  also  from
Lymatex; it can hardly be a coincidence that only
two  days  later  Lymatex  was  refusing  supplies  to
Powerpipe  and  sending  Løgstør  an  advance  draft
of  its  letter.

An  ABB  minute  of  a  sales  division  meeting  of  7
April  1995  noting  that  Powerpipe  had  obtained
the  Lippendorf  contract,  goes  on:

‘The  only  possibility  of  the  order  going  to
Isolrohr/ABB  is  of  Powerpipe  proves  unable  to
deliver  on  time’  (Appendix  158).

Documentation  found  at  ABB  IC  Møller  during
the  investigation  shows  that  ABB  was  keeping
Powerpipe  under  close  watch  (Appendices  159
and  160).  ABB  was  able  to  obtain  excellent
intelligence  material 
Powerpipe’s
sources  of  supply  for  the  Leipzig-Lippendorf
contract.  An  ABB  report  dated  12  April  1995
(Appendix  160)  identifies  the  Finnish  company
Rautaruuki  as  a  likely  supplier  of  the  steel  pipes
required  and  states:

regarding 

‘Up  to  lunchtime  today  Rautaruukki  has  not
received  any  order.’

At the end of June Powerpipe in fact informed the
Commission  (Appendix  161)  that  the  cartel  had
contacted its supplier of steel pipes (Rautaruukki)
pressing 
it  to  delay  or  withhold  deliveries.
Powerpipe  was  informed  by  Rautaruukki  in  a
meeting  on  27  June  1995  that  a  consignment  of
pipes  destined  for  Powerpipe  had  instead  been
sold  to  ABB:  delivery  would  be  delayed  by  three
months  (Appendices  161,  162  and  163).

(106)  ABB’s  intelligence  network  had  also  identified
KWH  as  a  possible  source  of  supply  for  some  of
Powerpipe’s 
contract
(extruder  welding  machines  and  large  diameter
pipes).  The  relevant  report  asks:  ‘Can  this  be
controlled?’  KWH  confirmed  that  it  had  been
warned  by  ABB  to  comply  with  the  boycott.

requirements 

the 

for 

(105)  Although  Løgstør  had  taken  the  initiative  with
regard  to  Lymatex,  the  driving  force  behind  the
complex  of  actions  aimed  at  Powerpipe  was
ABB.

At  the  time  of  the  Commission’s  investigations,
attempts  were  also  being  made  by  the  cartel  to
buy  out  Powerpipe  to  remove  it  as  a  competitor
from  the  market.  Pan-Isovit  had  indicated  that  it
would  acquire  Powerpipe  provided  the  others
to  Statement  of
contributed 
Objections,  p.  24).  According 
to  KWH,
Henss/Isoplus suggested it was worthwhile to pay

(KWH  Reply 

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a  price  of  DEM  23  to  25  million  and  share  the
cost amount the competitors. In fact at least ABB,
Tarco and Henss had already agreed in writing on
21  April  1995  to  contribute  to  the  purchase,
their  allocated
apparently 
market-share  quota  (Additional  documents  16  to
18).

in  proportion 

to 

(107)  The  attitude  of  the  producers  towards  Powerpipe
following  its  taking  of  the  Leipzig-Lippendorf
contract is perhaps most succinctly summed up in
a  note  (Appendix  164)  made  by  Starpipe  in  June
1995:

‘Powerpipe:  Total  war’.

An  internal  note  made  by  Powerpipe  on  12  June
1995  relates  examples  of  systematic  efforts
directed  against  it  by  the  cartel  and  concludes:

‘As  the  cartel  by  its  activities  is  aware  of  the
success  to  damage  Powerpipe  they  increase  their
pressure  from  [one]  day  to  another  and  operate
almost  open  against  us.’

Powerpipe  explains  that  where  it  did  win  a
project  in  Germany,  the  difficulties  and  delays
in  obtaining  supplies
which 
exposed  it  to  substantial  contractual  penalties.

it  experienced 

Powerpipe claims that the actions directed against
it  by  the  cartel  effectively  foreclosed  it  as  a
competitor  from  the  German  market  and  caused
it  substantial  loss  and  damage  (Powerpipe  Reply
under Article 11 of 23 September 1997; Enclosure
18  to  same).

(f)  Continuation  of 
investigations

the 

cartel 

after 

the

(108)  Despite 

the 

investigations  made  by 

the
Commission  under  Article  14(3)  of  Regulation
No  17  on  29  June  1995  —  by  coincidence  only
the  day  after  a  director’s  club  meeting  had  been
in  Billund  —  the  cartel  arrangements
held 
continued  virtually  as  before  until  at  least  the
time  when  the  Commission’s  Article  11  requests
were received in March 1996. The directors’s club
met  on  at  least  six  or  seven  more  occasions
following  the  investigations.  Indeed,  on  6  July
1995 it was decided that their meetings should go
on, but with greater efforts made to conceal their
time  and  location.  (ABB’s  Supplementary  Reply,

pp.  5  and  6).  Løgstør  states  (Reply  to  Statement
of  Objections,  p.  64)  that  there  was  ‘strong
pressure from ABB on the other players to uphold
the  agreement.  Everybody  else  was  afraid’.

the  Directorate-General 

ABB,  at  high  level  within  the  group,  had  been
made  aware  by 
for
Competition,  on  4  July  1995,  of  the  fact  that
evidence  of  its  involvement  in  a  very  serious
infringement  had  been  obtained  during 
the
investigations.

The consequences of continuing of the cartel were
explained  —  and  no  doubt  understood  —  at  that
time.

Among  the  measures  adopted  in  an  attempt  to
hide  the  continued  existence  of  the  cartel  were  (i)
holding  all  director’s  club  meetings  outside  the
Community  (i)  where  possible,  travelling  by  car
rather  than  by  air  (iii)  arranging  for  the  Danish
participants  to  use  Løgstør’s  private  aircraft.

As  from  September  1995,  all  meetings  of  the
German  contact  group  were  also  held  in  Zurich.

(109)  The  monitoring  of 

the  bidding  on 

individual  projects  and
individual
manipulation  of 
projects  by  this  group  continued,  as 
indeed
Powerpipe  had  suspected.  Powerpipe’s  belief
(Enclosure  26  to  its  Article  11  Reply  of  23
September 1997) that a major project — Boxberg
—  had  from  the  start  been  destined  for  Isoplus
and that in return ABB should receive a project of
similar 
is
corroborated  by  a  table  of  projects  dating  from
the  relevant  period  (Appendix  79):  the  two
companies are designated as respective ‘favourites’
to  obtain  the  two  contracts  concerned.

size  —  Weisweiler-Jülich  — 

From  shortly  after  the  date  of  the  investigations,
the  cartel  participants  were  required  to  report
each  month  to  ABB  their  total  sales  in  Europe  as
well as on each national market (Tarco statement,
p.  6,  Appendix  165;  Løgstør  Statement  I,  p.  74).

Whatever minor modifications the producers may
have  been  obliged  to  make  at  a  technical  level  to
disguise  their  continuing  arrangements  after  the
cartel  was  discovered  do  not  seem  to  have

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affected the nub of the plan to divide the markets.
The  local  meetings  were  still  being  held  for
virtually  all  national  markets.  Løgstør  says,
however,  that  the  participants  became  concerned
more  with  global  market-shares  in  the  European
market  than  with  individual  national  markets.
During 
the  directors’  club  made
corrections and adjustments to the original quotas
(Appendices  62,  166  and  189).

the  year, 

As  part  of  this  exercise,  a  set  of  tables  showing
market  shares  under  the  quota  system  for  1995
was  sent  by  fax  to  KWH  by  ABB.  On  the  table
for the Nordic and Baltic markets is the following
revealing annotation:

‘Pekka: to be destroyed — completely . . . EU case
looks  bad  —  be  careful  for  Christ’s  sake.’
(Appendix  189).

market  share.  The  losers  were  ABB,  Isoplus  and
KWH.

‘Heated  discussions’  took  place  as  to  how  the
deviations  from  quota  were  to  be  equalled  out,
but  Løgstør  says  that  no  definitive  scheme  was
agreed (11),  since  at  the  beginning  of  1996  several
firms  announced  they  did  not  wish  to  continue
with  the  arrangement.  (Løgstør  Statement  I,  p.
75)  In  actual  fact  the  directors’  club  meetings  did
not  stop  —  if  indeed  they  have  stopped  —  until
March/April 1996.

(111)  At  the  directors’  club  meeting  on  17  January
1996,  ABB  even  proposed  to  set  up  a  permanent
Secretariat  in  Switzerland  which  would  continue
to  coordinate  the  operations  of  the  cartel  (the
suggestion  was  rejected  by  the  others:  Løgstør
Reply  to  Statement  of  Objections,  p.  66).

In  the  directors’  club  meetings  during  this  period,
the  participants  discussed  how  to  continue  the
cooperation,  how  market  development  could  be
controlled 
equalisation  or
compensation  system  could  be  developed.

and  how 

an 

(110)  At  the  end  of  1995  ABB  drew  up  the  balance
sheet  for  the  year  (Tarco’s  Statement,  p.  8;
Appendices  167,  168  and  169).  The  original
allocations in terms of value of business had been
adjusted  to  take  account  of  market  size  and
various  other  corrections.  Tarco  says  that  at  that
time  both  itself  and  Løgstør  received  demands
from Henss/Isoplus and ABB for compensation, as
they  had  exceeded  their  1995  quota.

KWH  has  also  supplied  to  the  Commission  a
table  of  calculations  sent  to  it  by  ABB  (Appendix
190)  which  correspond  with  the  item  headed
‘Market  —  corrections  for  size  and  restgroup’  in
Appendix  169  and  giving  a  total  market  of  DKK
3 417  million.

KWH  states  that  during  the  last  meeting  of  the
directors’  club  which  it  attended  (on  4  March
1996  in  Zurich),  the  other  members  discussed:

—  a  compensation  scheme  for  the  exchange  of
ready-made  pipes,  under  which 
if  one
producer  won  a  contract  which  had  not  been
assigned to it by the cartel, the pipes would in
fact  be  supplied  by  the  aggrieved  party  but
with  the  labels  on  the  pipes  changes  so  as  to
conceal  the  identity  of  the  real  supplier,

—  continuing  the  cartel  by  using  a  trusted
‘consultant’  who  would  visit  each  member  in
turn  and  coordinate  their  activities  so  as  to
obviate  the  need  for  multilateral  ‘Directors
Club’  meetings  (KWH  Statement,  pp.  12  and
13).

Løgstør  confirms  that  this  was  the  case  (Reply  to
Statement  of  Objections,  p.  67)  but  attributes  the
initiative  for  both  these  proposals  to  KWH  itself
(the  ‘consultant’)  idea  in  conjunction  with  ABB).

Henss/Isoplus  provided  the  Commission  (on  10
October  1996)  with  a  table  dated  15  December
1995  (Appendix  170)  which  compared  the  actual
performance  of  each  producer  (‘Ist’)  with  the
quota allocation (‘Soll’). It shows both Tarco and
Løgstør  as  substantially  ahead  of  their  agreed

(11) Løgstør later qualified this statement by stating that a project
(unidentified)  worth  DKK  30  million  was  awarded  to
Henss/Isolus  ‘exceptionally’  in  lieu  of  compensation  (Reply
to  Statement  of  Objections,  p.  66).

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It  is  unlikely  that  KWH  took  the  initiative,  but
the  identity  of  the  producer  or  producers  which
suggested  the  idea  is  perhaps  less  important  than
the  fact  that  even  at  this  late  stage,  proposals  of
this  nature  were  still  being  made  at  all.

This  meeting  was  attended  by  the  directors  from
ABB,  Løgstør,  Starpipe;  Tarco;  Pan-Isovit,
Henss/Isoplus and KWH (KWH Article 11 Reply,
p.  17).

(112)  Since, according to KWH, the last meting which it
attended  included  discussions  of  the  requests  for
information  received  from  the  Commission  under
Article  11,  this  meeting  must  in  fact  have  been
held  on  a  date  after  4  March  1996:  the  requests
for  information  were  only  dispatched  by  the
Commission  on  13  March  1996.

Løgstør also places the last directors’ club meeting
on  4  March  1996,  but  claims  that  it  and  other
companies  only  went  to  the  meeting  ‘to  say  their
participation  was  finished’.

If  indeed  it  is  correct  that  the  only  purpose  of
their  last  meeting  was  to  wind  up  the  cartel,  it  is
most  likely  that  it  took  place  after  the  receipt  of
the  Commission’s  requests  for  information,  and
thus  later  than  the  participants  admit.

in
There  was  an  EuHP  board  meeting 
Copenhagen  on  26  March  1996,  attended  by  all
the  members  of  the  director’s  club.  It  is  unlikely
that  on 
the
opportunity  presented  by  the  EuHP  meting  to
confer  together  on  the  Commission’s  recent
initiative.

they  eschewed 

this  occasion 

5.  The  role  of  EuHP

(113)  The  objective  of  EuHP  was  ostensibly:

‘to  promote  among  the  members  the  exchange  of
experience  as  regards  technology,  total  quality,
energy  and  environment,  and  to  participate  in  a
continuous  development  in  these  fields.’

EuHP’s formation in April 1991 had in reality far
more to do with control of the market and ABB’s
long-term strategy than this anodyne statement of
objectives suggests.

In  particular,  the  effect  on  the  profitability  of
other  producers  of  the  recent  development  by
Løgstør of a continuous production process (with
savings  of  15  to  20 %  in  production  costs,  hence
lower  selling  prices)  had  to  be  limited.  The  other
producers  who  used  the  traditional  batch  process
wanted to maintain the old norms which required
a thicker jacket and more form: Løgstør says they
discriminated  against  a 
superior
product  which  could  be  sold  at  lower  prices.

technically 

ABB frankly admits (Article 11 Reply, p. 23) that
it  regarded  it  as  a  priority  to  reach  a  ‘strategic
agreement’  with  Løgstør  which  would  involve
Løgstør’s  withdrawing  the  new  pipe  from  the
market,  with  the  next-best  alternative  being  for  it
to  negotiate  access  to  Løgstør’s  technology.

ABB and Løgstør both admit meeting in Denmark
on 18 April 1996 with a view to finding a means
of  somehow  continuing  the  cooperation  although
they  claim  the  result  was  inconclusive  (see  (78)).

In  any  event, 
the  German  contact  group
continued  to  meet  in  Zurich  until  at  least  25
March  1996.  According  to  ABB,  the  Austrian
group  last  met  in  April.  As  far  as  can  be
ascertained, 
Italian  contact  group  only
stopped  meeting  in  June.

the 

(114)  ABB’s 

internal  documentation  confirms 

that
compliance  with  standards  was  being  used  as  a
means  of  keeping  up  price  levels.  Recalling  that
EuHP  was  set  up  with  the  purpose  of  excluding
in
‘minor  new  foreign  competitors  especially 
Eastern  Europe’,  and 
that  a  relaxation  of
technical norms would lead to a weakening of the
market, a senior ABB official warned in July 1993
that  if  continuous  production  were  accepted  the
attendant cast savings would mean a reduction of
10  to  15 %  in  market  volume  ‘and  none  of  us
will become richer . . . Consequently, Løgstør and
ABB  must  cooperate  closely  in  controlling  the

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development  and  the  work  with  norms  and
standards’  (Appendix  48).

(This  was  the  EuHP  meeting  at  which  KWH’s
representative  reportedly  first  became  aware  of
the  understanding  between  the  other  producers).

(116) 

the 

At  the  end  of  1993,  when  the  ‘plenary’  meetings
in  temporary
of  the  cartel  were  apparently 
from
(apart 
same  directors 
abeyance, 
representatives  of  Henss/Isoplus)  were  arguing
about  Løgstør’s  non-compliance  with  norms.
Pan-Isovit  complained  that  they  did  not  meet  the
required  standards.  Each  member  then  had  to
certify to EuHP that its products met EN 253 and
EuHP’s  quality  standard.

(115) 

It  is  significant  that  at  this  time  ABB  itself  was
planning 
introduce  continuously-produced
pipes  (to  be  called  ‘ABB  slimline  quality  pipes’).

to 

ABB  privately  acknowledged  that  such  pipes  did
not  meet  the  norms  with  which  EuHP  required
compliance  but  the  Director  of  EuHP  (who  was
also  on  the  board  of  ABB  IC  Møller)  ‘was
convinced that if all big producers want this norm
to be changed it can be achieved’. It was foreseen
that  the  new  ABB  pipes  would  only  be  ready  for
marketing by 1 January 1994: ‘Until we are ready
for  introduction,  all  (ABB)  BA-VDH  companies
are  to  speak  against  Konto-pipes’  (Appendix
177).

ABB  only  planned  to  introduce  the  new  pipes  in
Denmark:  for  Germany  it  was  decided  to  wait
and  see  whether  Løgstør  was  able  to  gain  a
foothold  in  that  market  with  its  continuous
pipes.

Only  a  few  days  after  the  meeting  on  18  August
1994  to  fix  how  to  increase  prices  in  Germany
EuHP  met  and  the  Board  reiterated  its  earlier
decision  that  all  members  should  sell  only
products which complied with EN standards. The
minutes  record  that:

the  cartel:  Pan-Isovit  only 

It  is  not  alleged  that  EuHP  was  indistinguishable
from 
in
mid-1993; Henss/Isoplus was kept out until 1995;
Brugg,  Ke-Kelit  and  Sigma  were  prospective
members  but  ultimately  did  not  join.

joined 

The producers in fact went to elaborate lengths to
keep  their  manifestly  illegal  activities  separate
from  EuHP,  at  least  formally.  since  most  of  the
managing  directors  going  to  secret  meetings  in
1991  to  1993  were  also  almost  all  members  of
the  board  of  EuHP,  the  device  was  adopted  of
adjourning  to  another  location  once  the  EuHP
meeting  had  finished,  in  order  to  discuss  cartel
business: the managing directors were then joined
by  Henss  and  Pan-Isovit  ‘to  discuss  matters  of
common  interest’.

in  EuHP, 

Once  all  the  larger  producers  (except  Brugg  and
of  course  Powerpipe)  were 
the
somewhat  artificial  distinction  between  ‘illegal’
and  ‘legal’  (or  semi-legal)  activities  was  largely
maintained.  A  proposal  to  give  EuHP  a  part  in
administering the quota scheme was not taken up.
Nevertheless  EuHP’s  role  as  a  handmaiden  of  the
cartel  is  apparent  from  the  fact  that  it  was  to
examine the question of whether Powerpipe could
be  excluded  on  technical  grounds  from  the
Leipzig-Lippendorf  project.  Similarly,  when  the
cartel  wanted  to  prepare  the  market  for  increases
of  15  to  30 %  n  early  1995,  it  was  EuHP  that
was chosen to send out information on impending
price  rises  to  the  trade  press.

6.  Assessment  of  the  role  of  each  participant

(117)  The whole gravamen of the cartel in this case lies
in  the  combination  of  the  producers  in  a  joint
unlawful 
common
objective.

enterprise 

pursuing 

a 

‘Løgstør  Rør  AS  has  for  some  time  sold  pipes
which  are  non-standard.  They  promised  to  stop
that  business  immediately.’

Most  of  the  addressees  do  not  contest  their
involvement  in  an  infringement  of  Article  85,
although  only  ABB  has  made  an  unqualified

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admission  of  participation 
in  a  continuing
violation beginning in about November 1990 and
continuing  until  March  or  April  1996.

The  Danish  producers  Løgstør  and  Tarco
expressly  admit  their  participation  in  a  ‘national’
cartel  between  1991  and  1993  (Starpipe  does  not
specifically  address  the  issue)  but  deny  that  any
agreement  operated  outside  that  market  before
late  1994.  Pan-Isovit  and  Henss/Isoplus  advance
the  same  argument  in  support  of  their  contention
that their participation in an infringement did not
begin until the end of 1994 or even the beginning
of  1995.

As  regards  the  campaign  against  Powerpipe
(which  the  undertakings  seek  for  the  purposes  of
their  argument  to  present  as  an  allegation  of  a
discrete  infringement  of  Article  85)  the  denials  of
any ‘agreement’ by all producers except ABB is in
flat contradiction with the documentary evidence.
The  fact  that  (for  purely  practical  reasons)  the
main part in implementing the agreed boycott fell
to  ABB  and  Løgstør  does  not  absolve  of
responsibility  the  others  who  were  in  the  plan.
Whatever  was  done  by  Løgstør  and  ABB  was
within  the  contemplation  of  the  scheme  devised
on 24 March 1995. Their acts were in furtherance
of a scheme to which all subscribed and of which
all  were  fully  aware.

(120)  Quite  apart  from  their  own  (partial)  admissions,
there  is  ample  direct  documentary  evidence  to
prove  the  participation  of  each  participant  in  the
infringement  for  the  periods  alleged  by  the
Commission.

to  other  markets 

(118)  The  arguments  of  the  main  producers  other  than
ABB  contesting  the  alleged  extension  of  cartel
arrangements 
(primarily
Germany) 
in  or  about  October  1991  are
essentially  concerned  with  the  legal  question  of
whether  their  conduct  fell  under  the  prohibition
of  Article  85:  they  could  hardly  deny  (with  any
credibility) their attendance at the many directors’
meetings  held  in  1991  to  1993,  several  of  which
were  the  subject  of  notes  kept  by  the  participants
and  discovered  by  the  Commission.  Instead,  they
dismiss their regular meetings as mere preparatory
measures  or  failed  attempts  to  reach  agreement.
They  do  not,  however,  provide  any  detailed
account of matters discussed in those meetings. In
so  far  as  factual  issues  are  raised  in  connection
with  this  aspect  of  the  Commission’s  case,  they
are 
towards
the  most  part  directed 
demonstrating  the  supposed  improbability  of  any
cartel  arrangements  having  been  in  place  (such  as
intense rivalries between producers; low rice levels
and  strong  competition  in  Germany;  ‘dumping’
on that market by the Danish producers; the entry
of the German producers on the Danish market in
1993  and,  for  Henss,  the  disputes  with  ABB
concerning  its  agency  agreement  for  Bavaria).

for 

(119)  As  was  explained  in  detail  in  Part  II,  even  if
proven,  none  of  these  factors,  whether  alone  or
cumulatively, is incompatible with the existence of
prohibited  collusion  of  the  type  which  is  alleged
by the Commission during this period and which,
for  its  part,  ABB  fully  accepts  as  falling  within
Article  85.

It  is  also  appropriate  for  the  Commission  to
assess  the  respective  roles  played  by  the  different
producers  in  the  violation.  This  exercise  is  of
particular importance for the determination of the
appropriate penalties which may be imposed. It is
not  necessarily  always  practicable  or  possible  in
every case of a cartel, since there may be a lack of
reliable  evidence  as  to  the  precise  contribution  of
each participant to the overall scheme, but in this
case  the  volume  of  documentary  proof  permits
such  an  assessment  to  be  made.

Some  undertakings  (particularly  Løgstør,  KWH
and  Henss/Isoplus)  devoted  a  large  part  of  their
defence to minimising their own part in the cartel
and  shifting  the  primary  responsibility  onto  ABB.
Henss/Isoplus  goes  so  far  as  to  accuse  ABB  of
exaggerating or misrepresenting the facts as to the
existence  of  wider  cartel  arrangements  outside
Denmark  from  October  1991  onwards,  in  order
to  ingratiate  itself  with  the  Commission  and  thus
secure  favourable  treatment.

For  its  part  ABB  asserts  that  it  was  ‘not  the  sole
prime  mover’  in  the  cartel.

The  allegations  of  Henss/Isoplus  are  without  any
foundation  and  are  to  be  entirely  discounted.

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intended 

they  are 

Recriminations  by  other  undertakings  against
their  fellow  cartel  members  must  be  treated  with
some  caution  as 
to  be
self-serving.  Such  statements  will  in  fact  rarely
serve  to  exculpate  or  exonerate  the  maker;
however, 
the
far  as 
circumstantial  detail,  they  may  be  given  credence
particularly  where  they  are  corroborated  or
consistent  with  the  overall  pattern  of  behaviour
disclosed  by  the  documentary  evidence.

they  add 

so 

to 

in 

Where  in  this  decision  the  Commission  has  cited
such  statements  without  further  qualification  or
reservation,  it  accepts  the  gist  of  the  allegation
the
made:  however,  no 
to 
facts  of 
establishment  of 
the
infringement 
the  unsupported
assertions  of  a  participant  during  the  procedure.

finding  critical 

is  based  on 

the  essential 

to 

the 

involves 

introduce 

the  accommodation  of 

existence  as  the  ‘No  2  player’  was  a  necessary
part  of  ABB’s  strategy.  The  active  role  of  senior
Løgstør  executives  in  planning  and  executing  the
strategy  of  the  cartel 
is  fully  demonstrated.
Løgstør  may  to  some  extent  have  had  its  own
agenda,  namely 
(cheaper)
continuous  production  process  which  others
wanted  to  stop  or  delay  but  any  anti-competitive
the
scheme 
divergent,  or  possibly  divergent,  interests  of  its
members.  The  Commission  does  not  accept  that
Løgstør ‘left’ the cartel in April 1993 as it claims:
it  continued  throughout  the  period  in  question  to
attend  meetings,  and,  on  its  own  admission
whatever threats it may have made were intended
to  gain  recognition  from  ABB  for  a  larger  quota.
As regards the action taken to damage Powerpipe
(most  specifically  in  relation  to  joint  hiring  of  its
key personnel and later to securing the cutting-off
of  supplies)  the  Commission  rejects  Løgstør’s
claim  to  have  implemented  no  hostile  actions
against  this  inconvenient  competitor.

(121)  There  can  be  no  doubt  that  ABB  was  the
ringleader  and  main  instigator  of  the  cartel.
Domination of the market via a cartel in which it
played  the  leading  role  was  a  clearly  stated
strategic  objective  of  the  company.  The  whole
enterprise  was  conceived,  authorised,  approved
and  guided  at  the  most  senior  corporate  level.
Throughout  the  whole  five-year  period,  the
initiatives to consolidate, reinforce and extend the
cartel  came  from  ABB,  and  it  is  beyond  dispute
that  it  was  this  undertaking  which  was  charged
with  recruiting  other  undertakings  (KWH  and
Brugg)  into  the  cartel.  The  Commission  also
considers  that  the  attribution  to  ABB  by  Løgstør
and  others  of 
to
continue  the  cartel  after  the  investigations  is
entirely credible.

the  proposal  deliberately 

Henss/Isoplus  may  have  been  regarded  with
distrust  by  the  other  producers  and  may  have
been  excluded  from  EuHP  until  1995  but  this
does not give credibility to its version of the facts
by which it was as much a ‘victim’ of the cartel as
a  participant.  There  is  no  indication  that  Henss
was  forced  against  its  will  to  attend  the  meetings
with  the  directors  of  other  companies  which
started  in  October  1991:  indeed,  Løgstør  says
ABB  and  Henss  were  the  driving  force  in  the
discussions. When the collusion was relaunched in
early  1994,  Henss  played  a  leading  role  as  the
lieutenant  of  ABB,  and  all  the  reliable  evidence
points  to  its  having  consistently  been  one  of  the
most  zealous  enforcers  of  the  market-sharing  and
bid-rigging arrangements.

itself  as 

to  portray 

the
Løgstør’s  attempts 
unwilling  —  and  even  unwitting  —  tool  of  ABB
are not, however, believable. It may well be that it
was motivated to join the cartel partly by a desire
not  to  offend 
larger  multinational
neighbour  and  (like  others)  was  subjected  to
ABB’s  ‘persuasive’  techniques,  but  as  the  second
most  important  producer  in  the  district  heating
sector 
any
it  was 
continued
anti-competitive 

a  key  member  of 

scheme  and 

its  much 

its 

(122)  Tarco’s  perceived  indiscipline  does  not  place  it
outside the mainstream of the unlawful scheme. It
was  a  full  member  of  all  the  organs  of  the  cartel
and,  if  it  sought  to  further  its  own  special
interests  while  at  the  same  time  obtaining  the

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benefits  of  collusion  with  competitors, 
this
element  does  not  diminish  its  role.  Specifically,
the  fact  that  a  settlement  in  Germany  in  May
1993  was  delayed  because  Tarco  would  not
accept  an  agreement  on  price  alone  is  indicative
only  of 
its  familiarity  with  basic  economic
principles  and  a  wish  on  its  part  to  obtain  a
guaranteed  quota.

The Commission accepts that there is no evidence
of  Tarco’s  having  itself  taken  direct  action  to
harm  Powerpipe  (although  it  was  a  signatory  to
the  joint  plan  to  finance  Pan-Isovit’s  purchase  of
that  company).  This  does  not  alter  the  fact  that
(as  is  proven  by  its  own  documentation)  it  was
privy  to  the  plan  to  boycott  Powerpipe  and  to
attempt  to  ensure  that  it  failed  to  complete  the
Leipzig-Lippendorf  project.

Starpipe  similarly  was  a  ‘full’  member  of  the
cartel  even  if  its  participation  has  no  particular
distinguishing  features.  It  was  at  the  meeting  in
which  it  was  agreed  to  cut  off  Powerpipe’s
supplies,  and  acquiesced  in  the  scheme.

(123)  The  same  considerations  apply  to  Pan-Isovit.  It
argues  that  it  was  not  involved  in  any  measures
taken by other producers against Powerpipe: these
(it  says)  were  non-concerted  actions  taken  by
individual  producers.  It  was  of  course  never
alleged  by  the  Commission  that  Pan-Isovit  (or
indeed  any  producers  besides  ABB  and  Løgstør)
was  a  party  to  the  scheme  to  entice  away  key
Powerpipe  personnel  in  1992—93,  although  its
own  notes  of  a  meeting  in  early  1995  indicate
that  this  spoiling  tactic  was  still  in  the  cartel’s
contemplation.  For  the  sake  of  completeness,  it
should be stated that both Starpipe and Pan-Isovit
were  party  to  the  scheme  agreed  on  24  March
1995  to  boycott  Powerpipe  and  the  major
in
Leipzig-Lippendorf 
Pan-Isovit 
particular,  as  a  member  of 
the  aggrieved
consortium  of  German  producers,  can  hardly
claim 
in
Powerpipe’s activities, and indeed it was later put

to  have  had  no  special 

project. 

interest 

forward as the nominal purchaser (to be financed
partly  by  the  others)  of  that  company  so  as  to
remove  it  from  the  market.

When  the  new  dispensation  for  the  European
market  was  being  agreed  in  late  1994,  the  other
producers  considered  that  for  any  agreement  to
be  viable  it  would  need  the  participation  of
KWH.  KWH  claims  that  it  only  agreed  to  join
after  long  resisting  the  blandishments  of  other
producers  and  that  even  then  it  only  ‘played
along’  in  order  to  escape  reprisals.

The Commission fully accepts that KWH was not
a leading member of the cartel and that as regards
the  orchestrated  campaign  against  Powerpipe,
KWH  was  the  only  producer  willing  to  supply
Powerpipe  and  DSD  with  equipment  and
components  for  the  Leipzig-Lippendorf  project
and  indeed  defied  instructions  from  the  cartel  to
do  so.

It  does  not,  however,  accept  that  KWH’s  joining
of,  and  continued  participation  in,  the  cartel  was
due  to  such  duress  that  its  involvement  could  be
excused;  Powerpipe  resisted  more 
immediate
threats  to  its  existence.  Indeed  the  documentary
evidence  points  to  KWH  holding  out  for  a  larger
share  than  the  other  members  of  the  cartel  were
initially willing to concede it. It was a member of
the  directors’s  club  and  regularly  attended
meetings.  Furthermore,  had  KWH  been  looking
for an opportunity to quit the cartel, it could have
done  so  after  the  investigations  in  June  1995.  At
the  end  of  the  year,  KWH  was  even  warned  by
ABB  that  the  ‘EU  case  looks  bad’  but  it  chose  to
continue  in  the  cartel.

(124)  Brugg  was  to  all  intents  and  purposes  considered
a  relevant  player  only  on  the  local  German
market  (as  well  as  in  Switzerland  which  is,
however,  outside  the  scope  of  this  procedure).
While 
the  cartel  could  not  have  operated
effectively  without  the  presence  of  this  company
(and  KWH),  it  did  not  play  a  decisive  role.
However  the  argument  that  it  did  not  participate
in  any  scheme  to  damage  Powerpipe  is  rejected:
Brugg  was  present  at  the  meeting  in  Düsseldorf
on  24  March  1995  when  the  boycott  was
decided.  The  Commission  considers  that 
its
participation  in  the  infringement  (limited  to  the
its
arrangements 

in  Germany)  began  with 

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attendance  at  the  Copenhagen  meeting  of  18
August  1994.

Ke-Kelit  was  only  involved  in  the  arrangements
on  the  Austrian  market,  where  it  was  allocated  a
quota  of  23 %.  It  may  well  have  been  presented
with  a  fait  accompli,  the  quotas  being  agreed  by
the  directors’  club  which  it  did  not  attend.  The
claim  that  it  was  dependent  on  Løgstør  for  its
supplies, and that it had little choice but to attend
meetings  in  order  to  defend  its  interests  against
ABB  and  Isoplus  which  dominated  the  Austrian
market,  does  not  serve  to  justify  its  involvement.
Ke-Kelit  admits  that 
it  was  aware  that  the
arrangements  in  Austria  were  part  of  a  wider
scheme. For the sake of completeness, it should be
stated  that  the  Commission  accepts  that  Ke-Kelit,
which  did  not  attend  directors’  meetings  or  those
of  the  German  contact  group,  was  unaware  of
and  had  no  part  in  the  measures  undertaken
against  Powerpipe.

Sigma’s  involvement  was  also  confined  to  the
arrangements  on  the  Italian  market,  where  it  was
allocated a 10 % share on new projects (although
it 
later  demanded  20 %  of  the  market).  It
participated in the procedure for the allocation of
projects. It may have been regarded as a nuisance
and  was  not  invited  to  all  meetings  in  which  the
Italian market was discussed (Appendix 187, p. 4)
but 
it  was  a  regular
participant  in  local-level  meetings  from  about
April  1995.  As  with  Ke-Kelit,  the  Commission
accepts  that  Sigma  had  no  knowledge  of  the
campaign  to  eliminate  Powerpipe.

the  evidence  shows 

7.  Effects  upon  overall  price  levels

(125)  There  is  no  serious  dispute  that  up  to  1993  the
consensus  among  the  Danish  producers  who
shared their national market without any effective
competition  from  outsiders  enabled  them  to
maintain  prices  at  a  level  which  could  finance
their expansion into export markets. This applied
particularly  to  Germany  where  the  two  largest
national  producers  were  under  pressure  from
Danish  imports.  Price  levels  in  Germany  were
about  15  to  20 %  lower  than  those  obtaining  in
Denmark.  However,  prices  were  even  lower  in
other  markets:  at  times  Swedish  prices  were  as
little  as  half  those  in  Denmark.  Indeed,  there  is  a
good  deal  of  evidence  that  ABB  and  Løgstør  had

a  common  strategy  of  entering  the  Swedish  and
Finnish  markets  with  low  prices  so  as  to  put
pressure  on  the  local  producers  with  a  view  to
acquiring  them  and  taking  them  off  the  market:
this is set out in KWH’s Reply to the Statement of
Objections,  pp.  7,  8  and  9.  Far  from  serving  as
the  proof  that  no  cartel  could  have  existed,  the
competitive  situation  must  if  anything  have  been
an incentive for the German producers to seek an
accommodation  with  their  competitors:  their
objective  was  to  persuade  the  Danish  producers
to  raise  their  export  prices  to  the  same  level  as
they  could  charge  on  their  domestic  market.

It  was  expressly  agreed  by  all  producers  in  late
1991  to  raise  price  levels  in  Germany  by  some  6
to  8 %.  To  achieve  this  objective,  the  measure
was  adopted  of  producing  a  minimum  price  list.

It  may  well  be,  however,  that  in  practice  any
increase in list prices was offset by the granting of
discounts  off-list.  (The  sales  agents  of  ABB  —
which  had  raised  its  prices  to  them  in  line  with
the  6 %  increase  —  complained  that  the  market
could not bear the increase). In the absence of an
agreement at that time on market shares, such an
outcome might be predictable: the net results was
that  each  producer  demanded  a  higher  market
share  and  none  was  prepared  to  forgo  volume.

The phenomenon of steadily declining price levels
in  Germany  between  1990  and  mid-1994  is  thus
in  no  way  inconsistent  with  collusion  of  the  type
alleged by the Commission. (It may also be noted
that the price of raw materials fell by 20 % in this
period).

(126)  The  fall  in  price  levels  was,  however,  by  the
producers’  own  accounts  reversed  in  mid-1994
and  turned  into  an  upward  trend.  it  can  be  no
coincidence  that  the  upturn  coincided  with  the
introduction  in  May  of  the  common  price  list  in
Germany  and  the  later  agreement  on  that  market
of  18  August  1994.

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The aim of the European-wide cartel was to raise
price  levels  by  30  to  35 %  in  two  years.

In September 1994 ABB was predicting price rises
of  10 %  and  another  10 %to  cover  a  predicted
increase  in  the  cost  of  raw  materials.

The  success  of  the  plan  can  be  seen  from  the
notes  of  a  Directors’  Club  meeting  in  March  or
April  1995,  found  at  Pan-Isovit:  in  most  markets
mentioned,  increases  of  15  to  20 %  are  reported.
significantly, 
in  national  markets  where  the
increase was not achieved, Powerpipe is identified
as 
(Appendices  60  and  65).
Powerpipe  estimated  in  its  complaint  that  in
December  1994,  taking  the  index  for  Sweden  as
100,  prices  in  Germany  were  130  to  140  and  in
Denmark  140  to  150.

‘problem’ 

the 

In terms of turnover, the total value of sales made
by  the  four  Danish  producers  and  Pan-Isovit,
combined, increased by almost 20 % in 1995 over
the  previous  year.

8.  Compensation  by  ABB

restriction 

agreements  between  undertakings,  decisions  by
associations  of  undertakings  or 
concerted
practices which may affect trade between Member
States and which have as their object or effect the
of
prevention, 
competition  within  the  common  market,  and  in
particular  those  which  directly  or  indirectly  fix
purchase  or  selling  prices  or  any  other  trading
conditions,  limit  or  control  production,  markets,
technical  development  or  investment,  or  share
markets  or  sources  of  supply.

distortion 

or 

2.  Agreements  and  concerted  practices

(129)  Article  85(1)  prohibits  both  agreements  and

concerted  practices.

(127)  On  18  November  1996  ABB 

informed  the
Commission  that  in  May  1996  an  agreement  had
been  reached  with  Powerpipe  and  its  owners  for
the  settlement  of  all  differences  between  them
relating 
these
to 
proceedings.

subject  matter  of 

the 

The  settlement 
substantial  sum  in  compensation.

involved 

the  payment  of  a

The  agreement  contains  a  clause  whereby  the
parties agreed to keep the terms and conditions of
the  settlement  confidential.

A copy of the agreement has been supplied to the
Commission  by  ABB.

II.  LEGAL  ASSESSMENT

A.  Article  85

1.  Article  85(1)

(128)  Article  85(1)  of 
incompatible  with 

the  Treaty  prohibits  as
the  common  market  all

to 

said 

exist 

can  be 

An  agreement 
in
circumstances  such  as  this  case  when  the  parties
adhere to a common plan which limits or is likely
to  limit  their  individual  commercial  conduct  by
determining  the  lines  of  their  mutual  action  or
abstention  from  action  in  the  market.  While  it
involves  joint  decision-making  and  commitment
to a common scheme, it does not have to be made
in  writing;  no  formalities  are  necessary,  and  no
contractual  sanctions  or  enforcement  measures
are  required.  The  fact  of  agreement  may  be
express  or 
in  the  behaviour  of  the
parties.

implicit 

A concerted practice does not however require the
participants  to  have  reached  an  actual  agreement
express  or  implied  regarding  the  terms  of  their
mutual  action  or  abstention  from  action.

to 
evading 
rules 

(130)  The  object  of  the  Treaty  in  creating  the  concept
of  concerted  practice  in  addition  to  that  of
the  possibility  of
forestall 
is 
agreement 
of
application 
undertakings 
competition 
an
in 
by 
anti-competitive  manner 
falling  short  of  an
agreement  by  (for  example)  informing  each  other
in  advance  of  the  attitude  each  intends  to  adopt,
so  that  each  may  regulate  its  commercial  conduct
in  the  knowledge  that  its  competitors  will  behave
in the same way: judgment of the Court of Justice

colluding 

the 

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of 14 July 1972 in Case 48/69, Imperial Chemical
Industries  v.  Commission (12).

In  its  judgment  of  16  December  1975  in  relation
to the European Sugar Cartel; Joined Cases 40 to
48,  50,  54  to  56,  111,  113  and  114/73  Suiker
Unie  and  others  v.  Commission (13),  the  Court  of
Justice  held  that  the  criteria  of  coordination  and
cooperation  laid  down  by  the  case-law  of  the
Court, which in no way requires the working out
of an actual plan, must be understood in the light
of  the  concept  inherent  in  the  provisions  of  the
Treaty relating to competition that each economic
operator  must  determine 
the
commercial  policy  which  he  intends  to  adopt  in
requirement  of
the  common  market.  This 
independence  does  not  deprive  undertakings  of
the  right  to  adapt  themselves  intelligently  to  the
existing  or 
their
competitors but it does strictly preclude any direct
or  indirect  contact  between  them  the  object  or
effect  whereof  is  either  to  influence  the  conduct
on 
the  market  of  an  actual  or  potential
competitor or to disclose to such a competitor the
course  of  conduct  which  they  themselves  have
decided  to  adopt  or  contemplate  adopting  on  the
market.

independently 

conduct  of 

anticipated 

Thus,  conduct  may  fall  under  Article  85(1)  as  a
‘concerted  practice’  even  where  the  parties  have
not  agreed  or  decided  in  advance  what  each  will
do  or  not  do  in  the  market  but  knowingly  adopt
or  adhere  to  collusive  devices  which  facilitate  the
coordination  of  their  commercial  behaviour.

(See  also  judgment  of  the  Court  of  First  Instance
in  Case  T-7/89  Hercules  v.  Commission (14)).

(131) 

followed 

concerted  practices 

In  a  complex  cartel  of  long  duration,  where  the
various 
and
agreements  concluded  form  part  of  a  series  of
efforts  made  by  the  undertakings  in  pursuit  of  a
common  objective  of  preventing  or  distorting
competition,  the  Commission  is  entitled  to  find
that 
continuous
infringement.  As  the  Court  of  First  Instance

constitute 

single 

they 

a 

observed  on  this  point  in  Case  T-7/89 (15):  it
would  be  artificial  to  split  up  such  continuous
conduct,  characterized  by  a  single  purpose,  by
treating  it  as  a  number  of  separate  infringements:
‘The  fact  is  that  the  (undertakings)  took  part  —
over  a  period  of  years  —  in  an  integrated  set  of
schemes  constituting  a  single  infringement,  which
progressively  manifested  itself  in  both  unlawful
agreements  and  unlawful  concerted  practices.’

(132)  Nor  is  it  necessary,  in  such  a  case,  for  the
Commission  to  categorise  it  as  exclusively  one  or
other  of  these  forms.  The  concepts  are  fluid  and
may  overlap.  An  infringement  may  begin  as  one
form  and  as  it  evolves  over  time  progressively
assume  some  or  all  the  characteristics  of  another.
(It  should  be  noted  in  this  connection  that  it  is
not  a  correct  analysis  to  categorise  the  terms  of
the  bargain  struck  by  the  parties  at  a  particular
moment  as  the  ‘agreement’  and  its  subsequent
implementation  over 
‘concerted
practice’).  It  is  often  not  even  realistic  to  make
any analytical distinction, as an infringement may
present  simultaneously  the  characteristics  of  each
form  of  prohibited  conduct,  while  considered  in
isolation  some  of  its  manifestations  could  more
accurately  be  described  as  one  rather  than  the
other.  A  cartel  may  therefore  be  an  agreement
and a concerted practice at the same time. Article
85  lays  down  no  specific  category  for  a  complex
infringement  of  the  present  type  —  see  again
judgment  of  the  Court  of  First  Instance  in  Case
T-7/89 (16).

time  as  a 

(133)  Moreover, an infringement should not be equated
with  a  commercial  contract  under  civil  law,  since
Article  85  is  not  concerned  simply  with  the
interpretation  of  the  terms  agreed  by  the  parties.
In  the  case  of  a  complex  cartel,  the 
legal
prohibition  of  Article  85  applies  not  only  to  the
specific  agreement  on  the  basic  scheme  which  is
to  be  operated  or  to  the  exact  terms  which  may
be  agreed  from  time  to  time  but  to  the  whole
continuing  process  of  collusion  in  which  they  are
therefore
involved.  The 
appropriate  not  only  to  cover  the  terms  expressly
agreed  but  also  the  implementation  of  what  has
final
been  agreed. 

further,  even  before  a 

‘agreement’ 

term 

is 

(12) [1972]  ECR  619.
(13) [1975]  1663.
(14) [1991]  ECR  II-1711,  at  (256).

(15) See  footnote  14,  at  (262)  and  (263).
(16) See  footnote  14;  at  (264).

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comprehensive  agreement  is  concluded  regulating
in  the
their  mutual  actions  and  abstentions 
market,  the  bargaining  process  may 
involve
reaching  inchoate  understandings  and  conditional
or  partial  agreement  which  restrict  competition.

(134)  An  agreement  for  the  purposes  of  Article  85(1)
may  also  fall  well  short  of  the  certainty  required
for  the  enforcement  of  a  commercial  contract.  Its
exact  terms  may  never  be  expressed:  the  fact  of
agreement  will  have  to  be  inferred  from  all  the
circumstances.  The  divergent  interests  of  the  cartel
members may also preclude a full consensus on all
issues.  One  or  other  party  may  have  reservations
about  some  particular  aspect  of  the  arrangement
while  still  adhering  to  the  common  enterprise.
some  aspects  may  deliberately  be  left  vague  or
undefined.  It  may  be  that  the  parties  agree
(expressly  or  tacitly)  to  adopt  a  common  plan  and
that  they  have  to  meet  on  a  continuing  basis  to
work  out  the  details,  alter  or  amend  it  from  time
to  time  or  resolve  particular  difficulties.

Formal  agreement  may  never  be  reached  on  all
matters.  Agreements 
in  one  area  may  exist
alongside conflicts in another. competition may not
be  completely  eliminated.

The participants may also show varying degrees of
commitment  to  the  common  scheme.  One  may
exercise  a  dominant  role  as  ringleader.  There  may
be  internal  conflicts  and  rivalries.  Some  members
may  even  cheat.  there  could  be  outbreaks  of  fierce
competition  and  even  ‘price  wars’  form  time  to
time.

None  of  these  elements  will  however  prevent  the
arrangement 
from  constituting  an  agreement/
concerted practice for the purposes of Article 85(1)
where  there  is  a  combination  of  parties  with  a
single  common  and  continuing  objective.  A
complex  cartel  may  properly  be  viewed  as  a  single
continuing  infringement  for  the  time  frame  in

which it existed. The agreement may well be varied
or  modified, 
activities  may
progressively be expanded to cover new markets or
its  mechanisms  may  be  adapted  or  strengthened.

cartel’s 

the 

Members may join or leave the cartel from time to
time  without  its  having  to  be  treated  as  a  new
‘agreement’  with  each  change  in  participation.

Furthermore,  as  a  matter  both  of  evidence  and  of
substantive law it is not necessary, for the existence
of  an  agreement,  that  every  alleged  participant
participated  in,  gave  its  express  consent  to  or  was
even  aware  of  each  and  every  individual  aspect  or
its
manifestation  of 
adherence  to  the  common  scheme.

throughout 

cartel 

the 

3.  The  nature  of  the  infringement  in  this  case

(135)  There  is  no  substantial  dispute  that  the  express
market-sharing  arrangement  between  the  four
Danish  producers  dating  from  late  1990  had  all
the characteristics of a full ‘agreement’ within the
meaning  of  Article  85(1).

The  subsequent  working-out  of  the  details  of  the
plan  and  its  implementation  in  regular  meetings
does  not  give  rise  to  a  series  of  discrete
‘agreements’  but  constitutes  part  of  the  same
overall  and  illegal  scheme.

the 

four  Danish
The  agreement  between 
producers  also  covered  concerted  price  increases
on  export  markets.  While  at  the  time  the  cartel
was at its most developed in Denmark (their most
profitable  market)  cooperation  extended  to  other
markets,  albeit  in  a  piecemeal  and  inchoate  form.
Through  its  interlocking  arrangement  with  ABB,
Pan-Isovit  was  also  drawn  into  the  collusion  at
the  beginning,  even  if  this  alliance  lasted  only  a
few  months.

(136)  The 

systematic  cooperation  of 

the  Danish
producers  was  extended  to  Germany  and  was
joined  by  the  two  German  producers,  Pan-Isovit
and  Isoplus  in  October  1991.  Its  first  concrete
manifestation  was  the  6 %  price  increase  agreed

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in that month and due to take effect on 1 January
1992. The discussions were expanded to cover the
potential  entry  of  the  German  producers  to
Denmark  so  that  the  two  major  markets  for
district  heating  were  eventually  being  considered
in  the  same  meetings.

and  Pan-Isovit 

Both  Henss/Isoplus 
argue,
however,  that  they  did  not  take  part  in  any
infringement  before  the  end  of  1994.  While  they
can  hardly  contest  their  participation  in  regularly
scheduled  meetings,  they  say  that  these  repeated
contacts  were  an  entirely  unsuccessful  attempt  to
reach  a  truce  in  the  price  war  which  then
prevailed.  They  invoke  the  downward  spiral  in
prices  between  1991  and  1994  as  proof  that  no
agreement  was  ever  made.

prices; 

agreeing 

drafting, 

charge  particular  prices  and  to  increase  and
maintain 
and
distributing  model  price-lists  to  be  used  for
coordinating  pricing;  exchanging  information  on
sales  volumes,  market  size  and  market  shares  so
as  to  set  up  a  quota  system;  and  agreeing  a  sales
quota  system.  The  discussions  may  have  involved
a  shifting  constellation  of  alliances,  even  threats
of  reprisal  or  hostile  action,  but  as  part  of  the
developing  process  of  understandings  and  partial
agreements  intended  to  fix  prices,  coordinate
price  increases  and  allocate  markets  and  market
shares  they  constituted  cartel  conduct  prohibited
by  Article  85(1).

The  two  Danish  producers  Løgstør  and  Tarco
invoke  similar  arguments  in  support  of  their
contention  that  there  were  two  entirely  separate
cartels.

(138)  On  the  basis  of  the  principles  set  out  above,  the
continuing  anti-competitive  arrangements  from
October  1991  onwards  can  be  taken  as  a  whole
to  constitute  a  prohibited  ‘agreement’  in  terms  of
Article  85(1).

(137)  Although  it  may  well  be  true  that  they  were
the
loose  and  often 
inchoate, 
Commission 
the
arrangements  outside  Denmark  before  1994  did
not  amount  to  an  infringement  of  Article  85(1).

fragmentary, 
that 

the  argument 

rejects 

In  the  first  place,  this  contention  ignores  the  fact
(amply  documented)  that  there  was  express
agreement  on  (at  least  1.  the  price  increase  for
Germany  of  1  January  1992,  2.  pricing  and
project  sharing  in  Italy,  and  3.  the  market-quota
scheme  in  August  1993.

These  express  and  explicit  agreements  were  in
reality  the  result  of  a  continuing  agreement,
understanding  and  concert  of  action  among  the
producers.  The  participants  had  set  up  an
infrastructure  of  regular  meetings  and  were
involved  in  a  continuous  process  of  business
diplomacy  aimed  at  reconciling  their  respective
interests. For the purpose of forming and carrying
out  their  scheme,  the  participants  did  things
which  they  had  devised  and  agreed  to  do,
including  (but  not  limited  to)  participating  in
meetings  to  discuss  prices,  sales  quotas  and
project-sharing; agreeing during those meetings to

still 

falls  under 

in  question 

In  any  event,  even  if  the  concept  of  ‘agreement’
does  not  apply  to  steps  in  the  bargaining  process
leading  up  to  comprehensive  agreement,  the
the
conduct 
prohibition  of  Article  85  as  a  concerted  practice.
The  six  producers  had  set  up  a  forum  for  the
regular discussion of ‘matters of common interest’
which involved the exchange of normally sensitive
commercial information and (quite apart from the
three  known  initiatives  when  specific  and  explicit
agreement  to  fix  prices  or  quotas  was  reached)
must  have  meant  reaching  a  certain  level  of
understanding,  reciprocity  and  conditional  or
partial  agreement  as 
In
determining  their  policy 
in  the  market  the
participants could not, in any event, have failed to
take  into  account,  directly  or  indirectly,  the
information  obtained  in  the  course  of  those
regular meetings.

their  conduct. 

to 

(139)  As  regards  the  ‘new’  European-wide  agreement,
the  Commission  also  rejects  the  argument  that  it
did  not  begin  until  the  end  of  1994  or  even  the
beginning  of  1995.

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Again,  this  assertion  by  the  producers  does  not
correspond  with  the  facts.  The  so-called  ‘plenary’
meetings  re-started  (after  only  a  short  hiatus)  for
Germany  as  early  as  7  March  1994.  By  May  an
agreed  price  list  had  already  been  drawn  up
which was to be used as the basis for all supplies
to the German market and, even if it had in some
respects  been  incomplete  (reference  was  made  to
‘confrontations and differences of interpretation’),
it  was  indeed  implemented  and  by  August  1994
the  remaining  differences  as  to  how  to  bring
prices  up  were  settled.

(141) 

If  the  agreed  market-sharing  in  Denmark  broke
down  in  1993,  this  was  the  result  of  a  power
struggle  inside  the  cartel,  not  of  any  desire  to
return  to  conditions  of  free  competition.  In  any
event,  the  Danish  and  German  markets  were
being  discussed  in  the  same  forum;  the  regular
meetings leading to the market-sharing agreement
in  Germany  in  the  summer  of  1993  ensured  the
continuity  of  the  collusion  between  the  six  major
producers.

The  overall  system  for  the  European  market  was
agreed  in  principle  by  September.  The  fact  that
the  network  of  ‘contact  groups’  in  the  different
markets  was  set  up  in  the  following  month  and
may  not  have  been  completed  until  March  1995
(Netherlands,  Italy)  does  not  mean  that  no
agreement  in  the  sense  of  Article  85(1)  had
existed  before  then.

Thus,  at  the  very  time  when  Løgstør  says  it
informed  ABB  and  the  others  by  telephone  on  19
and 20 April 1993 that it had decided to leave the
cartel in Denmark, they were attending a meeting
in  Hamburg  which  Løgstør  itself  had  organised
(and  may  well  have  attended)  to  restart  progress
towards agreeing a common price list in Germany
(point  49).

(140)  Nor  does  the  Commission  accept  the  related
argument  of  Løgstør  and  Tarco  that  the  ‘Danish’
and  ‘European’  cartels  constituted  two  entirely
discrete  and  unrelated  infringements.

There  is  no  clear-cut  distinction  between  the
Danish 
that
developed  to  cover  the  whole  European  market,
as  the  arguments  of  Løgstør  and  Tarco  imply.

the  arrangements 

cartel  and 

the 

six-month 

Throughout 
period
later 
(September  1993-March  1994)  characterised  by
the  producers  as  a 
‘price  war’,  bilateral  or
trilateral contacts continued. As late as November
or  December  1993  ABB  was  still  trying  to  induce
Løgstør  to  sign  the  compensation  agreement  for
Germany. Any hiatus could be considered to be a
suspension  of  the  normal  arrangements  and
relationships:  the  producers  soon  recognised  that
a prolonged power struggle was self-defeating and
returned  to  the  conference  table.

The  cartel  may  for  practical  reasons  have  begun
in Denmark (it was the ‘home market’ for four of
the sic producers and was easily administered) but
from  the  start  the  over-arching  and  longer-term
objective,  perhaps  most  clearly  defined  in  ABB’s
strategy,  was  to  extend  control  to  the  whole
market.

Almost  from  the  start  the  cooperation  extended
to  other  Community  national  markets  (Germany
and  Italy  in  particular)  and  however  fragmented
this  evolution  may  have  been,  it  is  clear  that  a
common objective and purpose to raise prices and
regulate  the  market  was  steadily  pursued.

First  Pan-Isovit  and  then  Henss/Isoplus  were
brought  into  the  arrangements  with  the  four
Danish  producers.

(142)  There  is  also  a  clear  continuity  of  method  and
practice  between  the  dispensation  agreed  in  late
1994  for  the  whole  European  market  and  earlier
arrangements.

the 
same  as 

The  methods  for  securing  collusion  which  were
‘new’  dispensation  were
adopted  under 
those  which  had
essentially 
the 
successfully  applied 
this  was
particularly the case in Germany where inside the
framework  of  the  quota  system,  a  sophisticated
mechanism  of  identifying  projects,  allocation  of
contracts  to  a  ‘favourite’,  collusive  bidding  and
monitoring  to  ensure  compliance  was  translated

in  Denmark; 

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from a market of thirty or so new projects to one
with  as  many  as  1 500 annually.

(144) 

The  two-tier  meeting  structure  to  administer  the
cartel  was  also  the  same  as  that  operating  in
Denmark. Indeed, the system was said to be based
on  the  ‘Danish  model’.  The  cartel  arrangements
which  had  been  a  feature  of  the  Danish  district
heating market for years now permeate the whole
industry.  The  Europe-wide  agreement  was  the
culmination of a process of cartellisation in which
—  whatever  its  vicissitudes  —  the  producers  had
long  been  engaged.

It does not matter that the Danish cartel had only
had  four  members.  The  two 
large  German
producers  had  in  fact  already  been  involved  with
the  others  in  a  scheme  of  collusion  outside
Denmark  for  several  years:  now  they  were  being
fully integrated into the mechanism at the ‘Danish
model’  was  transposed  to  the  wider  European
market.

join 

finding 

The  fact  that  smaller  producers  —  Brugg,  KWH,
Ke-Kelit  and  Sigma  —  did  not 
the
arrangements  until  1994  or  1995  does  not
this  was  a  single
that 
preclude  a 
continuing  infringement.  By  that  time,  the  system
of  market  division,  price-fixing  and  bid-rigging
had become the customary and recognised way of
doing  business  in  the  industry.  It  was  simply  a
matter  of  integrating  the  smaller  local  producers
into  the  overall  scheme  to  make  it  watertight.

(143)  The  Commission  also  rejects 

the  argument
advanced  by  most  of  the  producers  —  Løgstør,
Henss/Isoplus,  Pan-Isovit,  Starpipe,  Tarco  and
Brugg  —  that  they  did  not  participate  ‘  in  any
agreement  to  damage  Powerpipe’.

Their  contention  is  unsustainable  in  law.  The
producers  involved  seek  to  divide  the  various
manifestations  of  the  cartel  into  totally  separate
infringements  of  Article  85.  This  analysis  is
entirely  artificial,  since  the  plan  to  damage  or
eliminate  Powerpipe  was  an  integral  part  of  the
schemes for cartellising the European and German
markets 
they  were  all  deeply
involved (17).

in  which 

(17) The  Commission  accepts  that  there  is  no  evidence  that
Ke-Kelit  or  Sigma,  who  were 
the
arrangements  on  their  national  market,  were  aware  of  any
plan  to  eliminate  Powerpipe.

involved  only 

in 

In  any  case,  the  factual  evidence  belies  their
claims.  From  the  time  when  Powerpipe  entered
the  German  market,  there  had  been  concerted
efforts by Løgstør, Henss/Isoplus (as well as ABB)
to  keep  it  out  or  induce  it  to  enter  the  cartel.  All
the  undertakings  making  this  argument  were
present at the meeting in Dusseldorf on 24 March
1995,  the  conclusions  of  which  were  noted  with
great clarity by Tarco. The main advocates of the
boycott  may  have  been  ABB  and  Henss,  but  all
those  present  at  the  meeting  knew  of  and
acquiesced  in  the  plan.

Nor  does  it  matter  that  in  the  implementation  of
the  boycott  the  leading  role  fell  to  ABB  and
Løgstør;  these  were  by  force  of  circumstance  the
two  producers  best  placed 
approach
Powerpipe’s  sub-contractors  or  suppliers.

to 

It is, of course, not possible to state with certainty
that  the  refusal  of  these  producers  to  supply  the
DSD  order  was  motivated  solely  by  the  intention
to  damage  Powerpipe:  they  may  well  have  been
unable to meet an order of this type or size and in
any  case  they  are  not  legally  obliged  to  contract.
Nevertheless  the  annotation  on  the  order  enquiry
found at Pan-Isovit confirms that ABB, Henss and
Pan-Isovit  (the  three  members  of  the  unsuccessful
consortium) were in contact about this order; that
Pan-Isovit  at  least  was  pleased  that  DSD  was  in
difficulties  finding  supplies;  and  that  the  question
was  discussed  in  the  directors’  club.

The  express  instructions  given  by  ABB  to  KWH
not  to  supply  Powerpipe  and  the  discussions  in
the  directors’  meetings  of  5  May  and  13  June
1995 (see 101)) confirm that the plan to eliminate
that  competitor  was  a  settled  policy  of  the
cartel.

(145)  Given  the  common  design  and  common  objective
which  the  producers  steadily  pursued,  namely  of
eliminating  competition  in  the  district  heating
industry,  the  Commission  considers  that  the  joint
enterprise  constituted  a  continuing  infringement
of  Article  85(1)  beginning  in  late  1990  in  which
each  of  the  producers  played  its  part.

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Although,  considered  as  a  whole,  the  complex  of
arrangements  between  the  producers  could  be
regarded as presenting the characteristics of a full
‘agreement’, 
in  question  also
comprises  factual  elements  some  of  which  could
aptly  be  described  as  a  concerted  practice  (see
(138)).

the  conduct 

that  while 

The  Commission  recognises 
the
infringement  constituted  a  single  continuing
violation,  its  intensity  and  effectiveness  varied
over  the  duration  of  the  time  period  covered:  it
progressively  developed  (subject  to  a  short  period
when  the  arrangements  were  in  abeyance)  from
arrangements  affecting  primarily  Denmark 
in
1991 to other markets and by 1994 constituted a
pan-European  cartel  covering  almost  all  trade  in
the  product.

The  principal  aspects  of 
the  complex  of
agreements  and  arrangements  which  can  be
characterised  as  restrictions  of  competition  are:

—  allocating  market  share  quotas,

—  requiring  or  encouraging  producers  with  low
market  shares  to  withdraw  from  particular
markets  in  exchange  for  compensation  in
other  national  markets,

—  agreeing  and  applying  a  mechanism  of
sanctions/compensation  to  reinforce  the  quota
system,

—  agreeing  concerted  price  increases  (amount,

timing  and  stages  of  increase),

4.  Restriction  of  competition

—  agreeing  on  the  use  of  a  common  price  list  or

lists,

(146)  The  complex  of  agreements  in  this  case  had  the
object  and  effect  of  restricting  competition.

—  agreeing  the  discounts  (in  percentage  terms)
that  were  to  be  permitted  from  the  list  price,

Article  85(1)  expressly  mentions  as  restrictive  of
competition,  agreements  which:

—  directly  or  indirectly  fix  selling  prices  or  any

other  trading  conditions,

—  limit  or  control  production,  markets  or

technical  development,

—  share  markets  or  sources  of  supply.

(The  list  is  not  exhaustive)

These  are  the  essential  characteristics  of  the
integrated  scheme  of  horizontal  arrangements
under  consideration  in  this  case.  Price  being  the
instrument  of  competition,  the  various
main 
collusive  arrangements  and  mechanisms  adopted
by  the  producers,  including  the  common  plan  to
eliminate  or  damage  Powerpipe,  were  all
ultimately  aimed  at  an  inflation  of  the  price  to
their  benefit  and  above  the  level  which  would  be
determined  by  conditions  of  free  competition.

(147)  Market  sharing  and  price  fixing  by  their  very
nature  restrict  competition  within  the  meaning  of
Article  85(1), 
technical
development.

as  does 

limiting 

—  allocating  business  on  the  basis  of  respect  for
existing  ‘traditional’  customer  relationships,

—  allocating 

individual  projects 

to
competitive 
a
particular  ‘favourite’  (namely  the  producer  to
which  the  project  was  assigned),

tendering  procedures 

subject 
to 

—  fixing  the  price  that  the  ‘favourite’  was  to

quote  in  order  to  win  the  business,

—  arranging  for  the  other  producers  to  submit
higher  offers  in  the  tendering  procedure  to
‘protect’  the  favourite  and  ensure  that  it  was
successful,

—  agreeing  that  the  unsuccessful  bidders  in  a
tendering  procedure  would  receive  a  specific
allocation  of  production  as  sub-contractor  for
the  winning  bidder,

—  withdrawing 

from  particular  projects  or
abstaining  from  bidding  in  return  for  some
other  compensation  or  a  commodation,

—  devising  and  applying  a 

reporting  and
monitoring  mechanism  to  follow  individual
projects,  compare  bids,  deter  ‘cheating’  and

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influence  the  biding  procedure 
contracts,

in 

‘open’

For  the  avoidance  of  doubt,  it  is,  however,
necessary  to  state  that:

—  requiring  any  participant  which  had  underbid
the  assigned  ‘favourite’  to  revoke  or  revise  its
bid,

(a)  the above-listed restrictions of competition are
not  separate  infringements  of  Article  85  but
aspects  of  the  single  continuing  infringement;

—  scheming  to  lure  away  systematically  key
employees  of  Powerpipe  in  order  to  damage
its  business  and  customer  goodwill  (ABB  and
Løgstør),

—  attempting 

to 

into
coerce 
withdrawing  winning  bids  in  projects  which
had  been  assigned  by  the  cartel  to  one  of  its
members  (for  example,  Neu-Brandenburg),

Powerpipe 

—  influencing  or 

attempting 

influence
contractors/purchasers to disqualify Powerpipe
after  it  had  won  a  major  project  allocated  by
the  cartel  to  three  of  its  members  (ABB,
Henss/Isoplus),

to 

—  agreeing a collective boycott of the contractors
and  suppliers  involved  in  the  above  project,

—  approaching  Powerpipe’s  suppliers  in  order  to
persuade  them  to  withhold  or  delay  supplies
essential 
timely
performance  of  its  contracts  (primarily  ABB
and  Løgstør),

proper 

and 

the 

for 

—  agreeing to indemnify Pan-Isovit in proportion
to 
the
their  allocated  market  share 
purchase  by  Pan-Isovit  of  Powerpipe  in  order
to  remove  it  from  the  market  as  a  competitor
(ABB,  Henss/Isoplus,  Tarco  and  Pan-Isovit),

for 

—  using norms and standards in order to prevent
or  delay  the  introduction  of  new  technology
which  would  result  in  price  reductions  (the
members  of  EuHP).

(b) the  infringement  consisted  of  a  complex  of
agreements  and  concerted  practices  in  which
each  undertaking  played  its  part.  It  is  not
alleged  that  each  addressee  of  this  Decision
participated  in  each  and  every  aspect  of  the
anti-competitive  arrangements  set  out  or  did
so for the whole duration of the infringement.
The role of each participant and the extent of
its involvement is fully set out in this Decision:
see in particular the special position of KWH,
Brugg,  Ke-Kelit  and  Sigma;.

(c)  some  anti-competitive  aspects  of  the  cartel
mentioned here only applied in some markets,
were more developed in some markets than in
others  or  lasted  for  a  limited  period:  for
example,  after 
the
the
Europe-wide 
bid-rigging  mechanism  which  had  been  the
basis  of  the  ‘Danish  model’  was  found  in  its
most  developed  form  in  Germany.

the  establishment  of 
late  1994, 

cartel 

in 

(d) the  Commission  will  for  the  purposes  of  this
procedure 
joint  actions
take  account  of 
against  Powerpipe  prior  to  the  accession  of
Sweden  to  the  European  Union  (1  January
it  affected
1995)  only 
in  so  far  as  (i) 
competition 
Community
(Powerpipe’s entry to the German market) and
is  circumstantial  evidence  of  a
(ii) 
to  damage  or  eliminate
continuing  plan 
Powerpipe  after  that  date.

inside 

the 

it 

5.  Effect  upon  trade  between  Member  States

(149)  The  continuing  agreement  between  the  producers
had  an  appreciable  effect  upon  trade  between
Member  States.

(148) 

is  not  necessary,  given 

their  manifest
It 
anti-competitive  object,  to  examine  in  relation  to
each  one  of  the  above  restrictions  of  competition
the extent to which it contributed in achieving the
aim  being  pursued.

is
The  district-heating  market 
particularly  characterised  by 
trade  between
Member  States:  almost  60 %  of  business  in  the

is  one  which 

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Community is accounted for by such trade. In the
most  important  national  market,  Germany,  75 %
of  demand  is  supplied  by  imports  from  other
Member  States:  Denmark,  Sweden,  Finland  and
Austria.  Half  of  Community  production  capacity
is  located  in  Denmark,  which  supplies  district
heating  pipes  to  all  the  other  Member  States.

the  grounds  that  it  sold  only  on  the  local  market
must  be  rejected.  It  was  in  any  case  well  aware
that  the  arrangements  in  Austria  to  which  it
subscribed formed part of a larger scheme, and of
it  sold  were  all
course  the  products  which 
imported  from  Denmark.

While  at  the  beginning  the  cartel  arrangements
were primarily concerned with Denmark and later
with  Germany,  these  two  markets  constituted  the
two most important national markets and indeed,
in  the  initial  stages,  the  underlying  objective  of
the  cartel  had  been  to  regulate  the  penetration  of
the  German  and  Scandinavian  groups  in  each
other’s  ‘home  territory’.

(151) 

throughout 

Subsequently  by  the  end  of  1994  the  cartel
arrangements  had  become  all-pervasive  and
covered  the  whole  European  market.  Virtually  all
trade 
this
important  industrial  sector  was  controlled  by  the
cartel.  It  is  significant  that  the  campaign  directed
at  Powerpipe  intensified  when  it  expanded  its
activities  to  the  German  market.

the  Community 

in 

(150)  As  between  the  cartel  participants  themselves,  the
withdrawal  from  particular  markets  of  those
whose existing share was deemed too low resulted
in  the  automatic  diversion  of  trade  patterns  from
the  course  that  they  would  otherwise  have
followed.

The  application  of  Article  85  to  a  cartel  is  not
limited  to  that  part  of  the  members’  sales  which
actually  involve  the  transfer  of  goods  from  one
Member  State  to  another.  Nor  is  it  necessary,  in
order  for  Article  85  to  apply,  to  show  that  the
individual  conduct  of  each  participant,  as
opposed  to  the  cartel  as  a  whole,  affected  trade
between  Member  States  (see  the  judgment  of  the
Court  of  First  Instance  in  Case  T-13/89,  Imperial
Chemical  Industries  v.  Commission (18).

The  argument  of  Ke-Kelit  that  trade  between
Member  States  was  in  no  way  affected  by  its
participation  in  the  Austrian  Contact  Group  on

6.  Duration  of  the  infringement

single 

involving  a 

It  follows  from  the  Commission’s  analysis  of  this
comprehensive
case  as 
infringement  rather  than  a  series  of  multiple  but
discrete  agreements  that  there  may  be  different
dates  of  commencement  for  the  participation  of
those  involved.  although  it  is  apparent  from  the
statement of Løgstør (Statement II, pp 86-87) that
anti-competitive  contacts  between  producers  had
already  begun  in  1998/98,  the  Commission  will
confine  its  analysis  under  Article  85  and  the
assessment of any fines to the period beginning in
about  November  1990  when  the  concerted  price
increases 
for  Denmark  were  agreed.  The
participation of ABB, Løgstør, Tarco and Starpipe
in  collusive  arrangements  is  clearly  established  as
from  that  time.

time.  The 

Pan-Isovit  was  drawn  into  the  collusion  at  the
‘informal  strategic  alliance’
same 
between  ABB  and  Pan-Isovit  regarding 
the
German  market  dates  from  December  1990,  and
although  with  the  founding  of  EuHP  shortly
afterwards  their  bilateral  arrangement  seems  to
have 
in  April  1991,
Pan-Isovit  was  involved  in  the  discussion  in  Italy
in July and by October 1991 arrangements for the
German  market  involving  all  six  main  suppliers
were  in  force  and  they  agreed  a  common  price
increase  with  effect  from  1  January  1992.

into  abeyance 

fallen 

The  active  involvement  of  Henss/Isoplus  in  the
scheme  of  collusion  is  fully  established  from
October  1991  when  it  began  to  attend  regular
Directors’  meetings.  from  then  all  six  leading
Starpipe,
producers  ABB,  Løgstør,  Tarco, 
Henss/Isoplus  and  Pan-Isovit  were  involved.

(18) [1992]  ECR  II-1021,  at  point  304.

(152)  Even  if  the  Danish  quota  agreement  had  broken
down 
in  mid-1993,  the  cooperation  on  the
German  market  was  by  then  already  being

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concretised in a defined quota scheme (points (50)
tot  (52)).  For  the  six-month  period  between
October  1993  and  March  1994  the  arrangements
can  be  considered  to  have  been  in  abeyance,
although  (as  ABB  says)  bilateral  and  trilateral
meetings  continued.  By  May  1994  the  collusion
had  been  re-established  in  Germany  with  the
implementation  of  the  Euro  price  list  and  by
August  1994  its  terms  had  been  finalised.

institutionalised 

in  October-
The  overall  dispensation  agreed 
November 
a
on 
1994 
Europe-wide  basis  the  system  of  collusion  which
the  major  players  in  the  industry  regarded  as  the
desired  model  for  doing  business.  These  six
producers  produced  a  system  which  developed
and  remained  viable  amongst  themselves  and  to
which  other  producers  operating  on  national  or
regional  markets  could  subscribe.

KWH’s  involvement  in  the  collusive  venture  is
fully  established  from  January  1995  when  one  of
its  senior  directors  met  ABB  in  Copenhagen.
However  since 
the  Statement  of  Objections
identified  March  1995  as  the  staring  date  for
in  this
KWH,  this 
Decision.

later  date  will  be  used 

(153) 

In  the  individual  national  markets,  the  two  local
producers  Ke-Kelit  (Austria)  and  Sigma  (Italy)
probably only joined the cartel at the beginning of
1995.  Brugg,  however,  was 
in  the
scheme  from  August  1994,  even  if  it  only  began
attending the German contact group in December
of  that  year.

involved 

The  infringement  continued  up  to  at  least  March
1996,  when  the  Commission  addressed  requests
under  Article  11  to  the  principal  participants,  if
not April/May in some markets and in the case of
Italy,  as  late  as  June  1996.  Even  now  there  is  no
guarantee  that  collusion  in  some  form  is  not  still
taking place.

basis  that  the  cartel  lasted  until  March/April
1996.

Consequently, 
undertakings 
follows:

the  participation  of  various
lasted  as

infringement 

the 

in 

(a)  ABB, Løgstør, Tarco and Starpipe from about
November  1990  in  Denmark,  progressively
extending to the whole of the Community and
lasting  until  at  least  March  or  April  1996,
subject to the arrangements being in abeyance
for  a  period  of  up  to  six  months  from
October  1993  to  about  March  1994;

(b) Pan-Isovit, 
initially  from  about  December
and
in 
1990 
conjunction  with  ABB 
subsequently  from  October  1991,  together
with  the  above  producers  and  Henss/Isoplus,
again subject to the abovementioned period of
six  months  when  the  arrangements  were  in
abeyance  and  lasting  until  at  least  March  or
April  1996;

(c)  Isoplus from October 1991 and subject to the
above period of abeyance until at least March
or  April  1996;

(d) Brugg  from  about  August  1994  until  at  least

March  or  April  1996;

(e)  Ke-Kelit  from  about  December  1994  until  at

least  March  or  April  1996;

(f)  KWH from (at the least) March 1995 until at

least  March  or  April  1996;

(g)  Sigma  from  about  April  1995  until  at  least

March  or  April  1996.

7.  The  addressees  of  the  present  proceedings

(a)  General  considerations

(154)  The subject of the competition rules in the Treaty
is  the  ‘undertaking’,  a  concept  not  necessarily
identical  with  the  notion  of  corporate 
legal
personality  in  national  commercial  company  or
fiscal law.

However,  given  the  absence  of  reliable  and
detailed  information  as  to  the  Italian  contact
group,  the  Commission  will  assess  fines  on  the

The term is not defined in the Treaty. It may refer
to  any  entity  engaged  in  commercial  activity.  In

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the  case  of  a  large  multinational  corporation
(such  as  ABB),  the  myriad  subsidiaries,  the
complex network of ownership and shareholdings
and the organisation for management purposes of
the  group’s  activities  into  separate  operational  or
functional divisions and/or geographical areas not
necessarily 
corporate
corresponding 
structure,  may  give  rise  to  complications.

its 

to 

According  to  the  circumstances, 
it  may  be
appropriate  to  treat  as  the  relevant  ‘undertaking’
for  purposes  of  Article  85  the  whole  group  or
individual  subgroups  or  subsidiary  companies.

(b) ABB

(155) 

involve 

recourse 

In this case, the proceedings and this Decision are
addressed  to  the  ABB  concern  as  represented  by
its  top  holding  company  ABB-Asea  Brown  Boveri
Limited.  For  the  purposes  of  recovering  any  fine,
to  national
which  might 
enforcement procedures, it is necessary to address
the  decision  to  a  body  or  bodies  possessing  legal
personality.  In  the  case  of  a  large  group,  the
legal  entity  may  be  the  holding
appropriate 
company  which  heads  the  group.  The  fact  that
the  product  which  is  the  subject  of  the  cartel  is
only  one  of  many  activities  in  which  the  group  is
engaged and within the corporate structure, is the
sub-group,  division  or
responsibility  of  a 
subsidiary  is  not  decisive.

evidence of its integrated structure and underlines
the appropriateness of addressing this Decision to
the  group.

(156) 

In  addition  to  the  above,  there  are  further  more
specific  reasons  in  this  case  why  the  proceedings
should  properly  be  addressed  to  ABB  itself  rather
than  to  any  subsidiary:

—  the  district  heating  business  are  (BA-VDH)
groups  together  a  whole  array  of  30  or  more
companies;

—  there 

is  no  single  holding  company  for
in
BA-VDH:  while  ABB  IC  Møller  A/S 
Denmark may account for the most important
manufacturing  facilities,  there  are  six  other
ABB  production  companies  with  different
lines  of  ownership,  and  on  the  commercial
side  the  sales  function  in  many  countries  is
performed  by  the  national  subsidiaries  of
ABB;

—  the  efforts  of  ABB  to  eliminate  Powerpipe
and/or  secure  the  interests  of  the  cartel  were
exerted 
the
business  are  a  BA-VDH  (see  Appendices  144,
146,  159  and  160.)

companies  outside 

through 

—  BA-VDH  reports  direct 

to  an  executive
vice-president  of  ABB  who  is  ex  officio  a
member  of  the  executive  committee,  the  top
executive  body  of  the  ABB  group;

—  Both  the  cartel  and  the  measures  to  deny  and
conceal  its  existence  were  conceived,  directed
and  actively  supported  at  a  high  level  in  ABB
group management (see Appendices 1, 2, 3, 6,
7,  11,  13,  16,  26,  29,  48  and  126).

The  present  approach  squares  with  the  normal
practice  of  the  Commission  in  previous  major
cartel  cases  (such  as  case  No  IV/31.149  —
Polypropylene  cartel (19),  which  has  been  upheld
by  the  Court  of  First  Instance.

(c)  Henss/Isoplus

The  group’s  operations  are  consolidated  and
accounted  for  in  the  Annual  Report  of  ABB  Asea
Brown  Boveri  Limited.  ABB’s  organisational
matrix  of  business  areas  and  industrial  product
segments  overlapping  with  geographic  regions  is

(19) OJ  L  230,  18.8.1986,  p.  1.

(157)  The  Henss/Isoplus  companies  acted  as  a  de  facto
group.  During  the  investigation  at  the  Austrian
manufacturing  company 
Isoplus  Fernwärme-
technik Ges.m.B.H. the Commission officials were
told  by  its  managing  director  that  the  majority
shareholder was Dr. W. Henss with 87 %. Isoplus
later denied having made any such statement. The
local  companies  register  does  not  show  Dr  Henss
as  owning  any  such  shareholding:  the  owner  of
the shares is stated to be the managing director of

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Isoplus, and although the register showed that for
three  years  up  to  December  1993  the  lawyer
acting  for  Isoplus  in  these  proceedings  had  held
the  87 %  shareholding  in  question,  no  indication
was given as to the capacity in which or on whose
behalf  he  held  them.  (No 
information  was
forthcoming on this point from Isoplus or its legal
adviser.)

Isoplus  to  attend  directors’  club  meetings  because
of  his  special  knowledge  and  experience  of  the
German market: he was not there on behalf of the
Henss  companies.  It  was  also  claimed  that  the
Henss  companies  as  commercial  agents  could  not
as a matter of law be party to a producer’s cartel:
any  infringement  of  Article  85  could  only  be
imputed  to  Isoplus.

Isoplus  Fernwärme  Ges.m.b.H.  of  Hohenberg,
Austria owns 100 % of a legally separate German
registered  company  of  the  same  name  located  in
Sondershausen  and  which  is  in  fact  the  principal
manufacturing  company 
in  the  Henss/Isoplus
group.

At  the  relevant  times,  the  two  Henss  companies
Dipl-Kfm.  Walter  Henss  GmbH  in  Rosenheim
(‘Henss  Rosenheim’)  and  Dipl-Kfm  Walter  Henss
Fernwärmeleitungsbau  GmbH  in  Berlin  (‘Henss
Berlin’)  acted  as  the  commercial  agents  of  Isoplus
in Germany. Dr. W. Henss was both the majority
shareholder  and  the  managing  director  of  Henss
Rosenheim and he was the managing director (but
not  a  shareholder)  of  Henss  Berlin (20).

It  is  apparent  from  the  fact  that  it  was  Dr.  W.
Henss  who  always  attended  the  directors’  club
meetings  that  he  was  the  person  who  exercised
management  and  control  over  Isoplus  and  that
the Henss and Isoplus companies together formed
a  de  facto  group.  It  was  common  knowledge  in
the  industry  that  Henss  was  the  power  behind
Isoplus.

The  purpose  of  this  line  of  defence  was  no  doubt
to  limit  the  amount  of  any  fine  that  might  be
imposed  to  10 %  of  the  turnover  of  Isoplus
Ges.m.b.H.  (which  had  in  fact  been  considerably
understated  in  that  company’s  original  replies
under  Article  11).

Although  the  Commission  considered  that  the
Henss/Isoplus  companies  formed  a  group,  to  its
knowledge  there  was  no  holding  company  to
which  the  Statement  of  Objections  could  be
addressed  (on  the  basis  of  its  normal  practice  as
set  out  with  regard  to  ABB  at  (155)).

to 

therefore
The  Statement  of  Objections  was 
addressed 
the  Henss/Isoplus  group,  as
represented  by  all  four  of  its  principal  companies
in  the  Community,  namely  Isoplus  Hohenberg,
Isoplus  Sondershausen,  Henss  Rosenheim  and
Henss  Berlin.

(159)  After the opening of the procedure and the issuing
of the Statement of Objections, Henss Rosenheim
(which  had  changed 
Isoplus
Fernwärmetechnik  Vertriebsgesellschaft  mbH  as
of 1 January 1997) absorbed Henss Berlin, which
not  longer  exists  as  a  separate  legal  entity.

its  name 

to 

(158)  However  throughout  the  proceedings  the  Henss
and  Isoplus  companies  argued  that  there  was  no
structural link of ownership between them: it was
specifically  denied  in  reply  to  the  Statement  of
Objections  that  Dr  Henss  was  the  owner  of
Isoplus  through  trustees  or  nominees  (at  the
Commission  had  suggested).  They  insisted  that
contractual
the  only 
relationship  of  principal  and  commercial  agent.
They  attributed  the  presence  of  Dr  Henss  in  the
presidents’  club  to  his  having  been  mandated  by

connection  was 

the 

(20) The  share  capital  of  Henss  Berlin  was  owned  by  one  of  the

directors  of  Henss  Rosenheim  and  his  spouse.

At  the  oral  hearing  both  Henss  and  Isoplus
(which  were  separately  represented)  continued  to
deny  the  existence  of  any  links  of  ownership.

just  before 

However 
the
Commission  checked  the  entry  in  the  Companies
Register  (Amtsgericht  Charlottenburg)  of  the
former  Henss  Berlin  company.

the  oral  hearing, 

A  document  was  discovered  which  had  been
placed  on  the  Public  Register  apparently  by
lawyers  acting 
those
appearing  in  the  present  proceedings)  and  which
showed  that  in  January  1997  a  legal  entity  in  the
form  of  a  ‘Kommandit-Gesellschaft’  had  been

for  Henss/Isoplus 

(not 

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30.1.1999

established  to  act  as  a  holding  company  for  the
various  Henss/Isoplus  companies (21).

document 

(an
question 
in 
The 
‘Einbringungsvertrag’) 
listed  the  shareholdings
which  had  been  transferred  to  the  GmbH  &  Co
KG  by  the  contracting  parties (22).

(160)  The  deed  which  was  notarised  in  due  and  proper
form  disclosed  that  Dr  Henss  was  indeed  the
beneficial  owner  of  the  majority  of  shares  (83 %)
in  Isoplus  Hohenberg:  the  Managing  Director  of
that  company  who  is  the  registered  owner  of
those  shares  was  holding  them  as  a  trustee
(‘Treuhänder’)  on  his  behalf (23). 
further
revealed  that  alongside  Isoplus  Hohenberg  a
so-called  ‘Stille  Gesellschaft’  had  been  formed,  of
which  the  beneficial  owner  was  again  Dr  Henss;
the  shares  were  held  on  his  behalf  by  the  legal
adviser  of  Isoplus,  also  acting  as  a  trustee.

It 

(21) The  holding  entity  HFB  Holding  für  Fernwärmetechnik
Beteiligungsgesellschaft  is  constituted  as  a  ‘GmbH  &  Co
KG’, i.e. a limited partnership with a private limited liability
company  acting  as  the  general  partner  (Komplementär)  with
personal 
partners
(Kommanditisten)  are  liable  only  up  to  a  specified  sum.  The
general  partner  or  Komplementär  in  the  GmbH  Co  KG  in
question  here 
für  Fernwärmetechnik
is  HFB  Holding 
Beteiligungsgesellschaft mbH Verwaltungs-gesellschaft.

individual 

liability; 

other 

the 

(22) Under  this  agreement,  Dr  Henss,  his  business  associate  and
their respective spouses placed their shareholdings in a series
für
of  Henss/Isoplus  companies 
Fernwärmetechnik  Beteiligungsgesellschaft  mbH  &  Co.  KG.
The  shareholdings  were  in  the  following  companies:
—  Isoplus  Fernwärmetechnik  Vertriebsgesellschaft  mbH

into  HFB  Holding 

(formerly  Dipl.  Kfm  Walter  Henss  GmbH),  Rosenheim,

—  Dipl.  Kfm  Walter  Henss  Fernwärmerohrleitungsbau

GmbH, Berlin,

—  Isoplus  Fernwärmetechnik  GmbH,  Sondershausen,
—  Isoplus  Fernwärmetechnik  Ges.mbH,  Hohenberg,
plus  three  other  companies  in  Budapest,  Schlüchtern  and
Lehrte.
Since  the  date  of  the  Einbringungsvertrag  HFB  Holding  has
divested itself of the shareholding of Dr Henss (via a trustee)
in  Isoplus  Fernwärmetechnik  Ges.mbH,  Höhenberg,  but  the
identity  of  the  transferee  and  the  current  ownership  of  these
shares  is  not  known  to  the  Commission.

(23) He  held 

the  shares  pursuant 

trust  agreement
(Treuhandvertrag)  of  20  December  1993;  having  acquired
them on the same date from the lawyer acting for Isoplus in
the  present  proceedngs:  it  may  be  concluded  that  the  lawyer
had  also  held  them  as  a  trustee  for  Dr  Henss  (see  157).

to  a 

The  deed  also  showed  that  one-third  of  Isoplus
Hohenberg’s  shareholding  in  its  wholly-owned
subsidiary  Isoplus  Sondershausen  were  in  fact
held by it on trust for Mr Henss’ associate (one of
the directors of Henss Rosenheim) and his spouse
(who  were  also  the  sole  owners  of  Henss  Berlin).

Henss  and  Isoplus  argued  that  the  deed 
in
question  related  to  business  secrets,  had  been
placed  by  inadvertence  on  the  public  register  and
as  such  ought  not  to  have  been  admitted  in
evidence  or  disclosed  during  the  procedure.  The
Commission  cannot  accept  this  argument,  for  the
simple reason that a document placed on a public
register  (whether  inadvertently  or  otherwise)  by
or  HFB
representatives 
themselves  cannot  merit  confidential  treatment.

of  Henss/Isoplus 

Although  the  Statement  of  Objections  was  not
formally  sent  to  the  holding  company  (the
existence  and  purpose  of  which  was  not  known
to  the  Commission  and  only  came  to  light  in  the
circumstances set out above), it was made clear in
the  Statement  of  Objections  that  the  proceedings
were  being  addressed  to  the  Henss/Isoplus  Group
and  that  in  the  absence  of  a  single  holding
company  the  four  named  operating  companies
were  the  representatives  of  the  group  for  the
purposes  of  service  and  of  enforcement.

It is therefore appropriate to address this Decision
not  only  to  the  (now  three)  operating  companies
but  also  to  the  Holding  company,  HFB  Holding
für  Fernwärmetechnik  Beteiligungsgesellschaft
mbH  &  Co  KG,  HFB  Holding 
für
Fernwärmetechnik  Beteiligungsgesellschaft  mbH
Verwaltungsgesellschaft  (both  of  Rosenheim)  and
the  Isoplus  ‘Stille  Gesellschaft’.

(d) KWH

(161)  Although  in  the  Statement  of  Objections  it  was
stated  the  proceedings  were  addressed  to  Oy
KWH  Pipe  AB  the  documents  were  in  fact
dispatched  (against  acknowledgement  of  receipt)
to  Oy  KWH  Tech  AB,  the  division  of  KWH  Pipe
responsible 
The
denominations  ‘KWH  Tech’  and  ‘KWH  Pipe’  are

heating. 

district 

for 

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L  24/61

in 

and 

activity 

used indiscriminately by KWH in connection with
its  district  heating 
its
correspondence.  At 
the  oral  hearing  KWH
announced  that  it  assumed  that  the  proceedings
were  meant  to  be  addressed  to  KWH  Techn.  and
not  KWH  Pipe.  Since 
the
Commission  considers  appropriate  in  the  case  of
KWH  does  not  exceed  10 %  of  the  turnover  of
Oy  KWH  Tech  AB,  the  precise  identity  of  the
legal entity in the KWH organisation to which the
decision  is  addressed  is  not  of  crucial  importance
and the decision will formally be addressed to Oy
KWH  Tech  AB.

fine  which 

the 

B.  Remedies

1.  Article  3  of  Regulation  No  17

(162)  Where 

finds 

the  Commission 

is  an
infringement  of  Article  85  it  may  require  the
undertakings 
such
infringement to an end in accordance with Article
3  of  Regulation  No  17.

concerned 

bring 

there 

to 

In  this  case  the  participants  in  the  cartel  went  to
considerable  (but  ultimately  unsuccessful)  lengths
to conceal their activities. Their meetings were for
the most part held in secret under the cover of, or
on  the  same  occasion  as,  meetings  of  ostensibly
legitimate trade associations.

long  after 

infringement  continued 

The 
the
investigations  made  by  the  Commission  under
Article  14(3),  the  only  significant  modification  of
their  conduct  being  that  the  most  senior  directors
in  the  directors’  group  and  the  German  contact
group met outside the Community, presumably in
the hope that by this device they might be able to
conceal  their  activities.  There  as  even  discussion
in  the  last  meeting  of  continuing  the  cartel  by
other  means.  In  the  circumstances  it  is  not
possible  to  say  with  any  confidence  that  the
infringement  has  ceased  even  now.

It  is  therefore  necessary  for  the  Commission  to
require the undertakings to which this Decision is
addressed  to  bring  the  infringement  to  an  end  (if
they  have  not  already  done  so)  and  henceforth  to
refrain from any agreement, concerted practice or
decision  of  an  association  which  might  have  the
same  or  similar  object  or  effect.

2.  Article  15(2)  of  Regulation  No  17

(a)  General  considerations

(163)  Under  Article  15(2)  of  Regulation  No  17,  the
impose  upon
Commission  may  by  decision 
undertakings  fines  of  from  ECU  1 000  to  ECU
1  million,  or  a  sum 
in  excess  thereof  not
exceeding  10 %  of  the  turnover  in  the  preceding
business  year  of  each  of 
the  undertakings
participating  in  the  infringement  where,  either
intentionally  or  negligently,  they  infringe  Article
85(1).

In  fixing  the  amount  of  the  fine  the  Commission
must  have  regard  to  all  relevant  circumstances
and particularly to the gravity and the duration of
the  infringement.

In  assessing  the  gravity  of  the  infringement,  the
Commission  will  take  account  of  its  nature,  its
actual  impact  on  the  market  and  the  size  of  the
relevant  geographic  market.

The  Commission  will  in  this  case  also  apply  the
Notice  on  the  non-imposition  or  reduction  of
fines  in  cartel  cases (24).

(164) 

In relation to its assessment and the gravity of the
infringement 
the
Commission  takes  account  of  the  following
general considerations:

considered  as  a  whole, 

(a)  Market  sharing  and  price  fixing  are  by  their
nature  a  very  serious  violation  of  Article
85(1).  With  full  knowledge  of  the  illegality  of
their actions the producers combined to set up
a secret an institutionalised system designed to
restrict  competition  in  an  important  industrial
sector. 
unlawful
cooperation  was  extended  until  it  covered  the
whole  Community.

Progressively, 

their 

(b) The  cartel  arrangements  eventually  permeated
the  whole 
industry,  were  conceived  and
in  each
encouraged  at  the  highest 
undertaking  concerned  and  operated  entirely
to  the  benefit  of  the  participating  producers
and  to  the  detriment  of  their  customers,  any
non-participating  competitor  and  the  general
public.

levels 

(24) OJ  C  207,  18.7.1996,  p.  4.

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Official  Journal  of  the  European  Communities

(165)  Quite  apart  from  the  inherently  very  serious
nature  of  any  market-sharing  or  price-fixing
agreement,  the  following  factors  are  relevant  to
the Commission’s assessment of the gravity of the
infringement:

the  undertakings  participating 

of 
infringement.

30.1.1999

in 

the

(a)  The  illegality  of  the  quota  agreement  was
compounded  by  the  adoption  of  a  fraudulent
scheme  of  collusive  bidding.  The  majority  of
business  in  this  industry  is  accounted  for  by
tendering 
envisage
procedures  which 
competitive  bidding  between  the  participants.
The  public  authorities  and  contractors  which
commissioned  the  tendering  procedure  were
entitled to expect that the bids submitted were
not  the  result  of  secret  collusion  between  the
participants.  In  supply  contracts  over  ECU
400 000,  a  statutory  scheme  of  competitive
bidding  is  prescribed  by  Community  law  in
the  public  interest:  the  producers  combined
unlawfully  to  defeat  the  intention  of  the
community legislature.

(b) The unlawful scheme was aggressively pursued
and  implemented,  not  only  with  regard  to
ensuring  the  compliance  of  its  members  but
also  with  a  view  to  eliminating  the  only
competitor  of  any  importance  outside  the
cartel,  namely  Powerpipe.

The  Commission  therefore  considers  that  the
present  infringement  constituted  a  very  serious
infringement  of  Article  85(1)  for  which  the  likely
fines  would  be  at  least  ECU  20  million.

into 

the  undertakings  can 

in
For 
this  purpose, 
principle  be  divided 
categories
established  according  to  their  relative  importance
in  the  relevant  market  in  the  Community,  subject
to  adjustment  where  appropriate  to  take  account
of  other  factors  and  especially  of  the  need  to
ensure  effective  deterrence.

four 

The  Commission  will  also  take  account 
in
assessing  the  individual  fines  of  the  duration  of
each  participant’s  adherence  to  the  common
scheme.  In  general,  however,  it  can  be  said  that
the 
infringement  was  of  medium  duration,
meriting an increase of up to 50 % of the amount
determined  for  gravity.

infringement, 

The Commission will, however, take into account
the  fact  that  although  this  case  relates  to  a  single
evolving 
its  most  developed
manifestations  were  (a)  the  arrangements  among
the  Danish  producers  beginning  in  late  1990  and
(b) 
from
the  European-wide  arrangements 
September  1994  onwards,  including  the  actions
against Powerpipe.

With regard to the agreements relating principally
to  the  German  market  between  late  1991  and
1993  (see  (38)  to  (52),  the  Commission  will  in
fixing  fines  reflect  its  assessment  that  these  were
of  limited  practical  effect  and  application.

(166) 

It  will  however  be  necessary  inside  that  category
to take account of the effective economic capacity
of  the  offenders  to  cause  significant  damage  to
competition  and  to  set  the  fine  at  a  level  which
ensures  it  has  sufficient  deterrent  effect.

(167) 

In  relation  to  each  undertaking,  the  Commission
will also reflect in the amount of the fine imposed
any  aggravating  or  attenuating  circumstances.

In  the  circumstances  of  this  case,  which  involves
several undertakings, it will be necessary in setting
the  basic  amount  of  the  fines  to  take  account  of
the  specific  weight  and  therefore  the  real  impact
of  the  offending  conduct  of  each  undertaking  on
competition.

The  final  amount  calculated  according  to  this
method  may  not  in  any  case  exceed  10 %  of  the
world-wide  turnover  of  the  undertakings  as  laid
down  in  Article  15(2)  of  Regulation  No  17,  and
adjustments  may  have  to  be  made  accordingly.

This  exercise  is  particularly  necessary  where  (as
here)  there  is  a  considerable  disparity  in  the  sizes

The  position  of  each  undertaking  in  relation  to
the  Notice  on  the  non-imposition  or  reduction  of
fines  will  also  be  considered.

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(b) The  individual  fines

(i)  A B B

—  Gravity  of  the  infringement

(168) 

In determining the penalty to be imposed on ABB,
the Commission will take account of its economic
capacity 
to
competition and the need to set the fine at a level
which  ensures  by  its  deterrent  effect  that  there  is
no  repetition.

significant  damage 

cause 

to 

In the case of ABB, the appropriate starting point
for  a  fine  resulting  from  the  criterion  of  the
relative 
the  relevant  market
in 
requires  further  upward  adjustment  to  take
account  of  ABB’s  position  as  one  of  Europe’s
largest  industrial  combines.

importance 

This  adjustment  serves  two  objectives:

(a)  to  ensure  that  the  fine  has  a  sufficiently

deterrent  effect;

(b) to 

the 

that 

take  account  of 

fact 
legal  and 

large
economic
undertakings  have 
knowledge  and  infrastructures  which  enable
them  more  easily  to  recognise  that  their
conduct  constitutes  an  infringement  and  be
aware  of  the  consequences  stemming  from  it
under  competition  law.

(169)  ABB’s  involvement  in  the  violation  of  Article  85
was  not  (as  ABB  had  initially  attempted  to
portray it) the unauthorised and atypical action of
a  minor 
de-centralised
management  structure.

subsidiary 

in 

a 

The  organisation  of  the  cartel  represented  a
strategic  plan  by  ABB  to  control  the  district
heating  industry  which  was  conceived,  approved
and  directed  at  a 
level  of  group
management,  as  were  the  measures  to  deny  and
conceal its existence and to continue its operation
for  nine  months  after  the  investigation.

senior 

It  is  abundantly  clear  that  ABB  systematically
used its economic power and resources as a major
multinational 
the
effectiveness of the cartel and to ensure that other
undertakings  complied  with  its  wishes.

company 

reinforce 

to 

Indeed  by  the  stage  of  the  oral  hearing  ABB  had
abandoned its earlier attempts to lay the blame at

the  door  of  its  Danish  subsidiary  ABB  IC  Møller
imputation  of
and  does  not  contest 
responsibility  of 
still
(although 
maintaining  that  the  District  Heating  business
area  constitutes  the  relevant  ‘undertaking’  to
which  the  10 %  limit  of  Article  15(2)  applies).

the 
the  group 

The  Commission  does  not  accept  this  argument.
The  proven  involvement  in  the  cartel  of  the  most
senior level of management underlines the need to
set  the  fine  at  a  level  which  ensures  it  has
sufficient  deterrent  effect.

On  the  basis  of  the  above,  the  Commission
considers  that  in  the  case  of  ABB,  the  need  for
deterrence requires that the minimum fine of ECU
serious
20  million 
infringement  should  be  weighted  by  2,5  to  give  a
starting  point  of  ECU  50  million.

for  a  very 

envisaged 

—  Duration

infringement 

(170)  As  regards  duration,  ABB  does  not  contest  that
the 
lasted  over  five  years.  The
Commission, however, takes into account the fact
that while there was throughout the whole period
a  continuing  objective  of  restricting  competition,
(i)  in  the  early  period  the  arrangements  were
incomplete  and  of  limited  effect  outside  the
Danish  market 
the  arrangements  were
effectively  in  abeyance  from  late  1993  to  early
1994 (iii) they reached their most developed form
only  with  the  Europe-wide  cartel  set  up  in  1994
to  95  (although  from  1991  to  1993  the  Danish
cartel  was  fully  effective).

(ii) 

IF  the  duration  of  the  continuing  infringement  is
taken  as  five  years,  it  is  appropriate  to  apply  an
additional  weighting  of  *  1,4  to  ABB.

This increases the amount fixed in (169) to give a
base  figure  of  ECU  70  million.

—  Aggravating  and  extenuating  factors

(171)  The  gravity  of  the  infringement  is  aggravated  in

ABB’s  case  by  the  following  factors:

—  ABB’s  role  as  the  ringleader  and  instigator  of
the  cartel  and  its  bringing  pressure  on  other
undertakings  to  persuade  them  to  enter  the
cartel,

L  24/64

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30.1.1999

—  its  systematic  orchestration  of  retaliatory
measures  against  Powerpipe,  aimed  at  its
elimination  from  the  market,

—  its  continuation  of  such  a  clear-cut  and
indisputable 
the
infringement 
investigations  despite  having  been  warned  at
high 
level  by  the  Directorate-General  for
Competition  of  the  consequences  of  such
conduct.

after 

to  ABB  personnel  to  respect  the  provisions  of
competition  law  (memorandum  of  4  April  1996)
were  issued  by  some  of  those  most  actively
involved  in  the  cartel  and  were  couched  in
language  entirely  dismissive  of  allegations  of
misconduct  later  admitted  by  ABB  to  be  true.
Moreover,  even  after  ABB’s  lawyers  had  twice
informed  the  Commission  (letters  of  21  March
and  1  April  1996)  of  its  willingness  to  cooperate,
an  executive  of  ABB  IC  Møller  took  part  in  a
meeting 
inconclusive  one)  with
Løgstør’s  Sales  Director  to  discuss  ways  of
continuing  the  cartel  ‘by  other  means’.

(albeit  an 

With  regard  to  these  substantial  aggravating
factors,  an  increase  in  the  basic  amount  by  50 %
is  justified.

principally 

‘relieved  of 

their  duties’ 
responsible 

ABB  also  claimed  in  its  reply  to  the  Statement  of
Objections  that  it  should  be  given  credit  for
having 
the  senior
the
managers 
infringement:  the  removal  of  these  company
officers  was  supposedly  intended  to  prevent  any
recurrence  of  the  infringement  and  to  send  a
strong  message  to  all  personnel  that  violations  of
the  group’s  policy  of  compliance  would  not  be
tolerated.

for 

(172)  The  only  extenuating  circumstance  of  which  the
Commission  can  take  account  in  relation  to  ABB
is  the  payment  of  substantial  compensation  to
Powerpipe  and  its  previous  owner.  In  recognition
of  this  element,  the  Commission  will  apply  a
reduction  of  ECU  5  million  to  the  basic  amount.

In fact the deterrent effect of any such message on
ABB  personnel  must  have  been  diluted  by  the
selective  nature  of  the  ‘disciplinary  measures’
taken:  the  most  senior  of  those  involved  escaped
all  sanctions  entirely  and  only  one  relatively
middle-ranking  executive  left  the  Group.

that 

including 

Instructions 

The  Commission  does  not  accept 
the
purported  ‘strengthening’  of  ABB’s  compliance
policy  which  it  invokes  as  a  mitigating  factor
should  result  in  any  reduction  of  the  fine.  ABB
claimed  to  have  had  at  all  times  a  mandatory
policy  of  strict  compliance  with  all  applicable
laws 
and  Community
national 
competition rules. Whatever the stated policy may
have been, it did not apply to (or was flouted by)
the  most  senior  management  level.  Nor  did  it
prevent  the  continuation  by  those  highly-placed
executives  of  the  cartel  for  nine  months  after  the
investigation. 
legal
department  to  the  then  chairman  of  IC  Møller  of
29  November  1995  to  the  effect  that  it  was
‘mandatory  group  policy’  that  ABB  employees
should  at  no 
in  breaches  of
time  engage 
Community competition law clearly had no effect.
ABB  claims  that  soon  after  the  meeting  of  17
January  1996,  BA-VDH  management  had  given
oral  instructions  to  all  companies  to  ‘desist  from
illegal  contacts  with  competitors’;  but  six  weeks
later on 4 March it was advocating in a directors’
meeting  the  employment  of  a  ‘consultant’  to
continue  the  cartel  without  the  need  for  plenary
meetings.  Indeed  even  after  the  Commission  sent
out  its  requests  for  information  the  ‘instructions’

from  ABB’s 

On 15 October 1998, ABB and Daimler-Benz, the
its
co-owners  of  Adtranz,  announced 
chairman  (whose  leading  role  in  the  cartel  when
executive 
fully
vice-president  of  ABB 
established: see (9), (10), (21), (49), (52), (55) and
(156))  was  leaving  the  company.

that 

is 

His departure, decided on the eve of the decision,
and  which  is  not  even  presented  as  a  sanction,
cannot  alter  the  Commission’s  conclusions.

Taking 
into  account  both  aggravating  and
extenuating  circumstances,  the  appropriate  fine
on  ABB  would  be  ECU  100  million.

—  Application  of  the  Notice  on  non-imposition

or  reduction  of  fines

(173)  The  Commission  will  however  grant  a  reduction
of the otherwise appropriate fine in recognition of
ABB’s  cooperation  in  terms  of  its  Notice  on  the
non-imposition  or  reduction  of  fines.

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This  is  not  a  case  where  an  undertaking  has
informed  the  Commission  about  a  secret  cartel
either  (a)  before  it  undertook  an  investigation
(Section  B)  or  (b)  after  it  has  undertaken  an
investigation  which  failed  to  provide  sufficient
grounds for initiating proceedings under Article 3
of  Regulation  No  17  (Section  C).

Under  Section  D  of  the  Notice,  however,  an
undertaking  which  does  not  comply  with  all  the
conditions  set  out  in  Sections  B  or  C  will  still
benefit from a significant reduction of 10 to 15 %
of  the  fine  that  would  otherwise  have  been
imposed  where  (for  example):

It  should  be  noted  that  ABB’s  cooperation  only
followed  the  sending-out  by  the  Commission  of
detailed requests for information under Article 11
to  all  the  undertakings  in  which  they  were  asked
to  explain  the  incriminating  documents  found  at
their  premises  in  June  1995.

ABB  cannot  therefore  be  accorded  the  full  50 %
reduction  available  under  Section  D.

After due consideration of all the relevant factors,
the  Commission  believes  it  is  appropriate  to
reduce  the  fine  it  would  otherwise  have  imposed
by  30 %.

ABB  will  therefore  be  required  to  pay  a  fine  of
ECU  70  million.

—  before  a  Statement  of  Objections  is  sent,  it
provides  the  Commission  with  information,
documents  or  other  evidence  which  materially
contribute  to  establishing  the  existence  of  the
infringement;

(ii) L ø g s t ø r

—  after  receiving  a  Statement  of  Objections,  it
informs  the  Commission  that  it  does  not
substantially  contest  the  facts  on  which  the
Commission  basis  its  objections.

(175)  Løgstør  is  the  second-largest  European  producer
of pre-insulated pipes with sales in the product of
about  half  those  of  ABB.

Having regard to this circumstance, and to reflect
its  situation  as  essentially  a  single-product
company,  the  starting  point  for  the  fine  on
Løgstør  will  be  adjusted  to  ECU  10  million  (for
gravity).

(174)  Even  if  the  infringement  did  continue  for  nine
months after the investigation, ABB cooperated at
the earlier of the stages referred to as examples in
Section  D,  and  adequate  recognition  should  be
accorded  in  the  reduction  granted.

its  participation 

The  duration  of 
the
infringement  is  the  same  as  ABB’s  and  will  be
reflected by an increase in the amount determined
as  the  ‘starting  point’  by  a  coefficient  of  ×  1,4
giving  a  basic  amount  of  ECU  14  million.

in 

following 

the  sending  of 

The  information  provided  by  ABB  (and  other
undertakings) 
the
requests  for  information  under  Article  11  did
assist  materially 
in  the  establishment  of  the
relevant  facts,  in  particular  as  regards  the  origins
of  the  cartel  in  Denmark  in  late  1990:  the
Commission  had  not  obtained  any  substantial
evidence  during  its  investigations  of  that  period,
although  it  is  not  correct  (as  ABB  suggests)  that
the  Commission  did  not  possess 
sufficient
evidence  of  the  cartel  before  1994:  notes  of
presidents’  meetings  and  other  evidence  going
bank  to  1992  were  obtained  at  Tarco,  Løgstør
and Starpipe, and some of the most incriminating
documentation  (such  as  Appendix  48)  had  been
discovered  at  ABB  IC  Møller.

(176)  Løgstør’s 

the 

of 
in 

deliberate 

continuation 

investigations 

the
infringement  after 
the
circumstances set out in (108) to (112) constitutes
a  considerable  aggravating  factor.  A  further
aggravating  circumstance  is  Løgstør’s  active  role
in  the  retaliatory  measures  against  Powerpipe,
although in that respect the Commission does not
regard Løgstør as being on a par with ABB (as the
latter  undertaking  has  attempted  to  present  it).

Having  regard  to  the  above  consideration,  it  is
appropriate  to  increase  the  basic  amount  in  the
case  of  Løgstør  by  30 %.

There  are  no  extenuating  circumstances  relating
to  the  infringement  in  Løgstør’s  case  which  could
justify  a  reduction.  Løgstør  may  well  have  come

L  24/66

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30.1.1999

under pressure from ABB at various times but the
portrayal  of  itself  as  being  dragged  unwillingly
into  the  cartel  by  the  latter  is  a  considerable
exaggeration.  The  appropriate  fine  for  Løgstør
before  any  reduction  for  cooperation  would
normally  be  set  at  ECU  18 200 000.

However,  since  the  final  amount  calculated
according  to  the  above  method  may  not  in  any
case  exceed  10 %  of  the  world-wide  turnover  of
Løgstør  (as 
laid  down  by  Article  15(2)  of
Regulation  No  17),  the  fine  will  be  set  at  ECU
12 700 000  so  as  not  to  exceed  the  permissible
limit.

(177)  The Notice on the non-imposition or reduction of
fines  also  applies  to  Løgstør,  which  provided  the
Commission  voluntarily  (even  if  the  Article  11
request  addressed  to  it  provided  the  occasion)
with  documentary  evidence  which  contributed
substantially  to  establishing  important  aspects  of
the  case,  in  particular  the  fact  that  the  members
of the cartel had decided to continue its operation
after  the  investigations,  an  element  which  the
Commission  suspected  but  of  which  it  possessed
no  proof.

Under  Section  D  of  the  Notice  the  Commission
will  accord  Løgstør  the  same  reduction  as  that
granted  to  ABB,  namely  30 %.

The  total  fine  imposed  on  Løgstør  will  therefore
be  ECU  8 900 000.

(iii)  T a r c o ,   S t a r p i p e ,   H e n s s / I s o p l u s   a n d

P a n - I s o v i t

(178)  Having  regard  to  their  importance  in  the  market
and  the  effect  of  their  conduct  upon  competition
the  Commission  will  adjust  the  staring  point  for
the  calculation  of  their  fines  in  each  case  at  ECU
5  million.

The  weightings 
for  duration  are  however
different:  for  Tarco  and  Starpipe  who  were
involved  in  the  cartel  for  the  same  length  of  time
as  ABB  and  Løgstør,  an  increase  by  *  1,4  is
appropriate  in  each  case,  while  given  the  lesser
period  for  Pan-Isovit  and  Henss/Isoplus  and  the

sporadic quality of their involvement before 1994,
the weighting for these two undertakings will be *
1,33  and  1,25  respectively.

This  gives  the  following  basic  amounts:

(in  ecus)

Starting
point

Duration

Basic  fine

Tarco

Ecu

5 000 000

5 000 000

× 1,4

× 1,4

7 000 000

7 000 000

Pan-Isovit

5 000 000

× 1,33

6 600 000

Henss/Isoplus

5 000 000

× 1,25

6 250 000

(179) 

In  each  case,  the  basic  fine  must  be  increased
the  aggravating  circumstance  of
because  of 
deliberately 
a  manifest
such 
continuing 
infringement  after  the  investigation  had  been
carried  out.

Under  this  head,  the  fine  on  Tarco,  Starpipe  and
Pan-Isovit  will  be  increased  by  20 %.

the 

systematic  attempt 

For  Henss/Isoplus,  the  Commission  must  take
into  account  two  additional  aggravating  factors,
leading  role  played  by  this
namely  1.  the 
undertaking  in  the  enforcement  of  the  cartel  and
2. 
the
Commission  as  to  the  true  relationship  between
the  companies  of  the  group;  this  constituted  a
deliberate  obstruction  of 
the  Commission’s
investigations which, had it succeeded, might well
have  allowed  the  undertaking  to  evade  the
appropriate  penalty  and/or  rendered  its  recovery
more  difficult.

to  mislead 

The  fine  on  Henss/Isoplus  will  therefore  be
increased  by  30 %.

There  are  no  extenuating  circumstances  which
would  justify  the  reduction  of  the  fine  on  any  of
these  undertakings.

The  following  fines  for  the  undertakings  are
therefore  considered  appropriate 
(before  any
reduction under the Notice on the non-imposition
or  reduction  of  fines):

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—  Tarco:

ECU  8 400 000,

—  Starpipe:

ECU  8 400 000,

—  Henss/Isoplus:

ECU  8 125 000,

—  Pan-Isovit:

ECU  8 000 000,

However,  the  fines  which  would  otherwise  be
appropriate  would  exceed  the  maximum  set  out
in  Article  15  of  Regulation  No  17,  namely  10 %
of  total  turnover  in  the  business  year  preceding
the  adoption  of  the  decision.

The  fines  on  these  undertakings  will  be  set  so  as
not  to  exceed  the  permissible  limit  and  are  fixed
at  ECU  4 170 000  for  Tarco.  ECU  1 840 000  for
Starpipe,  ECU  4 950 000  for  Henss/Isoplus  and
ECU  1 910 000  for  Pan-Isovit  (subject  to  any
reduction  for  cooperation).

(180)  As  regards  the  Notice  on  the  non-imposition  or
reduction  of  fines,  the  Commission  will  take  into
account  the  fact  that  Tarco  provided  information
and documents  which  assisted  the Commission in
establishing  the  facts  on  which  this  Decision  is
based.

The  fine  on  Tarco  will  be  reduced  by  30 %.

Pan-Isovit  and  Starpipe  were  perhaps  on  the
borderline  between  active  cooperation  with  the
Commission and merely admitting what could not
be  denied  in  their  responses  to  enquiries  made
under Article 11 of Regulation No 17. These two
undertakings  did  not  contest  the  essential  factual
allegations  made  against  them,  and  although
Pan-Isovit denied that its participation in meetings
before  1994  had  constituted  an  infringement  of
Article 85 the Commission will not penalise it for
this  position.  Both  Starpipe  and  Pan-Isovit  will
receive a reduction under Section D of the Notice
on  the  non-imposition  or  reduction  of  fines,  of
20 %.

No  reduction  for  cooperation  can  be  accorded  to
Henss/Isoplus.  It  is  true  that  having  first  in
response to requests for information under Article
11 denied all knowledge of or participation in the
infringement,  and  indeed  failing  to  address  most
of  the  relevant  issues,  this  undertaking  ultimately
the  Commission
provided  documentation 
its
which  added  to  the  evidence  already 

to 

in 

possession.  Henss/Isoplus  did  not 
in  essence
contest  that  there  had  been  an  infringement  after
late  1994  (although  it  attributed  participation  to
the Isoplus companies, not to Henss). However, it
is  implicit  that  to  benefit  from  this  opportunity
for  a  reduction,  an  undertaking  must  act  in  good
faith  and  not  attempt  to  deceive  the  Commission
on  a 
important  aspect  of  the  case,  as  did
Henss/Isoplus.

The  total  fines  imposed  on  the  four  undertakings
will  therefore  be  as  follows:

—  Tarco:

ECU  3 000 000,

—  Henss/Isoplus:

ECU  4 950 000,

—  Pan-Isovit:

ECU  1 500 000,

—  Starpipe:

ECU  1 475 000,

(iv) B r u g g ,   K W H ,   K e - K e l i t   a n d   S i g m a

(181)  These  four  undertakings  are  relatively  minor  in
terms  of  their  position  in  the  district  heating  pipe
involvement  must  also  be
market.  Their 
characterised  as  participation  in  a  very  serious
infringement  of  Article  85  but,  again,  the  fine
must  take  account  of  the  specific  impact  of  their
conduct  and  their  size  compared  with  ABB.

In  the  case  of  these  four  producers,  given  the
gravity  of  the  infringement,  the  adjusted  starting
point  for  any  fine  cannot  be  less  than  ECU  1
million  and  the  Commission  will  fix  it  at  this
figure  for  each  of  them.

The fines will be weighted (where appropriate) to
reflect a duration for Brugg of around 20 months,
KWH  around  one  year,  Ke-Kelit  15  months  and
sigma  one  year.

The  basic  amount  will  therefore  be  assessed  as
follows:

(in  ecus)

Starting
point

Weighting

Basic
amount

Brugg

KWH

Ke-Kelit

Sigma

1 000 000

× 1,1

1 100 000

1 000 000

—

1 000 000

1 000 000

× 1,1

1 100 000

1 000 000

—

1 000 000

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(182)  As regards aggravating and mitigating factors, the
Commission  takes  account  of  their  deliberate
continuation, 
the  other
participants,  of  this  manifest  infringement  and
will  increase  the  fines  by  20 %.

common  with 

in 

were  made,  and  hence  no  reduction  can  be
afforded  under  the  Notice  on  non-imposition  or
reduction  of  fines.

fines 

The 
undertakings  will  therefore  be  as  follows:

imposed  on 

to  be 

these 

four

There  are  no  mitigating  factors  intrinsic  to  the
infringement which could merit a reduction in the
fine  for  Brugg.

In  the  case  of  KWH,  the  Commission  will  take
into  account  its  non-compliance  with  the  boycott
of  Powerpipe.  (However,  its  own  account  of
having  been  inveigled  into  joining  the  cartel  by
threats  is  countered  by  the  evidence  of  its  having
stood  out  for  a  higher  quota  than  the  other
producers  were  originally  prepared  to  give).

—  Brugg:

ECU  925 00,

—  KWH:

ECU  700 00,

—  Ke-Kelit:

ECU  360 000,

—  Sigma:

ECU  400 000,

HAS  ADOPTED  THIS  DECISION:

Nor  is  it  accepted  that  KWH  was  unaware  of  or
in  any  doubt  as  to  the  illegality  of  the  scheme  in
which  it  was  involved.

Article  1

The  Commission  considers  that  the  mitigation
arising  from  KWH’s  refusal  to  join  the  boycott
offsets  the  20 %  increase  which  would  normally
have  been  applied  for  aggravation,  so  that  for
KWH  the  fine  will  remain  at  the  basic  amount.

In 
the
the  case  of  Ke-Kelit  and  Sigma, 
Commission will, because of their minor role and
the  fact  that  their  participation  was  confined  to
Austria  and  Italy,  both  relatively  small  markets
for  district  heating, 
the  otherwise
reduce 
appropriate  figure  by  two-thirds.

(183)  As  regards  the  application  of  the  Notice  of  18
July  1996,  the  fines  on  Brugg  and  KWH  will  be
reduced  by  30 %  in  recognition  of  their  having
the
provided 
Commission  and  not  contesting  the  allegations
against  them.

information 

important 

to 

Ke-Kelit will receive a reduction of 20 % as it did
not  contest  the  essentials  of  the  statement  of
objections.

ABB Asea Brown Boveri Ltd, Brugg Rohrsysteme GmbH,
Dansk  Rørindustri  A/S,  Henss/Isoplus  Group,  Ke-Kelit
Kunststoffwerk  Ges  mbH,  Oy  KWH  Tech  AB,  Løgstør
Rør  A/S,  Pan-Isovit  GmbH,  Sigma  Tecnologie  Di
Rivstimento  S. r. l.  and  Tarco  Energie  A/S  have  infringed
Article  85(1)  of  the  Treaty  by  participating,  in  the
manner  and  to  the  extent  set  out  in  the  reasoning,  in  a
complex  of  agreements  and  concerted  practices  in  the
pre-insulated  pipes  sector  which  originated  in  about
November/December  1990  among  the  four  Danish
producers,  was  subsequently  extended  to  other  national
markets  and  brought  in  Pan-Isovit  and  Henss/Isoplus,
and  by  late  1994  consisted  of  a  comprehensive  cartel
covering  the  whole  of  the  common  market.

The  duration  of  the  infringements  was  as  follows:

—  in  the  case  of  ABB,  Dansk  Rør,  Løgstør,  Pan-Isovit
and  Tarco  from  about  November/December  1990  to
at  least  March  or  April  1996,

—  in  the  case  of  Henss/Isoplus,  from  about  October

1991  up  to  the  same  time,

—  in  the  case  of  Brugg  from  about  August  1994  up  to

the  same  time,

—  in  the  case  of  Ke-Kelit  from  about  January  1995  up

to  the  same  time,

—  in  the  case  of  KWH  from  at  least  March  1995  up  to

the  same  time,

In  the  case  of  Sigma,  however,  its  defence  was
equivocal  as  to  the  facts,  no  express  admissions

—  in the case of Sigma from about April 1995 up to the

same  time.

30.1.1999

EN

Official  Journal  of  the  European  Communities

L  24/69

The principal characteristics of the infringement consisted
in:

—  HFB  Holding 

für  Fernwärmetechnik  Beteili-

gungsgesellschaft  mbH  &  Co  KG,

—  dividing  national  markets  and  eventually  the  whole
European  market  amongst  themselves  on  the  basis  of
quotas,

—  allocating  national  markets  to  particular  producers
and  arranging  the  withdrawal  of  other  producers,

—  HFB  Holding 

für  Fernwärmetechnik  Beteili-

gungsgesellschaft mbH Verwaltungsgesellschaft,

—  Isoplus  Fernwärmetechnik  Vertriebsgesellschaft
mbH  (formerly  Dipl-Kfm  Walter  Henss  GmbH
Rosenheim),

—  Isoplus  Fernwärmetechnik  GmbH, 

Sonders-

hausen,

—  agreeing  prices  for  the  product  and  for  individual

—  Isoplus  Fernwärmetechnik  Gesellschaft  mbH  —

projects,

stille Gesellschaft,

—  allocating  individual  projects  to  designated  producers
and  manipulating  the  bidding  procedure  for  those
projects in order to ensure that the assigned producer
was  awarded  the  contract  in  question,

—  in  order  to  protect  the  cartel  from  competition  from
the  only  substantial  non-member,  Powerpipe  AB,
agreeing  and  taking  concerted  measures  to  hinder  its
commercial  activity,  damage  its  business  or  drive  it
out  of  the  market  altogether.

—  Isoplus  Fernwärmetechnik  Ges  mbH,  Hohenberg,

(e)  Ke-Kelit  Kunststoffwerk  Ges  mbH,  a  fine  of  ECU

360 000;

(f)  Oy  KWH  Tech  AB,  a  fine  of  ECU  700 000;

(g)  Løgstør  Rør  A/S,  a  fine  of  ECU  8 900 000;

(h) Pan-Isovit  GmbH,  a  fine  of  ECU  1 500 000;

(i)  Sigma  Tecnologie  Di  Rivestimento  S. r. l.,  a  fine  of

ECU  400 000;

(j)  Tarco  Energi  A/S,  a  fine  of  ECU  3 000 000  ECU.

Article  2

Article  4

The  undertakings  named  in  Article  1  shall  forthwith
bring  the  said  infringement  to  an  end,  if  they  have  not
already  done  so.  They  shall  henceforward  refrain  in
relation to their activities in pre-insulated pipes from any
agreement  or  concerted  practice  which  may  have  the
same  or  a  similar  object  or  effect  as  the  infringement,
including  any  exchange  of  commercial  information  by
which  they  might  be  able  to  monitor  adherence  to  or
compliance with any tacit or express agreement regarding
market-sharing,  price 
the
Community.

fixing  or  bid-rigging 

in 

The fines shall be paid within three months of the date of
notification  of  this  Decision  to  the  following  account:

Account  No  310-0933000-43,

European  Commission,
Banque  Bruxelles-Lambert,
Agence  Europe´enne,
Rond-Point  Schuman/Schumanplein  5,
B-1040  Brussel.

Article  3

After  three  months, 
interest  shall  automatically  be
payable  at  the  rate  charged  by  the  European  Central
Bank  on  its  ecu  transactions  on  the  first  working  day  of
the  month  in  which  this  Decision  was  adopted,  plus  3,5
percentage  points,  namely,  7,5 %.

following 

The 
the
undertakings  named  in  Article  1  in  respect  of  the
infringements  found  therein:

fines  are  hereby 

imposed  on 

(a)  ABB  Asea  Brown  Boveri  Ltd,  a  fine  of  ECU

70 000 000;

(b) Brugg  Rohrsysteme  GmbH,  a  fine  of  ECU  925 000;

(c)  Dansk  Rørindustri  A/S,  a  fine  of  ECU  1 475 000;

Article  5

This  Decision  is  addressed  to:

(a)  ABB  Asea  Brown  Boveri  Ltd,

Affolternstrasse  44,
8050  Zurich,
Switzerland,
c/o  ABB  IC  Møller  A/S,
Treldevej 191,
DK  —  7000  Fredericia;

(d) de Henss/Isoplus-group, a fine of ECU 4 950 000,  for
jointly  and

which  the  following  companies  are 
severally liable:

(b) Brugg  Rohrsysteme  GmbH,
Adolf-Oesterheld-Strasse  31,
D  —  31515  Wunstorf;

L  24/70

EN

Official  Journal  of  the  European  Communities

30.1.1999

(c)  Dansk  Rørindustri  A/S,

Nymarksvej 37,
DK  —  7000  Fredericia;,

(d) De  Henss/Isoplus  group,  represented  by:

—  HFB  Holding  für  Fernwärmetechnik

Beteiligungsgesellschaft  mbH  &  Co  KG,
Aisingerstrasse 12,
D  —  83026  Rosenheim,

—  HFB  Holding  für  Fernwärmetechnik

Beteiligungsgesellschaft mbH,
Verwaltungs-gesellschaft,
Aisingerstrasse 12,
D  —  83026  Rosenheim,

—  Isoplus  Fernwärmetechnik  GmbH,

Aisingerstrasse 12,
D  —  83026  Rosenheim,

—  Isoplus  Fernwärmetechnik  Ges  mbH,

Furthoferstrasse  1A,
A  —  3192  Hohenberg,

—  Isoplus  Fernwärmetechnik  Ges  mbH  —

stille Gesellschaft,
Furthoferstrasse  1A,
A  —  3192  Hohenberg,

—  Isoplus  Fernwärmetechnik  GmbH,

Gluckaufstrasse  34,
D  —  99706  Sondershausen;

(e)  Ke-Kelit  Kunststoffwerk  Ges  mbH,

Ignaz-Meyer-Strasse  17,
Postfach  68,
A  —  4017  Linz;

(f)  Oy  KWH  Tech  AB,

Kappelinmäentie  240,
FIN  —  65370  Vaasa;

(g)  Løgstør  Rør  A/S,
Danmarksvej 11,
DK  —  9670  Løgstør;

(h) Pan-Isovit  GmbH,

Leipziger  Strasse  130,
D  —  36037  Fulda;

(i)  Sigma  Tecnologie  di  Rivestimento  Srl,

Via  Campagna  Sopra  14,
I  —  25017  Lonato  (BS);

(j)  Tarco  Energi  A/S,

Erritsø  Møllebanke  10,
DK  —  7000  Fredericia.

This  Decision  shall  be  enforceable  pursuant  to  Article
192  of  the  EC  Treaty.

Done  at  Brussels,  21  October  1998.

For  the  Commission

Karel  VAN  MIERT

Member  of  the  Commission