Competition: Commission fines members of
lifts and escalators cartels over €990 million

The European Commission has fined the Otis, KONE,
Schindler and ThyssenKrupp groups €992 million for operating cartels for
the installation and maintenance of lifts and escalators in Belgium, Germany,
Luxembourg and the Netherlands, in clear violation of EC Treaty rules that
outlaw restrictive business practices (Article 81).  The decision names 17
subsidiaries of the above groups, together with Mitsubishi Elevator Europe B.V.
which participated in the Dutch cartel.  Lifts and escalators play a major role
in modern urban life - Otis alone estimates that the equivalent of the entire
world's population travel on their lifts, escalators and moving walkways every 9
days.  Between at least 1995 and 2004, these companies rigged bids for
procurement contracts, fixed prices and allocated projects to each other, shared
markets and exchanged commercially important and confidential information.  The
effects of this cartel may continue for twenty to fifty years as maintenance is
often done by the companies that installed the equipment in the first place; by
cartelising the installation, the companies distorted the markets for years to
come.  KONE subsidiaries received full immunity from fines under the
Commission’s leniency programme in respect of the cartels in Belgium and
Luxembourg, as they were first to provide information about these cartels. 
Similarly, Otis Netherlands received full immunity in respect of the Netherlands
cartel.  The fines imposed on the ThyssenKrupp companies were increased by 50%,
as it is a repeat offender.  These are the largest ever fines imposed by the
Commission for cartel violations. 

Competition Commissioner Neelie Kroes said: "It is outrageous that the
construction and maintenance costs of buildings, including hospitals, have been
artificially bloated by these cartels.  The national management of these
companies knew what they were doing was wrong, but they tried to conceal their
action and went ahead anyway.  The damage caused by this cartel will last for
many years because it covered not only the initial supply but also the
subsequent maintenance of lifts and escalators - for these companies the memory
of this fine should last just as long." 

The Commission's started the investigation on its own initiative using
information brought to its attention.  This led to surprise inspections in
January 2004 at the premises of lift and escalator manufacturers throughout
Europe.  In turn, these inspections triggered many applications from the
companies for immunity or reduction of fines under the Commission's 2002
Leniency Notice (see IP/02/247
and MEMO/02/23). 

The cartels

The evidence uncovered in the inspections showed that the companies ran
illegal cartels in Belgium, Germany, Luxembourg and The Netherlands.  This was
further confirmed by numerous documents and corporate statements provided by the
leniency applicants. 

The companies allocated tenders and other contracts for the sale,
installation, maintenance and modernisation of lifts and escalators with the aim
of freezing market shares and fixing prices.  Business secrets and confidential
information on bidding patterns and prices between the cartel participants were
also exchanged.  Projects that were rigged included lifts and escalators for
hospitals, railway stations, shopping centres and commercial buildings. 

The allocation of projects was similar in all four Member States.  The
companies informed each other of calls for tender and co-ordinated their bids
according to their pre-agreed cartel quotas.  Fake bids, too high to be accepted,
were lodged by the companies who were not supposed to win the tender, in order
to give the impression of genuine competition.  The companies kept and circulated
amongst themselves updated project lists for Belgium, Germany and Luxembourg.  In
Germany and The Netherlands, it was often agreed that the company that had a
longstanding or good relationship with a particular customer should secure most
of that customer's contracts; referred to by the companies as the "existing
customers remain" principle. 

In all four cartels high-ranking national management (such as managing
directors, sales and services directors and heads of customer service
departments) participated in regular meetings and discussions.  There is evidence
that the companies were aware that their behaviour was illegal and they took
care to avoid detection; they usually met in bars and restaurants, they
travelled to the countryside or even abroad, and they used pre-paid mobile phone
cards to avoid tracking. 

In their responses to the Commission's Statement of Objections, the companies
did not contest the facts found by the Commission, and none of them requested an
oral hearing. 

Fines

These practices are a very serious infringement of EC Treaty anti-trust
rules.  The fines take account of the size of the markets for the products, the
duration of the cartels and the size of the firms involved.  The fines calculated
for the relevant ThyssenKrupp companies were increased by 50% each, as it is a
repeat offender. 

It is the Commission's practice to address its decisions to all the legal
entities responsible for the illegal behaviour.  In line with established case
law, if the parent company within a group exercises decisive influence over the
commercial behaviour of its subsidiaries, then they both form part of the same
economic undertaking.  There is a presumption that a parent company exercises
decisive influence over its wholly owned subsidiary.  Legal responsibility for
the infringement and the related fine can be attributed to both the subsidiary
that actually participated in the cartel and the parent company or companies
that exercised decisive influence over the commercial behaviour of that
subsidiary at the relevant time. 

(*) Fine imposed on the undertaking.  The following parent companies are held
jointly and severally liable with their respective national subsidiaries for the
infringements and the related fines: for the Kone Group companies: KONE
Corporation; for the Otis Group companies: United Technologies Corporation and
Otis Elevator Company; for the Schindler Group companies: Schindler Holding Ltd;
and for the ThyssenKrupp Group companies: ThyssenKrupp AG and ThyssenKrupp
Elevator AG. 

(***) General Technic-Otis S.à.r.l. ( GTO) operates under the joint
control of its two parents, N.V. Otis S.A. and General Technic S.à.r.l. 
which are therefore held jointly and severally liable with GTO for the cartel in
Luxembourg. 

(****) In its decision of 21 January 1998 (IP/98/70),
the Commission imposed a fine on ThyssenStainless AG (TKS) for its own behaviour
and for the behaviour of Thyssen Stahl GmbH for participation in a cartel in the
stainless steel sector (and on another undertaking controlled by Krupp Stahl;
with regard to the part of the fine relating to the infringement of Thyssen
Stahl, the decision was re-adopted on 20 December 2006 (IP/06/1851)). 
As a result, the fines imposed on the ThyssenKrupp companies by today's decision
were increased by 50%, as ThyssenKrupp is a repeat offender.  ThyssenKrupp AG,
the parent undertaking of all undertakings of the Thyssen Group found to have
committed infringements in this decision, is the legal successor of both Thyssen
Stahl and Krupp Stahl. 

(*****) Jointly and severally

Action for damages

Any person or firm affected by anti-competitive behaviour as described in
this case may bring the matter before the courts of the Member States and seek
damages, submitting elements of the published decision as evidence that the
behaviour took place and was illegal.  Even though the Commission has fined the
companies concerned, damages may be awarded without these being reduced on
account of the Commission fine.  A Green Paper on private enforcement has been
published (see IP/05/1634
and MEMO/05/489). 

For more information on the Commission’s action against cartels, see MEMO/07/70.