Bundeskartellamt imposes fines on manufacturers of power transformers on account of collusive tendering

The Bundeskartellamt has imposed fines amounting to a total of 24.3 million Euros on four manufacturers of power transformers. Over several years the companies had engaged in anti-competitive agreements in tender procedures. The four companies are ABB AG, Mannheim, Alstom Grid GmbH, Frankfurt am Main, Siemens AG, Munich, and Starkstrom-Gerätebau GmbH, Regensburg.

Andreas Mundt, President of the Bundeskartellamt: "Between the spring of 1999 and March 2004, the four companies engaged in agreements on quotas and collusive tendering and carved up the German market for power transformers between them, which affected the tender procedures of a large number of energy suppliers."

The cartel prosecuted by the Bundeskartellamt involved agreements concluded in Germany on quotas and collusive tendering for medium-sized power transformers (from 12.5 Mega Volt Ampere) and large power transformers (from 100 MVA). Between spring 1999 and March 2004, the cartel members usually met in Frankfurt on the fringe of meetings of the working group 'Power Transformers' of the Central Association of the German Electronics Industry (Zentralverband Elektrotechnik- und Elektronikindustrie e.V. ). During the official part of these meetings, the participants discussed topics such as market conditions and general price developments on the basis of statistics provided by the association. This was followed by an 'unofficial' part during which project-related discussions took place in small groups. In some cases, cartel meetings also took place on the eve of the association's meetings or on the occasion of joint outings and factory tours. About once or twice a year the CEOs of the four companies met for talks. Meetings at sales manager level were held every two or three months.

The cartel members' agreements were based on a division of labour: While strategic decisions and decisions on market share quotas for medium-sized and large power transformers were made at the CEO level, the meetings at sales manager level dealt with agreements regarding specific projects and tenders.

The Bundeskartellamt initiated its proceedings in August 2008. The proceedings followed an inspection carried out by the European Commission on 7 and 8 February 2007 at the premises of manufacturers of power transformers in several EU Member States. The Bundeskartellamt took on the prosecution of the national cartel in Germany, whereas the European Commission prosecuted territorial protection agreements between European and Japanese manufacturers. In 2009, the Commission imposed fines totalling 67.6 million Euros on seven companies.

In the course of the proceedings all four companies involved filed applications for leniency with the Bundeskartellamt and were granted a reduction in fine. The orders imposing the fines are not yet final and can be appealed to the Düsseldorf Higher Regional Court. However, all the companies agreed to have the proceedings terminated by settlement.

Background:
Power transformers reduce or increase voltage for the transmission of electricity through a grid. Large power transformers with a voltage range of above 100 MVA are mainly used at the interface between power stations and high-voltage transmission grids, medium-sized power transformers with a voltage range of 10 to 100 MVA are mainly used to transform electricity at the interfaces between different grids.