Historical sanction for Cartel agreement

Office for the Protection of Competition (ÚOHS) by its decision from 9th February 2007, which has not come into force yet, imposed the highest fine in its history. Sanction in an amount nearly 1 billion CZK (979,221 mil.CZK – 37 million €) applies to the biggest producers of gas-insulated switching mechanism (GIS).

These have committed a cartel agreement, which has no comparison in decision experience of ÚOHS in size, complexity and duration.

The issue represents so called bid rigging, when parties to the proceeding agreed on the price that would be offered to GIS, so that the contract would be granted to the company agreed in advance.

Parties to the proceeding have set other detailed mechanisms of cooperation among each other. The cartel agreement had global extent (excluding e.g. USA and Canada) and was concluded in Vienna, in 1988. Cartel participants met every two weeks in different airport centers and hotels, there was a head meeting held every year to confirm the continuance of the cartel and to set general strategy for the future. Cartel participants started to communicate through the e-mails (messages were encoded) and mobile telephones (SMS) in the process.  

ÚOHS initiated the administrative proceeding in August 2006 on the basis of leniency application of ABB Company, which pleaded participation in cartel and gave relevant evidence of this. Hence this company has not been fined in terms of Leniency programme. 16 companies, which took part in the cartel agreement, were sanctioned. The highest fine was imposed upon Siemens AG Company (126,588 mil. CZK), nevertheless ÚOHS dealt only with behavior conducted from 1^st July 2001 to March 2004.

The GIS systems are basic components of control rooms and are used to control the energy flow in electric distribution networks. GIS unit is gas-filled device enabling reaching the high level of isolation. It is specialized equipment used mainly in big cities and the main consumers are state-owned companies.

Total amount of realized tenders in Czech Republic during 2001-2004 was approximately 700 mil. CZK. (Examples of tenders in Czech Republic noticed in year  2003, where cartel agreement was realized: Control Rooms Mikulov, Kunovice, Kaplice, Strakonice, electrification of Kadaň-Karlovy Vary railway and other).

The set of anticompetitive conduct by the parties to the proceeding mentioned above complete excluded competition in the Czech market in order to maintenance of market portions and maintenance of fixed GIS price level during the years 1991-2004.

During the process of assessing fines for particular companies, aggravating circumstances were considered such as leading or initiating role and intentional law infringement.

Other Antimonopoly Offices have also solved the case, for example Hungarian Competition Office or European Commission. European Commission recently imposed fine upon 11 industrial groups in total amount of 750,7 mil. € (21,2 billion CZK). Hungarian Competition Authority imposed fine upon four companies in total amount of 702 mil. HUF (c. 78 mil. CZK)

Sanctioned Companies

ALSTOM (Société Anonyme)	85.581.000,- CZK
AREVA T&D SA	69.552.000,- CZK
AREVA T&D AG	58.926.000,- CZK
AREVA T&D Holding SA	28.000.000,- CZK
Fuji Electric Holdings Co., Ltd.	44.408.000,- CZK
Fuji Electric Systems Co., Ltd.	44.408.000,- CZK
Hitachi Ltd.	54.600.000,- CZK
Hitachi Europe Limited	54.600.000,- CZK
Japan AE Power Systems Corporation	44.408.000,- CZK
Mitsubishi Electric Corporation	75.348.000,- CZK
Toshiba Corporation	70.762.000,- CZK
Siemens AG	126.588.000,- CZK
Siemens Aktiengesellschaft Österreich	88.816.000,- CZK
VA Tech Transmission & Distribution GmbH & Co KEG	44.408.000,- CZK
Siemens Transmission and Distribution Limited	44.408.000,- CZK
Nuova Magrini Galileo S.p.A.	44.408.000,- CZK
Total	979.221.000,- CZK

Highest fines imposed by the Czech Competition Office

ALSTOM, AREVA, Fuji, Hitachi, Mitsubishi, Toshiba, Siemens a další	979 mil. CZK	Not yet enforceable
RWE Transgas	370 mil. CZK	Not yet enforceable
ČESKÝ TELECOM, a.s. (dnes Telefónica)	205 mil. CZK	final and enforceable
Alliance UniChem CZ, GEHE Pharma Praha, PHARMOS a PHOENIX Lékárenský velkoobchod	113,064 mil. CZK	Not yet enforceable
ČESKÝ TELECOM, a.s. (dnes Telefónica)	81,7 mil. CZK	final and enforceable

External Relations Department ÚOHS