The Office Imposed Record Fine of Nearly CZK 2 billion for Cartel Agreement among Cable Manufacturers

The Office for the Protection of Competition (the Office) imposed fines totalling CZK 1,942,000,000 on four companies operating in the cable manufacturing and sales sector for a cartel agreement. One cable manufacturer was exempted from a fine as it informed the Office about the prohibited agreement. The Office’s decision is not final yet, and the parties to the proceedings may file an appeal to the Chairman of the Office.

The Office concluded that undertakings Kablo Vrchlabí s.r.o., NKT s.r.o., PRAKAB Pražská Kabelovna s.r.o., PRECON s.r.o., Prysmian Kabely, s.r.o., and Tele-Fonika Kabely CZ s.r.o. agreed on a uniform method for calculating a portion of the sales price of metallic telecommunications and power cables containing copper or aluminium, known as the “metal surcharge”. According to the Office, this agreement distorted competition in the market for the sale of metallic telecommunications and power cables in the Czech Republic and affected the trade between European Union member states.

The prohibited price coordination described above had been in place at NKT, PRAKAB, and PRYSMIAN since at least 2010, at Tele-Fonika since 2011, and at PRECON and Kablo Vrchlabí since 2020; the anticompetitive conduct ceased in February 2022. The Office conducted unannounced on-site inspections of the undertakings´ premises in June 2022.

The price of cables consists of a base price (the cost of plastic insulation, manufacturing and overhead costs, a margin, and a deposit for metal) and the price of the metal contained in a specific type of cable. Depending on the type of cable, the latter component represents a significant portion of the total price. The participants in the cartel agreement jointly established a formula for calculating the price of the metal. The companies cross-checked the accuracy of the calculated metal surcharges, determined their validity for various time periods, and, where necessary, adjusted the values after prior mutual consultation. The metal surcharge values were published through the association of undertakings, the Association of Cable and Wire Manufacturers of the Czech Republic and the Slovak Republic, and in the newspaper Hospodářské noviny.

“Instead of individual companies setting their own methods for factoring in the current price of the metal, they standardized the method of calculation and shared it regularly. In this way, the parties to the proceedings effectively eliminated the individual approach to determining this price input and replaced it with a coordinated practice, which reduced the scope for price competition,” Kamil Nejezchleb, Vice-Chair of the Office, commented on the case.

The investigation was initiated based on a leniency application submitted by PRAKAB, in which the undertaking provided the Office with basic information about the existence and operation of the cartel. As a result, the company completely avoided a penalty for the anti-competitive conduct. PRECON is currently undergoing insolvency proceedings and has no assets at its disposal; therefore, no penalty was imposed on it.

Four other cartel participants were fined the following amounts, with the Office considering, in particular, the gravity and duration of the anticompetitive conduct:

 

Kablo Vrchlabí s.r.o.                                         CZK 27,528,000

NKT s.r.o.                                                        CZK 910,071,000

Prysmian Kabely, s.r.o.                                     CZK 955,000,000

Tele-Fonika Kabely CZ s.r.o.                             CZK 49,581,000

 

Press Unit of the Office

26/166 – S0393/2022