BRUSSELS, Feb. 21 -- A record $1.3 billion in fines were imposed Wednesday on five elevator and escalator makers for fixing prices in Belgium, Germany, the Netherlands and Luxembourg, showing that European Union regulators are intent on using their expanded power to crack down on cartels.
The European Commission fined ThyssenKrupp $630 million, United Technologies' Otis unit $295 million, Schindler Holding $189 million and Kone $187 million. Mitsubishi Elevator Europe, a division of Mitsubishi Electric, was fined $2.4 million for participating in the Dutch cartel.
The sum of the fines topped a $1 billion penalty in 2001 against makers of vitamin products. Under antitrust guidelines established last year, the commission can levy larger fines and apply an automatic 50 percent increase for repeat cartel offenders. Because ThyssenKrupp had a previous cartel punishment -- a $4.2 million fine in 1998 for fixing stainless-steel prices -- its elevator penalty included the added charge, bringing its fine close to the record $653 million that Microsoft paid in 2004 for breaking monopoly laws. Microsoft is appealing that ruling.
The E.U. has "confirmed its resolute commitment to punishing companies which participate in unlawful cartels," said John Pheasant, a partner at District-based Hogan & Hartson who works in London and Brussels.
The commission began its investigation into the elevator and escalator businesses in January 2004 and found that the companies fixed prices and rigged bids from 1995 to 2004.
"It is outrageous that the construction and maintenance costs of buildings, including hospitals, have been artificially bloated by these cartels," the commission's top antitrust official, Neelie Kroes, said in a written statement. "The national management of these companies knew what they were doing was wrong, but they tried to conceal their action and went ahead anyway."
In all four countries, high-ranking managers held regular meetings related to the cartel. The commission said it found evidence that the companies knew that their behavior was illegal. The managers were careful to avoid detection, meeting in rural areas or abroad and using prepaid mobile-phone cards to avoid tracking. The commission said none of the companies contested those facts or other evidence unearthed in the investigation.
Kone's penalty was reduced by about $181 million because it was the first to disclose the cartels in Belgium and Luxembourg and provided key evidence in the German investigation. Otis's penalty was reduced by more than $273 million because it disclosed the Dutch cartel and cooperated with investigations in the other countries.
Otis said it will appeal the commission's decision at the European Court of First Instance in Luxembourg. Its U.S. parent company, United Technologies, said the fine "will have no material impact" on its financial condition.
Schindler said it was "very surprised" at the size of the fine, as the companies were charged with local collusion rather than running a pan-European cartel.
Kone, based in Finland, and Germany's ThyssenKrupp said they will examine the commission's decision before deciding whether to appeal.