December 07, 2011 Bloomberg
Whirlpool Units, Panasonic Fined by EU for Compressor Cartel
Two Whirlpool Corp. units and Panasonic Corp.
are among companies that agreed to pay European Union antitrust fines totaling
161 million euros ($215.6 million) for fixing prices of refrigerator
The Whirlpool units were fined a total of 54.5 million euros and Panasonic will pay 7.7 million euros after they settled a European Commission cartel probe into agreements that set prices for small compressors used in refrigerators and freezers and in vending machines and ice-cream coolers.
gAt a time of economic hardship it is all the more important to promote fair competition and step up the fight against cartels which inflict serious damage on productivity and economic growth,h EU Competition Commissioner Joaquin Almunia said in an e-mailed statement.
The commission has made fighting cartels a priority in recent years, imposing 3.3 billion euros in fines last year. EU investigators raided producers of refrigeration compressors in 2009.
Danfoss A/S, based in Nordborg, Denmark, agreed to pay 90 million euros, the largest fine, and Appliance Components Co. SpA of Italy must pay 9 million euros for coordinating prices and market shares from 2004 to 2007.
Whirlpool will set aside an extra $1.2 million in the fourth quarter on top of the $71.7 million reserve already established to cover the fine, it said in a regulatory filing today. Whirlpool previously set aside as much as $306 million to cover a possible fine and related costs, it said in July.
gItfs a very embarrassing case,h Danfoss Chief Executive Officer Niels Bjorn Christiansen said today in Copenhagen. Employees at Danfossfs German unit exchanged information, including prices, he said. They no longer work for the company, Christiansen said. The companyfs management found out about the cartel after the EU raid in 2009, he said.
gThere was nothing in the profit and loss accounts of the German subsidiary that raised our suspicions,h he said in an e-mailed statement. gThe business was performing poorly for a number of years and the performance didnft change in the period during which we now know the violations took place.h
Panasonicfs fine will have gno material effect on the financial outlook for the fiscal year ending March 31, 2012,h Katsuyuki Ito, a spokesman for the company in Wiesbaden, Germany, said in an e-mail. Panasonic gtakes this matter seriously and will make every effort to maintain the publicfs confidence.h
Tecumseh Avoids Fine
Applied Components Co. declined to immediately comment.
Tecumseh Products Co. of Ann Arbor, Michigan, wasnft fined because it told the EU about the cartel. Panasonic wasnft involved in all aspects of the cartel and quit it in 2006, regulators said. One of the companies had its fine reduced because of financial difficulties, the EU said, without naming the business.
Whirlpoolfs Embraco unit last year paid $91.8 million to settle a similar U.S. Justice Department probe. Osaka, Japan- based Panasonic also paid a $49.1 million fine under the U.S. settlement.
Whirlpool, Panasonic, Danfoss, Tecumseh and Appliances Components face multiple U.S. lawsuits by customers seeking compensation for alleged price-fixing. Price-fixing convictions in the U.S. can expose companies to fines and triple damages for customers that seek restitution through civil lawsuits.
European Commission - Press release
Antitrust: Commission fines producers of refrigeration compressors € 161 million in fifth cartel settlement
Brussels, 07 December 2011 - The European Commission has settled a cartel with producers of household and commercial refrigeration compressors, used in fridges, freezers, vending machines and ice-cream coolers. ACC, Danfoss, Embraco and Panasonic were fined a total of € 161 198 000 for operating together with Tecumseh a cartel that covered the whole European Economic Area (EEA)1 from April 2004 until October 2007 (15 November 2006 for Panasonic). The fine includes a reduction of 10% for the companiesf acknowledgement of their participation in the cartel and their liability in respect of such participation. Tecumseh was not fined as it benefited from immunity under the 2006 Leniency Notice for revealing the existence of the cartel to the Commission.
Commission Vice President in charge of competition policy, Joaquín Almunia, said: gI want to send a message to everybody that the Commission's dedicated cartelbusters continue to detect, hunt down and punish cartels. At a time of economic hardship it is all the more important to promote fair competition and step up the fight against cartels which inflict serious damage on productivity and economic growth".
The cartel concerned small compressors that are used predominantly in household appliances, such as fridges and freezers, and to a lesser extent in commercial equipment such as vending machines, ice cream coolers, etc. ACC, Danfoss, Embraco, Panasonic and Tecumseh aimed at coordinating European pricing policies and keeping market shares stable in an attempt to recover cost increases. To this end, the cartel members held bilateral, trilateral and multilateral meetings at which they discussed among other things prices and engaged in an exchange of sensitive market information.
The fines take into account the companies' sales of refrigeration compressors in the EEA, the very serious nature of the infringement and the EEA-wide scope of the cartel activities. The calculation of the fines was done on the basis of the EU 2006 Guidelines on fines. The individual fines are as follows:
|@||Leniency Notice||Settlement Notice||Fine (EUR)|
Appliances Components Companies S.p.A. (Italy) and
Elettromeccanica S.p.A. (Italy)
|25%||10%||9 000 000|
A/S (Denmark) and
Danfoss Flensburg GmbH (Germany)
|15%||10%||90 000 000|
|Embraco Europe S.r.l. (Italy) and Whirlpool S.A.(Brazil)||20%||10%||54 530 000|
|Panasonic Corporation (Japan)||40%||10%||7 668 000|
Tecumseh Products Company Inc. (USA),
Tecumseh do Brasil Ltda. (Brazil) and
Tecumseh Europe S.A. (France)
Tecumseh received full immunity from fines. Reductions for cooperation under the Leniency Notice were granted to Panasonic, ACC, Embraco and Danfoss while Embraco received a further reduction for its cooperation outside the leniency notice.
The fact that Panasonic was not involved in all aspects of the cartel was also taken into account by the Commission when setting the fines.
One of the undertakings has invoked its inability to pay the fine under point 35 of the 2006 Guidelines on fines. The Commission has thoroughly assessed the application on the basis of the company's financial statements for recent years, projections for the current and coming years, ratios measuring the financial strength, profitability, solvency, liquidity, and relations with outside financial partners and with shareholders. As a result of this assessment, the Commission granted a reduction of the fine.
The settlement procedure
The settlement procedure is based on Antitrust Regulation 1/2003 (see IP/08/1056 and MEMO/08/458). It allows the Commission to apply a simplified procedure to suitable cases and thereby reduce the length of the investigation. This is good for consumers and for taxpayers as it reduces costs; good for antitrust enforcement as it frees up resources to tackle other suspected cases; and good for the companies themselves that benefit from quicker decisions and a 10% reduction in fines.
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. The case law of the Court and Council Regulation 1/2003 both confirm that in cases before national courts, a Commission decision is binding proof 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.
The Commission considers that meritorious claims for damages should be aimed at compensating, in a fair way, the victims of an infringement for the harm done.