Europe Cracks Offshore Cabling Cartel

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Commission (E.C.) has cracked down on a long-running offshore cabling cartel and fined 11 companies a total of €301.6 million ($415 million).

The European and Asian companies, which provide underground and submarine high voltage power cables to connect offshore windfarms to the mainland as well as cabling for interconnecting electricity grids in different European countries, were found guilty of colluding on price fixing for more than a decade. They include most of the industry's leading cabling companies: ABB, Nexans, Prysmian (previously Pirelli), J-Power Systems (previously Sumitomo Electric and Hitachi Metals), VISCAS (previously Furukawa Electric and Fujikura), EXSYM (previously SWCC Showa and Mitsubishi Cable), Brugg, NKT, Silec (previously Safran), LS Cable and Taihan. The cartel was made up of six European, three Japanese and two Korean producers of submarine or underground power cables. ABB received full immunity from fines as it was the first to reveal the cartel to the Commission.

"These companies knew very well that what they were doing was illegal. This is why they acted cautiously and with great secrecy. Despite this and through joint efforts by several competition authorities around the world, we have detected their anti-competitive agreements and brought them to an end," said Joaquín Almunia, commission vice president in charge of competition policy.

The E.C. found that the cartel had "an almost world-wide scope" and lasted for nearly 10 years, from 1999 until the E.C.'s inspections in January 2009. The cartelists agreed to stay out of each other's home territories and to allocate projects between them on an almost worldwide scale. The E.C stated that this meant that Japanese and Korean producers did not compete in Europe while the European companies participating in the cartel allocated projects within the European economic area.

"As a result, utilities and governments were deprived of a genuine possibility to choose between different providers when planning important energy infrastructure projects," Almunia said. "The participants also did everything they could to hide the existence of their arrangement. During the 2009 inspections, the European Commission recovered several thousand relevant documents that had been previously deleted from a computer by an employee of Nexans."

Despite being found guilty and fined over €70 million ($96 million), Nexans did not rule out an appeal.

"The Commission regrettably did not take into account the lack of effect on customers, which it is not required to find in order to apply sanctions", argued Nexans Chief Executive Officer Frédéric Vincent, and Nexans Chief Operations Officer Arnaud Poupart-Lafarge in a joint statement. "We confirm our requirement of strict adherence to our ethical values as set out in Nexans' Code of Ethics and Business Conduct and Antitrust Guidelines which are very clear."

The E.C. has been working hard in recent years to stamp out anti-competitive practices in the European energy sector. In December, Chinese solar companies faced import duties of the up to 42.1% by the European Union (EU) after being found guilty of dumping below-cost solar glass onto the European market. For additional information, see December 2, 2013, article - Europe Slaps Import Duties on Chinese Solar Glass.

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