Price fixing cases
1 August 2007it was reported that British Airwayshas been fined £121.5 million [ cite news | title = BA gets £121.5m price-fixing fine| publisher = BBC News | date = 8 January 2007| url = http://news.bbc.co.uk/1/hi/business/6925397.stm] for price-fixing. The fine was imposed by the Office of Fair Trading(OFT) after BA admitted to the price-fixing of fuel surcharges on long haul flights. The allegation first came to light in 2006 when Virgin Atlantic reported the events to the authorities after it found staff members from BA and Virgin Atlantic were colluding. Virgin Atlantic have since been granted immunity by both the OFT and the United States Department of Justicewho have been investigating the allegations since June 2006. The US DOJ later announced that it would fine British Airways $300 million (£148 million) for price fixing.
The allegations are thought to be linked to the resignation of commercial director Martin George and communications chief Iain Burns. Although BA said fuel surcharges were "a legitimate way of recovering costs", in May 2007 it put aside £350 million for legal fees and fines.
* Computer Components:
DRAM price fixing
Lysine price-fixing conspiracy
* Electrical Equipment:
General Eletronicand Westinghouse(1965)
Roche, BASF, etc.
18 April 2007The European commissionimposed a fined Heineken€219.3m , Grolsch€31.65m and Bavaria€22.85m for operating a price fixing cartel in Holland, totalling €273.7m. InBev, (formerly Interbrew), escaped without a penalty because it provided "decisive information" about the cartel which operated between 1996 and 1999 and others in the EU market. The brewers controlled 95% of the Dutch market, with Heinekenclaiming a half and the three others 15% each.cite news | first= | last= | coauthors= | title=Heineken and Grolsch fined for price-fixing | date= | publisher= | url =http://business.guardian.co.uk/story/0,,2059542,00.html | work = The Guardian| pages = | accessdate = 2007-08-01 | language = ] Neelie Kroessaid she was "very disappointed" that the collusion took place at the very highest (boardroom) level. She added, Heineken, Grolsch, Bavariaand InBevtried to cover their tracks by using code names and abbreviations for secret meetings to carve up the market for beer sold to supermarkets, hotels, restaurantsand cafes. The price fixingextended to cheaper own-brand labels and rebatesfor bars.In December 2001 Interbrew, Danone(former owner of Kronenbourg), and two other smaller brewers were fined €91m for operating a cartel in Belgiumwhile four Luxembourg companies were fined €448,000 the same month.
Heinekenand Kronenbourg, the two dominant brewers in France, were fined €2.5m - with the penalty reduced for co-operating. A similar inquiry into an alleged Italian cartel was closed without proceedings while the British and German beer markets were specifically excluded.
In January 2007
Siemensfined €396 million over its role in a collusionscandal. The European Commissionhas handed out a massive €750 million in fines to Siemens, Alstrom, Areva, Schneiderand Japanese firms Fuji, Hitachi, Mitsubishi Electric, Toshibaand Japan AE Systems. Switzerland's ABBwas a whistleblowerand escaped without any fine from the Commission. [cite news | first= | last= | coauthors= | title=Vote call by Siemens shareholders | date= | publisher= | url =http://news.bbc.co.uk/1/hi/business/6296985.stm | work = BBC| pages = | accessdate = 2007-08-01 | language = ] Regulators found that the companies rigged bids for contracts and fixed prices in the market for gas-insulated switchgear - equipment is used to control the flow of energy in electricity grids. Its fine was the biggest of the companies involved because it was a ringleader, the Commission said. About 30 business premises and private homes were searched as part of the investigation.
The cartel swapped information on offers from customers and operated a quota system for the division of work. Bids were rigged so that tenders went to whichever firm was due work under the quota system. "Code names were used for both companies and individuals. They relied on anonymous email addresses for communication and used
encryptionfor sending messages,” said the Commission. [cite news | first= | last= | coauthors= | title=Siemens hit with €396 million price fixing fine | date= | publisher= | url =http://www.out-law.com/page-7701 | work = | pages = | accessdate = 2007-08-01 | language = ]
7 December 2007, Sainsbury's, Asda, Safeway, Dairy Crest, Robert Wiseman Dairiesand The Cheese Companyhave all admitted that they had secretly swapped information with each other to make shoppers pay more for milk and cheese in a £270m price-fixingconspiracy. [ [http://www.thisismoney.co.uk/news/article.html?in_article_id=427337&in_page_id=2&ito=1565 Supermarkets fined £116m for price-fixing] ] The cartel agreed in principle with, the Office of Fair Trading, that they conspired against the interests of consumers. In their defense, the corporations have publicly said they had been under pressure to help farmers hit by foot-and-mouth, however, the OFT said "I think it is reasonable to say we don't doubt the purpose initially was to pass money back to farmers but, in general, there is no evidence that Farm gate priceincreased as a result of the initiative. We don't know what happened to the money."
All the major UK store chains, with the exception of
Waitroseand Marks & Spencer, are embroiled in the OFT inquiry into milkprices in 2002 and 2003 which has been ongoing since the beginning of 2004. It was accepted by Asda, Sainsbury and Safeway, that stores increased the price of milk as a result of collusion. Dairy Crestand Wiseman allegedly acted as middle men, passing on sensitive information about prices to their supposed rivals. Britain's biggest store chain Tesco, and Morrison, are accused of collusion too, but vigorously deny they took part in the swindle. The allegations against Tesco involve cheeseas well as milkand butter. [ [http://www.guardian.co.uk/business/2007/dec/07/supermarkets?gusrc=rss&feed=networkfront OFT hands out £116m in fines for milk price fixing] ]
If the OFT proves its case, the retailers could theoretically face fines of up to 10 per cent of their worldwide turnover, which in Tesco's case would amount to £4.3bn. The Office of Fair Trading told Sainsbury's, Asda, Safeway, Dairy Crest, Wiseman and The Cheese Company they faced maximum fines of £116m, though the final figure may be as low as £80m as a result of their co-operation.
Sainsbury'stold the London Stock Exchangethat its fine was £26m. The fine for Safewayis thought to be between £8m and £10m; £9m for Dairy Crestand £6m for Robert Wiseman. It is unclear who blew the whistle on the price-fixing but Arla, the dairy processor, will escape a fine after fully co-operating with authorities. Which?complained that, despite overpaying £270m, consumerswould not receive any refunds. [ [http://news.independent.co.uk/business/news/article3233342.ece Milked! Supermarkets admit secret price-fixing] ]
In April 2008, The
Office of Fair Tradingnamed 112 companies that it says colluded to inflate the cost of a wide range of contracts worth billions of pounds, including tenders for schools, universities and hospitals.
The list includes several publicly listed companies, including
Balfour Beatty, Kier Groupand Carillion, with 80 of the firms have already admitted participating in some form of bid-rigging, or have applied for leniency in return for assisting the OFT. The allegations centre around "cover pricing", in which firms secretly agreed the prices they would submit during a tender process. A firm that did not want to win the contract would submit a price that was much too high. In some cases, the eventual successful bidder would then reward them with a secret payment. This bid rigging often involved false invoices. The OFT declined to comment on the value of the fraud. [http://www.oft.gov.uk/news/press/2008/52-08 OFT issues statement of objections against 112 construction companies] ]
In April 2003, The London office of
ABN Amrofined £900,000 fine for helping a US client, Oechsle International Advisers, to rig share prices. The fine was the FSA's fifth-biggest, and is the largest involving market abuse on the London Stock Exchange.
ABN's then joint head of the UK equity trading desk, Michael Ackers, has been fined £70,000 for "market misconduct." The FSA decided that traders in ABN Amro Equities (UK), known as AAE, "accepted improper instructions whose apparent purpose was to push the closing market price of certain shares to a higher level than would otherwise have been the case". This happened on three separate occasions between April and October 1998 in respect of shares in Carlton Communications, British Biotech, Volkswagen and Metro. Angelo Iannone, the head of ABN's international sales trading desk in New York, had had a long-standing relationship with Oechsle and one of its fund managers, Andrew Parlin. They agreed to increase the price of the shares in question at the end of certain days' trading, to make the prices look better in clients' portfolios. [http://www.independent.co.uk/news/business/news/abn-fined-pound900000-for-price-rigging-595508.html ABN fined £900,000 for price rigging] ]
* [http://www.independent.co.uk/news/business/news/french-owners-of-gas-pipeline-deny-pricerigging-465930.html French owners of gas pipeline deny price-rigging]
* [http://news.bbc.co.uk/2/hi/business/4250842.stm Spitzer targets Marsh executives]
* [http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/05/27/cnextrad27.xml Ten executives face long arm of US justice]
* [http://www.guardian.co.uk/business/2008/apr/25/regulators.retail OFT accuses tobacco firms and retailers of cigarette price-fixing]
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