Vehicle lighting cartel fined in latest supply fixing scandal to hit automotive parts market
22 June 2017
The European Union has fined vehicle lighting producers Automotive Lighting and Hella a combined total of €27 million for their part in the operation of a cartel, with Valeo, another participant, escaping sanction.
The cartel collaborated on the supply of parts such as headlamps and daytime running lights to manufacturers following the end of a model’s production. The European Commission found that for more than three years, Automotive Lighting, Hella and Valeo coordinated prices and other trading conditions for the supply of vehicle lighting systems across the European Economic Area (EEA).
The companies discussed quotes for tenders and negotiation strategies and exchanged information on the status of negotiations with customers regarding price increases, as well as other information. Moreover, the parties agreed that they should aim for a price increase on spare parts after the end of mass production of specific car models, and coordinated how long after that they would end contractual availability of the spare parts in question.
The investigation was limited to the aftermarket supply of parts by the three companies, which breeched the EU’s Article 101 of the Treaty on the Functioning of the European Union, and Article 53 of the EEA Agreement, both of which prohibit cartels and other restrictive business practices. The investigation began when Valeo submitted an immunity application.
Under the terms of the EU Commission’s 2006 Leniency notice, Automotive Lighting had their fine reduced by 35% to €16.3 million, while Hella’s fine was reduced by 20% to €10.3 million. Both companies received these deductions as they helped the commission with the investigation. Valeo, which informed the authorities of the cartel and cooperated with the investigation, received a 100% reduction and therefore escaped any financial punishment.
Commissioner Margrethe Vestager, in charge of competition policy, comments: ‘The Commission has sanctioned another cartel in the automotive sector. Three lighting producers harmed car and commercial vehicle manufacturers by colluding instead of competing against each other. Today's decision underlines that we do not accept cartels that affect the European market.’
This is not the first time that the EU has acted over a vehicle parts cartel. In fact, there is a long list of equipment areas that have been subject to companies working together to fix prices and the general supply chain in their favour. In March 2017, the commission fined Behr, Calsonic, Denso, Panasonic, Sanden and Valeo a total of €155 million for taking part in one or more of four cartels concerning air conditioning and engine cooling parts supply.
The commission found that the companies took part in up to four different bids to supply heating, ventilation and cooling (HVAC) systems, radiators or compressors to different vehicle manufacturers, including Daimler and BMW; Volkswagen Group, Jaguar Land Rover and Volvo; Renault Nissan Alliance; and Suzuki.
In January 2016, Denso escaped punishment when it revealed a cartel in the supply of vehicle alternators and starters with Mitsubishi Electric and Hitachi. The investigation revealed that between September 2004 and February 2010 the companies met at each other’s offices and in restaurants, and were in contact over the phone on a regular basis, in order to limit competition between them. They developed coordinated responses to certain calls for tenders issued by the manufacturers, determining what price they would offer and who should win the business, as well as sharing commercially sensitive information such as price elements and market strategies. In addition, the companies shared out vehicle manufacturer’s projects between each other in terms of who would supply required products.
Since 2013 the EU has also investigated and handed out fines to companies for fixing the supply of wire harnesses, parking heaters in trucks, car seats and bearings. There are also ongoing investigations concerning cartels in the occupant safety system market, concerning areas such as airbags and seatbelts. This has resulted in €1.6 billion in fines being handed out between multiple automotive suppliers, with the bearings cartel receiving the biggest joint fine of €953 million.
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