Goldman Sachs Group, which owned Prysmian from 2005 to 2010, and a number of other cable makers including Nexans SA have been fined a total of €301.6 million by the European Union for fixing the prices of high-voltage power cables sold to energy providers. The Goldman/Prysmian fine amounts to €37.3 m. Prysmian also shared a €67.3 m fine with its former owner Pirelli. Nexans, the world's second-largest cable maker, was fined €70.7 m. In all, says the EU, eleven producers of underground and submarine cables shared markets and allocated customers including large infrastructure projects and offshore wind farms ''on an almost worldwide scale'' from 1999 until the companies were raided by regulators in January 2009. European major ABB escaped a fine because it was the first to inform the EU of the cartel.
The six European, three Japanese and two Korean manufacturers were found guilty of agreeing to keep out of teach other's home markets and fixing price levels and rigging bids for power projects. The fines imposed were as follows. Furukawa Electric Co and Fujikura Ltd - €8.9 million and €8.2 m respectively. Furukawa and Viscas Corp - a shared fine of €35 m. J-Power Systems Corp, a joint venture owned by Sumitomo Electric and Hitachi Cable -€20.7 m. Separately Sumitomo was fined €2.6 m and Hitachi €2.3 m. LS Cable & System Ltd - €11.3 m, Taihan Electric Wire Co €6.2 m, Brugg Kabel AG €8.5 m, NKT Holding €3.9 m, Safran SA €8.6 m and share of a €123 500 fine with Silec Cable SAS which it has since sold to General Cable. Silec and General Cable Co share a €1.9 m fine. According to Safran's 2013 annual report, it is being sued by General Cable for compensation for the fine. Exsym Corp shares a €6.6 m fine with SWCC Showa and Mitsubishi. SWCC Showa was separately fined €844 000 and Mitsubishi €750 000.
In a company statement, Nexans said that the Commission investigation of its affairs commenced in 2009 and the period covered by the decision against Nexans France dates from November 2000 to January 2009. The cables concerned in the decision were narrowed from the initial investigation, following a Nexans challenge on scope, to underground cables at voltages of 110 kV and above, and submarine cables at voltages of 33kv and above. Nexans France has recorded a €200 m provision in its statutory financial statements, included in the Group's consolidated financial statements, since June 30, 2011. Since payment must be made within 3 months even if an appeal is filed, the Group's net debt will be impacted in 2014.
Nexans will review the decision in detail to determine its next course of action which could include 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", said Nexans CEO Frédéric Vincent and Nexans COO 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 Group is fully committed to compliance with competition laws and operates a strong dedicated competition compliance programme across its subsidiaries worldwide, which we reinforced in 2009 to ensure that our business activities are conducted in compliance with the highest ethical and legal standards."
Nexans's fine will affect its net debt in 2014. Legal action by customers seeking compensation could have a material adverse effect on Nexans results, the company warned.
Goldman Sachs is considering its right of appeal in the case and has stated that there is no suggestion that the company or its people had any knowledge or involvement in the claimed collusive behaviour. According to a statement from the bank "It is important to recognise that the commission has chosen to hold Goldman Sachs jointly and severally liable with Prysmian solely under its parental liability doctrine" because of its controlling interest in Prysmian between 2005 and 2010.
Prysmian is to appeal the fine because the EU decision was "based on a superficial and erroneous analysis of the relevant facts" and therefore considers the decision unlawful. The company said it has set aside €200 million euros for any fines that might be levied in the EU, USA, Canada and Australia.
Safran says that the fine will not have a significant impact on the group's results because of provisions that were previously set aside. It also states that it was wholly unaware of the illegal behaviour.
NKT, whose profits will be reduced by $5.4 million in 2014 maintains that there is no substance to the commission's allegations and it will appeal the fine in the EU courts. Pirelli said it will appeal the decision since it wasn't directly involved in the cartel and any fine should be paid by its former unit.
Linkedin
