Fines for price-fixing agreements involving forklift truck batteries
The Netherlands Authority for Consumers and Markets (ACM) has decided to impose fines totaling over EUR 16 million on importers of batteries for forklift trucks, among other vehicles, and on their trade association BMWT. These companies and the association had agreed on using a so-called ‘lead surcharge.’ The objective of this ‘lead surcharge’ was to incorporate in a structural manner the widely fluctuating price of lead into the retail price of batteries. In addition, they also shared competition-sensitive information among each other. These actions resulted in a restriction of competition.
Following investigations into this sector, ACM is warning trade associations not to participate in the collection and sharing of competition-sensitive information. Trade associations should also not cooperate with anticompetitive arrangements that members conclude with each other.
Chris Fonteijn, Chairman of the Board of ACM, adds: “Businesses should set their prices themselves. That will lead to competitive prices and better service. Price-fixing agreements and the exchange of competition-sensitive information hurt fair competition. Trade associations should be alert to such practices.”
What companies were involved?
Trade association BMWT (Association of Manufacturers and Traders of Heavy Machinery, Warehouse Equipment, Road Construction Equipment and Transportation Vehicles) and five importers (Exide Technologies, Hoppecke Batterijen Nederland, EnerSys, Celectric and R&W Traktiebatterijen Import) have admitted their involvement in the price-fixing agreements. For that reason, their fines have been lowered. These companies and the association have accepted the fines. Two other companies, which do not admit the violation, will follow the regular procedure.
Exide, Hoppecke and EnerSys have reported their involvement in the cartel to ACM, and are awarded an additional reduction of their fines. Since Exide was the first to notify ACM of the existence of the price-fixing agreements, and because it admitted its involvement, it escapes the imposition of a fine of over EUR 15 million.
How did these price-fixing agreements work in practice?
The importers and the trade association introduced a separate ‘lead surcharge’ that followed the lead price trend on the metal exchange. This ‘lead surcharge’ was listed as a separate item on the invoices for buyers. In that manner, one component of the battery price was fixed. The trade association facilitated the agreements by circulating a list with ‘lead surcharges’ among its members each quarter. The agreements were a recurring item on the agendas of the trade association’s sectoral meetings. The ‘lead surcharge’ varied between approximately 10% and 30% of the battery price. These agreements were in place between 2004 and 2013, and the importers, by and large, adhered to them.
Investigations into other parts of BMWT revealed that competition-sensitive information about other topics was exchanged within BMWT, too. For example, the trade association conducted surveys about price trends. One of these surveys contained questions about planned rates for service mechanics, and ones about the actual rates charged. ACM did not find any violations there, and has not imposed any fines. However, the trade association has stopped the collection and circulation of this kind of competition-sensitive information.
ACM regularly sees trade associations collecting and circulating competition-sensitive information. This might be information that companies could use to coordinate their prices. This kind of information offers companies insight into their competitors’ strategies. That is why it harms competition, and why it is illegal.