26 February 2007
The EU fines a lift cartel
Brian Micklethwait

Do lifts inside buildings count as transport?  I don’t see why they wouldn’t.

Anyway, I have a problem.  The EU has just fined a cartel of lift makers nearly a billion euros (a new EU record for fines) for being a cartel, selling both lifts and maintenance for lifts for higher prices than they’d have had to charge if they had competed, instead of colluding which is what they actually did.  (I’m assuming that the facts of the case are as reported.)

Between at least 1995 and 2004, these companies rigged bids for procurement contracts, fixed prices and allocated projects to each other, shared markets and exchanged commercially important and confidential information. The effects of this cartel may continue for twenty to fifty years as maintenance is often done by the companies that installed the equipment in the first place; by cartelising the installation, the companies distorted the markets for years to come.

I write a weekly bit for CNE Competition, and I’d love to be able to write something very pro-free-market (as opposed to very pro-imposed-free-market) about all this.  Maybe to the effect that the EU should just stay out of this and let other competitors move in on this market.  Or maybe that the distortions are caused by other market distortions, for instance in the tall building market.  But I am too ignorant of such things.

Any suggestions?  The reason I ask this here is not just because lifts-equals-transport is an excuse, but because maybe other transport debates and dilemmas actually might shed some light on this case.

  1. I am racking my brains to think of anything similar in transport.  One would have thought there would have been opportunities in the train-building bonanza of the late-1990s but manufacturers came up with quite a wide range of options.

    A possibility is that this is in fact and industry that is a natural monopoly but that the competitors haven’t been allowed to merge.  Not that I would find that a problem (warning: short).

    I liked that comment that: “In all four cartels high-ranking national management (such as managing directors, sales and services directors and heads of customer service departments) participated in regular meetings and discussions.”

    What did Adam Smith say about meetings of people in the same business that the conversation but always turns to a conspiracy against the public?

    Posted by Patrick Crozier on  26 February 2007 at 04:05 am

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