EUROPE
« In The NewsHausfeld and Cuatrecasas Launch Major UK Cartel Claim on Behalf of the European Rail Industry
Action commenced in London against Morgan Crucible, Schunk, SGL, Le Carbone Lorainne and Hoffman for losses resulting from the Carbon Graphite Cartel
Competition litigation experts Hausfeld & Co. LLP and Cuatrecasas, Gonçalves Pereira (Cuatrecasas) have commenced proceedings in the UK Competition Appeal Tribunal on behalf of the German, Dutch, Italian, and Portuguese rail industries, with respect to the Carbon Graphites Cartel. The Claimants include Germany’s Deutsche Bahn, Holland’s NS, Italy’s Trenitalia, Spanish Metro, Portuguese state railway CP, the main Portuguese rail stock maintenance provider and only manufacturer EMEF, and Rete Ferroviaria Italiana, RFI.
The claims are against Morgan Crucible, Schunk, SGL, Le Carbone Lorainne and Hoffman for their involvement in the carbon graphites price fixing cartel, which took place throughout Europe for a period of 11 years between 1988 and 1999. The European market for the products concerned was worth around €290 million a year.
In December 2003 the European Commission imposed fines totaling €101m on five corporate groups for operating the cartel which affected the market for electrical and mechanical carbon and graphite products. A sixth company, Morgan Crucible, also participated in the cartel, but received immunity from fines for being the first to denounce the illegal behaviour to the Commission.
The infringement decision by the Commission forms the basis of this action against the cartelists, because in follow-on damages actions before national courts, a Commission decision is binding proof that the anti-competitive behaviour took place and was illegal.
The Claimants represent a significant part of the European public transport sector, which have been heavy users of carbon and graphite products that are employed in rolling stock for the transfer of electricity in and to electrical motors. During the cartel period they realised purchases of the cartelised products running into hundreds of millions of euros and they are now seeking to recover the excess prices paid as a result of the cartel.
Anthony Maton, partner in Hausfeld & Co. LLP, comments:
“This action is brought by many of Europe’s leading state owned rail companies and is probably the most significant claim of its kind brought in Europe to date. The rail companies seek restitution in respect of damage suffered over many years from a long running and hard core cartel. We would urge the Defendants, who have already been fined by the European Commission, to be pragmatic in accepting and resolving their liability, and for them to seek sensible commercial resolutions with the Claimants.”
Paul Hitchings, partner in Cuatrecasas, comments:
“Given the geographic scope of the case and the significance of the Claimants, this claim marks a real landmark in the new wave of private antitrust damages actions in Europe, so much heralded by the European Commision in the last few years. As a law firm, we are proud to have received the confidence of major European companies such as Deutsche Bahn, the Portuguese railco CP, the Dutch NS, Trenitalia and Metro de Madrid to advise them in this case and thereby assist them in effectively recovering material economic losses suffered in the past.”
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For further information or to arrange interviews please contact:
Rohit Grover/Ryan McSharry
Spada
Tel: 020 7269 1430
Background – carbon and graphite products cartel
- Electrical carbon and graphite products are used to transfer electricity in and to electrical motors for a wide range of applications. These include the automobile industry (electric car windows, starters, air conditioning), public transport (trains, metro, trams) and virtually all consumer goods equipped with a motor (vacuum cleaners, shavers, etc). Mechanical carbon and graphite products are used, for instance, to seal dangerous gases and liquids in pumps, compressors and turbines. The European market for the products concerned is worth around €290 million a year.
- After a careful investigation, which started in September 2001 with an immunity application by British company Morgan Crucible Company plc, the Commission has concluded that the latter plus Carbone Lorraine S.A. of France, German companies Schunk GmbH and Schunk Kohlenstofftechnik GmbH (which are treated as one company for the purpose of this decision), SGL Carbon A.G. and C. Conradty Nürnberg GmbH, and Austrian company Hoffmann & Co. Elektrokohle AG (now part of the Schunk Group) have participated in a cartel in the European Economic Area.
- According to the information assembled by the Commission, the six companies operated a secret cartel between October 1988 and December 1999. During this period the companies, which control 93% of the European market, held more than 140 meetings to decide price increases for a broad range of products as well as for large individual customers and to ward off outside competition by undercutting the few rivals left. The top meetings, which they called 'summits', provided strategic direction and solved problems while the detailed price and other arrangements were worked out and agreed in 'technical committee' meetings. None of the companies involved has seriously disputed the facts ascertained by the Commission.
- On 3 December 2003, the Commission announced that it has imposed fines totalling €101.44 million on Carbone Lorraine, SGL, Schunk, and two other companies for operating a cartel in the market for electrical and mechanical carbon and graphite products, principally used to transfer electricity to and in electrical motors. Applications include electric car windows, shavers and vacuum cleaners as well as railway applications (carbon traction brushes).
- As Morgan Crucible was the first company to come forward with information about the cartel it received full immunity from fines.
NOTES TO EDITORS
Hausfeld
Hausfeld & Co. LLP, led by industry doyen Michael Hausfeld, is widely recognised as one of the leading and best-known claimant law firms in the world. It is at the forefront of numerous innovative legal actions that are expanding the quality and availability of legal recourse for aggrieved individuals and businesses around the world.
The partners of Hausfeld & Co. LLP and its sister practice Hausfeld LLP obtained numerous landmark judgments and settlements for individuals and businesses, and have been champions for the private enforcement of competition and antitrust laws globally for almost four decades.
Cuatrecasas, Gonçalves Pereira
With almost a century of professional practice, Cuatrecasas, Gonçalves Pereira is a leading international benchmark for legal practice in Europe. The Firm is the result of the merger in 2003 of two of the largest Iberian law firms, Cuatrecasas and Gonçalves Pereira, Castelo Branco. It is present outside the Iberian Penninsular in London, Brussels, Paris, Shanghai, Casablanca, Sao Paolo and New York, and has relevant activities in Germany and Italy through its German and Italian Desks.
Cuatrecasas, Gonçalves Pereira stands out as an innovative firm, which has a market leading reputation in sophisticated international litigation and arbitration, and in competition law. Its antitrust private enforcement practice is at the forefront of developments in Europe offering advice to major corporations on the implications of damages actions for their business.
Practice Areas: Antitrust / Competition
