EUR 35 million fine proposed on power line builder for participating in a cartel

The Finnish Competition and Consumer Authority (hereinafter the FCCA) submitted a proposal to the Market Court on 31 October 2014 to impose a fine of EUR 35 million on Eltel Networks Oy and Eltel Group Oy (hereinafter Eltel) for participating in illegal cooperation in the design and construction market of power lines in Finland.

The FCCA initiated its investigation after Empower, the other party to the suspected prohibited actions, provided the FCCA with information and evidence on the cartel’s operations in order to be exempted from paying any fines. The FCCA granted an exemption from the fine for Empower (leniency). When determining the amount of the fine imposed on Eltel, the FCCA considered the nature, scope and duration of the violation as well as Eltel’s substantial net sales, amounting to around EUR 1.1 billion in 2013.

According to the FCCA, its investigation shows that Eltel and Empower had agreed among themselves the prices, margins and distribution of contracts pertaining to future power line projects. The FCCA finds that these prohibited actions began in October 2004 at the latest, and continued without interruption until March 2011 or longer. The FCCA considers the actions of Eltel and Empower to be a serious violation of Finnish competition law and competition law rules of the European Union. According to the FCCA, the companies colluding in these actions were the two most significant power line contracting companies operating in Finland, and their harmful cooperation covered the entire country.

Empower reports that its management was informed in January 2013 of a claim according to which during the preceding decade there had been illegal cooperation in the design and construction market of power lines in Finland whereby contracts pertaining to future power line projects were distributed. Empower reports having immediately instigated an internal investigation as well as contacting the FCCA. Empower emphasizes that the alleged illegal cooperation took place before the nomination of the new management of the company in 2012.

Eltel considers that it has not violated competition law rules. According to Eltel, its own investigations do not show any violations of competition rules and thus Eltel does not agree with the conclusions made by the FCCA. In addition to its own internal investigations, Eltel says to have cooperated and assisted the FCCA in its investigation.

The FCCA is expected to publish a public version of the proposal to the Market Court on its website shortly.