The European Commission has imposed a hefty fine on Melco (Mitsubishi Electric) and Hitachi for their involvement with another Japanese car parts manufacturer (Denso) in a cartel for car engine components.

The Commission found that the three companies met in their offices, in restaurants and spoke on the phone regularly to create and coordinate the cartel outside Europe. However, as the car parts (alternators and starters) were sold to manufacturers in Europe, the cartel was found to have affected European customers. For over five years, the three companies allocated tenders by coordinating pricing, sharing other customers and projects and exchanging commercially sensitive information on pricing and market strategy in breach of European competition law.

Under the settlement reached with the Commission, Melco and Hitachi received a combined fine of €137.8 million. Although Denso was also involved in the cartel, it escaped a fine of €157 million and received full immunity under the European Commission's leniency rules for bringing the cartel to the Commission's attention. Melco and Hitachi received reductions in the level of their fines under the leniency rules for cooperating with the Commission's investigations. They also received a separate 10% reduction under the Commission's settlement procedure for acknowledging that they participated in the cartel and were liable for it.

The fact that both parties had previously been found to have breached European competition law was an aggravating factor the Commission took into account when considering the fines to impose in the car parts cartel case. In 2007 the Commission fined Melco over €118 million and Hitachi over €51 million for competition breaches in respect of the sale of gas insulated switchgear (used to control energy flows in electricity grids for power substations). Mitsubishi recently failed in its appeal against the decision before the Court of Justice of the European Union.

The car parts decision shows that the Commission will focus its efforts on breaking cartels which involve products that affect important consumer goods, such as cars. Indeed, this is just the latest fine that the Commission has levied on car part suppliers and a number of other investigations are currently in progress in this industry.

If you would like to discuss any aspect of competition law, please do not hesitate to contact Charles Livingstone.