Antitrust: Cartel Cost IEC Billions

Sources close to Antitrust Authority say it conducted investigation into electrical infrastructure cartel, sent out warning letters on September 27 to companies suspected of participating in cartel.

The Israel Electric Corporation was the victim of an international cartel that overcharged for electricity-generating equipment and infrastructure beginning in the 1980s - causing NIS 1 billion to NIS 3 billion in damage to the IEC and Israeli consumers.

The Antitrust Authority conducted an investigation into the electrical infrastructure cartel and sent out warning letters on September 27 to companies suspected of participating in the cartel, said sources close to the authority. Siemens, Alstom, Hitachi, Toshiba, Mitsubishi and Schneider Electric were among the companies cautioned by the Antitrust Authority. The authority's letters referred to the period from April 1988 to May 2004.

Antitrust Commissioner David Gilo is also considering a move to declare the existence of an illegal cartel in the electrical transmission infrastructure sector.

The IEC could sue the cartel members for damages, but it is not yet clear whether the authority determined that the IEC, its board members or senior executives deliberately cooperated with the cartel.

For six years, the Antitrust Authority has been examining suspicions that the IEC knowingly spent billions of shekels unnecessarily, even though it knew about the cartel. A European Union report on the cartel stated that it illegally overcharged tens of billions to international electric companies all over the world. The EU investigation ended five years ago and resulted in a total 750-million-euro fine to be paid by the various firms. Siemens, which led the conspiracy, was ordered to pay 397 million euros. Other countries also demanded - and received - money back.

The IEC denied that it knowingly cooperated with the cartel once the matter was revealed; TheMarker reported on the overcharges in 2007. Among the equipment for which the cartel overcharged was "gas-insulated switchgear," which is used in high-voltage transmission systems.