Schindler Lifts warned over elevator cartel

Photo / Glenn Jeffrey

The Commerce Commission has formally warned elevator company Schindler Lifts New Zealand Limited, an employee and a former employee for participating in a cartel arrangement for a decade.

The commission alleged the cartel, which shared elevator installation contracts in the South Island, operated from the early 1980s until late 1995.

The warning was issued after the Schindler manager concerned admitted involvement.

Under the arrangement, the cartel participants would determine which firm would win upcoming elevator installation contracts.

The losing bidder would submit a high 'cover' bid that did not succeed, in order to give the impression of genuine competition.

The market conditions at the time ensured that the company that installed the elevator was invariably awarded the contract for its ongoing maintenance - the cartel's objective.

The commission said collusion over the contracts also had the purpose of fixing the prices of maintenance contracts.

Commerce Commission director of competition Deborah Battell said the commission was concerned that some of the maintenance agreements were still in force today.

"Some of these contracts have not been subject to competition and building owners are potentially suffering higher prices as a result."

Limitation provisions in the Commerce Act prevent proceedings in relation to conduct more than ten years old, meaning the commission was unable to prosecute Schindler and one of the individuals.

The investigation was opened following an application under the commission's leniency policy.

The investigation obtained admissions from the key cartel participants and also uncovered evidence that senior executives within the cartel companies were aware of the behaviour and did little or nothing to stop it.

In February 2007, the European Commission announced it had imposed fines of over 990 million euro ($2.4 billion) on the Otis, KONE, Schindler and ThyssenKrupp groups for operating cartels for the installation and maintenance of lifts and escalators in Belgium, Germany, Luxembourg and the Netherlands between 1995 and 2004.

- NZPA