Watchdog's cartel comments wrong, Schindler Lifts says

Schindler Lifts has accused the Commerce Commission of making false statements after the commission said yesterday that Schindler had been formally warned over cartel participation more than a decade ago.

The commission said it had formally warned Schindler Lifts New Zealand Limited, along with an employee and a former employee for their involvement in a cartel with other elevator companies.

The cartel, which operated from the early 1980s to late 1995, would decide which company would win elevator contracts and lucrative ongoing maintenance contracts.

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

Schindler Lifts said today that the commission's investigation involved a single Christchurch-based staff member involved in price-fixing with his counterpart at rival lift company, Otis, in the Christchurch market.

Schindler chief executive Dirk Ryken said that even though the outcome of the investigation was largely expected, Schindler was concerned that the commission's public announcement contained "unproven and potentially commercially damaging allegations suggesting that after almost two decades, current lift maintenance contracts may still be affected".

The commission said yesterday that the market conditions at the time of the cartel ensured that the company that installed the elevator was invariably awarded the contract for its ongoing maintenance.

Collusion over the contracts also had the purpose of fixing the prices of maintenance contracts - some of which were still in force today, commission director of competition Deborah Battell said.

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

Mr Ryken said maintenance contracts were, on average, put out to tender or up for competitive price comparisons every three years.

"This has been the case for over a decade so the commission's comments yesterday aimed at building owners just don't stack up."

The company was considering its response to the letter received from the commission at the end of the investigation and the incorrect public comments made by the commission that current contracts may be affected, Mr Ryken said.

Schindler cooperated fully with the commission's investigation "even though the concerns stemmed from practices that were in place prior to Schindler's purchase of the Christchurch lift business and that ceased shortly after Schindler managers took over the running of the company".

It was not known whether Schindler would pursue legal action, as Mr Ryken did not return calls from NZPA today.

Commerce Commission communications manager Allanah Kalafatelis said the commission had no comment to make on Schindler's statement.

Limitation provisions in the Commerce Act prevent proceedings in relation to conduct more than 10 years old, meaning the commission was unable to prosecute Schindler and one of the individuals.

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