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BMW, Daimler, Volkswagen fined for anticompetitive practices in the purchase of steel

Christian Fernsby |
The Bundeskartellamt has imposed fines totalling around 100 million euros on Bayerische Motoren Werke AG, Daimler AG and Volkswagen AG for anticompetitive practices in the purchase of long steel products.

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Andreas Mundt, President of the Bundeskartellamt: “Between 2004 and the end of 2013 representatives of BMW, Daimler and Volkswagen regularly met twice a year with steel manufacturers, forging companies and large systems suppliers and exchanged information on uniform surcharges for the purchase of long steel products.

"Scrap and alloy surcharges account for a substantial part of the purchase prices for long steel. Insofar as the surcharges were no longer negotiated individually with the suppliers as a consequence of these talks, price competition between the companies on these price components was eliminated.”

In their production processes the car manufacturers use many parts which are made from long steel (e.g. crankshafts, connecting rods, camshafts, gear wheels and steering rods).

These components are either purchased from forging companies or are produced by the car manufacturers themselves in their own forges. For this purpose, long steel is purchased beforehand as a raw material.

Long steel is usually sold by the steel manufacturers or forging companies based on a certain price model. This consists of a basic price and scrap and alloy surcharges.

uring the period of infringement the surcharges, which fluctuated according to amount, accounted on average for approximately a third of the end price of engineering steel, which is the main type of long steel concerned here. The purchase costs of long steel account for less than one percent of the total costs of a car.

In contrast to the basic prices, the surcharges were traditionally not negotiated but calculated according to sector-wide uniform formulas and added to the basic price as separate price components. In 2003 and 2004 the steel manufacturers unilaterally made certain changes to the surcharge calculation, in some cases under the threat of refusal to supply.

As a reaction to this the discussions between the car and steel manufacturers and forging companies were taken up under the umbrella of the German association for steel and metal processing (Wirtschaftsverband Stahl- und Metallverarbeitung).

In the talks the representatives of the car manufacturers ensured one another that they would adopt the changes introduced by the steel manufacturers and continue to adhere to the established practice of uniformly calculated price surcharges. They did so at any rate until January 2016.

The companies acknowledged the facts as established by the Bundeskartellamt and agreed to a settlement. This was taken into account by the Bundeskartellamt when calculating the fines as well as the fact that the car manufacturers had cooperated with the authority throughout the proceeding.

The investigations against three component suppliers and an industrial association were terminated for discretionary reasons.

The fining decisions are not yet final and can be appealed along with the findings contained in them to the Düsseldorf Higher Regional Court.

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