Some items on our site have recently moved. Visit our News Hub for selected articles, special reports, podcasts and other resources.
Gulf utility providers file damages suits against Prysmian, others over power-cable cartel
24 October 2019 00:00 by Simon Zekaria
State utility companies in Bahrain, Saudi Arabia, Kuwait and Oman have filed damages claims against power-cable producers over their involvement in a multiyear global cartel, MLex has learned.
The antitrust suits, filed in the Netherlands, list 15 target companies including Prysmian and ABB. The claimants seek losses from cable prices paid through more than a hundred procurement contracts worth $500 million.
The claimants, all located in the Gulf region, are the Bahrain government's Electricity & Water Authority; Kuwait's Ministry of Electricity and Water; Oman Electricity Transmission Company; and the GCC Interconnection Authority in Saudi Arabia.
EWA is Bahrain’s national authority for water supply and power-grid operations, while KMEW is a Kuwaiti government agency. OETC, set up by the government in Oman, operates the main transmission systems in the country. GCC owns and operates a regional interconnector that links up grids of the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait.
The claims, lodged at the District Court of Amsterdam, stem from a European Commission decision in 2014 to fine 11 producers of underground and undersea cables for running a global cartel for almost a decade from 1999.
Electricity grids are connected up by cables to provide regional and crossborder energy flow. The companies were found to have colluded to divide up projects and customers, as well as to share pricing information and rig procurement bids.
The commission's fines totaled 302 million euros ($336 million), and the companies involved included Nexans, Prysmian, Brugg Kabel and NKT Holding. ABB was let off its notional fine of 33 million euros, because it had blown the whistle on the cartel.
The cable producers involved have been targeted by multiple lawsuits across Europe over the cartel. Several cartelists have appealed the commission's decision through the EU courts.
The cartelists say the losses sought by the suits, through alleged overcharge, can't be presumed across the multiple individual projects in which they were involved.
In legal documents seen by MLex, the Gulf providers said the cartelists "worked on the introduction, enforcement and application of the cartel,” which aimed to “distort competition in the power cable market.”
The utility providers were “victimized” by the cartel and “suffered loss as a buyer of the defendants’ products and services,” the papers said. The loss comes from “excessive prices” paid by the claimants “as a result of the corruption of the fair market.”
The Gulf claimants said they are all “power-transmission and electricity-distribution service providers” that develop, operate and maintain high-voltage electricity transmission networks in their respective countries. They said they directly purchased cables from the cartelists, mainly for power-generation and distribution projects.
After being “exposed to excessive prices,” the claimants say they suffered losses, including from "umbrella pricing" effects. These are a price increase created by a cartel, or reduction in supply that diverts demand toward substitute products.
The claimants also say the cartel took place during the Gulf’s rapid growth and industrial expansion, which resulted in increased demand for power in the region. This led the claimants to make “significant investments in the power transmission networks,” the papers say, resulting in the signing of more than 100 procurement contracts for cable supply with the cartelists, at a value of more than $500 million.
The paper, in the form of a legal summons, said the value of the claim would be determined in later proceedings.
The claimants said the suits, which are actioned through law firm Scott+Scott, are so-called follow-on claims — flowing from the EU decision — as well as standalone actions based on national laws in the Netherlands and other EU member states.
The claims are “partly based on the [EU] decision, but their basis and foundation is wider,” the paper said.
MLex understands that the defendants targeted in the actions have all appeared in court and have made procedural requests as part of preliminary proceedings.
No results found