Sources inform "Globes" that the Israel Electric Corporation (IEC) (TASE: ELEC.B22) is considering suing its suppliers of gas insulated switchgear for billions of dollars for forming an international cartel. The move comes after consulting with experts in international antitrust law. Winning such a case could result in the lowering of electricity tariffs .On Friday, Antitrust Authority director general David Gilo notified Sweden's ABB AB, Japan's Toshiba Corporation (TSE: 6502; LSE TOS) and Hitachi Ltd. (TSE: 6501; NYSE: HIT), France's Alstom SA (Euronext: ALO) and Areva SA (Euronext: CEI), and Germany's Siemens AG (NYSE: SI; DAX: SIE), that he might name them as a cartel in the manufacture of gas insulated switchgear for electricity grids between April 1988 and May 2004.
Gas insulated switchgear is a critical component for electricity grids; it is a combination of electrical disconnects, fuses and/or circuit breakers used to isolate electrical equipment. Switchgear is used both to de-energize equipment to allow work to be done and to clear faults downstream. It is important because it is directly linked to the reliability of the electricity supply.
The Antitrust Authority has summoned the companies to a hearing, subject to which it will decide on the effect of the alleged cartel on Israel.
The contention of an international cartel is based on a division of national markets by the companies and price fixing in tenders, thereby distorting them and ensuring that the manufacturer for the designated market wins the project in it. The cartel allegedly has a powerful effect on Israeli consumers because it lasted for a long time and because of its effect on IEC's cost structure.
The Antitrust Authority's immunity program enabled it to expose the cartel. This program allows a party - either an individual or company (including its employees and managers) - that was or is affiliated with a cartel to inform the Antitrust Authority about the existence of the cartel in exchange for full immunity against criminal charges on violations committed. The Antitrust Authority applies the program in accordance with instructions of the Attorney General.
Published by Globes [online], Israel business news - www.globes-online.com - on October 2, 2011
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