GE suing Danfoss for price-fixing losses

American multinational files US civil suit over losses related to overpriced compressors. The suit arrives after Danfoss in 2011 was fined for participating in a price-fixing cartel

March 5th, 2013 3:02 pm| by admin

American multinational General Electric (GE) is suing pump maker Danfoss after the Jutland-based company was found guilty of participating in a price-fixing cartel, financial daily Børsen reports.

Danfoss was fined 669 million kroner in December 2011 after being found guilty by the EU of collaborating with its competitors to fix the prices of refrigerator compressors.

Following the verdict GE, a significant consumer of refrigerator compressors, attempted to reach an out of court agreement with Danfoss and several other of the guilty companies over losses incurred from buying overpriced compressors since 1996.

While GE managed to reach a deal with two of the companies, negotiations with Danfoss, Whirlpool and ACC all failed, leading GE to file civil lawsuits against all three in a Kentucky court two weeks ago.

“Negotiations with the other conspirators continued, but in February 2013 it became clear that GE’s demands could not be satisfactorily resolved without a court case,” John McCall, a lawyer representing GE, told Børsen.

GE has not yet placed a figure on the losses, but regardless of the outcome GE could be entitled to three times the value of the estimated losses, according to Børsen.

Danfoss managing director Niels Bjørn Christiansen argued that Danfoss inflicted no financial damages on GE because the company never followed through with implementing the agreed prices.

“We haven’t set aside money for the loss of a civil suit because after examining our operations we drew the conclusion that [the price fixing] had no effect [on turnover] and civil cases depend on proving that a loss had occurred,” Christiansen told Børsen.

In the court documents filed by GE and obtained by Børsen, GE claims that the cartel, which controlled 85 percent of the US market, increased the cost of compressors, divided up the market and closed factories to reduce supply.

GE claims it can prove that Danfoss attempted to keep prices high by closing a factory in Mexico and reducing production at a factory in Flensburg, Germany, while also attending and organising meetings of fellow conspirators.

The cartel was exposed after one of the companies involved, Brazil-based Tecumseh, decided to co-operate with authorities in exchange for a lesser sentence.

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