Multi-million fines imposed on hydrant cartel

The Bundeskartellamt has imposed fines totalling approx. €15.5 million on six manufacturers and distributors of hydrants and other water pipe fittings, as well as on four individuals involved in illegal price agreements.

The companies involved are Erhard GmbH & Co. KG, Heidenheim an der Brenz, Schmieding Armaturen GmbH, Holzwickede, Frischhut Armaturen und Formteile GmbH, Heidenheim an der Brenz, AVK Mittelmann Armaturen GmbH, Wülfrath, VAG-Armaturen GmbH, Mannheim and vonRoll hydrotec gmbh, Prenzlau. In the German markets for hydrants and other water pipe fittings, such as gate valves and butterfly valves, the participants in the cartel have a combined market share of approx. 70%.

The Bundeskartellamt obtained first indications of the agreements while investigating a cartel of two manufacturers of cast iron pipes. In February 2007 the authority searched nine companies in the hydrants industry. Following the search the companies Erhard, Schmieding and Frischhut filed applications for leniency.

Andreas Mundt, President of the Bundeskartellamt, stated: "The companies agreed on increased list prices, general discounts as well as individual maximum discounts and conditions for specific customers. Directors and sales managers have met regularly, in some cases even since 1995, to exchange competition-relevant information. The cartel agreements have had a very negative impact on competition in the affected markets over a long period of time."

Hydrants are fittings for drawing water from a water pipeline system and are therefore a key element of the fire-fighting sprinkler systems of cities and municipalities. In a water pipeline system, gate valves and butterfly valves make it possible to interrupt or reduce the flow of water from such a system. The manufacturers of hydrants and other pipe fittings distribute their products via the retail sector, in particular via civil engineering retailers, but also sell directly to end consumers such as waterworks, water boards, private water suppliers and water system engineers.

The Bundeskartellamt calculates fines imposed on companies based on the turnover achieved from the price agreement and takes the severity and duration of the offence into consideration. Account is also taken of the economic viability of the individual company. The companies Erhard, Schmieding and Frischhut have had their fines reduced under the Bundeskartellamt's leniency programme as they helped to clarify the accusations. In addition, settlements were agreed with these three companies as well as VAT-Armaturen GmbH, which also reduced the level of their respective fines.

The orders imposing the fines are not yet final and can be appealed to the Düsseldorf Higher Regional Court.