Unfair competition: the Spanish CNC imposes fines to four lift manufacturers

The Spanish Antitrust Authority (Comisión Nacional de la Competencia – CNC) has imposed fines for almost 5 million euros on four elevator manufacturers and installers companies for hindering the business of competitors in the lift equipment maintenance market by employing unfair methods.
With a decision on 11th September, the CNC imposed a fine of 2,845,362 euros to Zardoya Otis, of 1,892,690 euros to Schindler, of 103,533 euros to Eminter and of 25,732 euros to Imem.

These proceedings were opened in 2012 following a complaint from a property owners’ association and a competitor, Citylift, which led to the start of a confidential probe by the Investigations Division.

The CNC has proved that companies under process, when dealing with costumers willing to withdraw from the contract of maintenance for relying on competitors offering more advantageous conditions, provided some information liable to discredit, undermine or denigrate competitors in the lift maintenance and repair market.
In the statements analysed by the CNC, the large companies questioned the technical, professional and economic skills of their competitors not “vertically integrated”, i.e. maintenance enterprises not dealing with production and installation of lifts. These remarks were reported both for not mentioned maintenance companies and for “Citylift”.
Among the libelous declarations, independent maintenance companies lack experience and technical support, have dangerously low priced deals at the expense of quality and safety; to ensure low prices, independent maintainers are accused of using non-original spare parts, or preferring generic pieces which do not guarantee a long service life.
Finally, maintainers have not a prompt access to materials, resulting in long waits for repairs.

The Council took the view that the communications sent by the above-mentioned companies to their clients could only be interpreted as being “intended to discredit and denigrate competitors that were not vertically integrated, pointing out the risks inherent in contracting their maintenance services and making reference to their alleged lack of resources, lack of adequate training and lack of safety measures”.

The CNC pointed out that “unfair acts distort free competition if they affect the ability of other businesses to compete or if they alter the operation of the market by limiting that ability, in this case hindering the consolidation of the small businesses devoted to the maintenance and repair of lifts manufactured and installed by other operators and thereby affecting the public interest”. Moreover, it recognised that “lift manufacturers and installers are vertically integrated operators that start with a competitive advantage in the related lift maintenance and repair market. This market structure, characterised by stronger operators with networks in the retail market, generates entry barriers in the installation and maintenance market, barriers which have been reinforced by the individual behaviour that has been penalized”.

Giving customers negative information on competitors – and even false information like the absence of certain certifications – leaded to a conviction for acts of unfair competition.

As regards to sanctions, as the behavior of the four companies has been qualified as a serious breach of art. 62, paragraph 2, letter c) (“unfair competition”) of the Spanish law on the defence of competition (law 15/2007), the CNC imposed to Otis, Eminter and Imem a fine equal to 1% of its annual turnover, while Schindler was raised to 2% because the aggravating circumstance of creation of “predetermined” models by the company’s management was proven. For the other three companies, the acts of unfair competition were proven to be a “usual practice” in the commercial network, without the input of certain models from the company to be sent systematically in the presence of certain conditions, as evidenced by Schindler.

Acts of unfair competition attributed to the four companies were judged by the CNC as harmful to the public interest to have a competitive maintenance market, because repeated in large-scale and time, and therefore this behavior deserved an administrative penalty by the Authority.

To read the official press release of CNC, please follow this Link.

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