Competition Authority Announces Elevators and Senior Companies Intending to File Criminal Indictments on Coordination • Former Antitrust Commissioner: "The Decision Has Big Implications, This Is Open for Classical Claims"

• Elevators in office building // Archive photo: Ronnie Schitzer

The Competition Authority has notified the elevator companies Schindler, Kona, Electra Elevators, Fasting, Kfir and Alad, and their senior officers that it is considering charges against them, subject to a hearing. This is a suspicion of a market sharing arrangement and price coordination between the companies.
According to the hearing, between Schindler, Kona, Electra and Kafir, and Alard, there were non-compete arrangements on several clients, one of whom provided service.

The Competition Authority convened a hearing before filing indictments with the CEOs of Kuna, Electra Elevators, Kfir and Redd, and the former CEO of Schindler. We were also invited to hear some other VP's at other companies and offices. According to the suspicion sent to them yesterday and published yesterday, there were non-compete arrangements between Schindler and Al-Rad, between buyer and Al-Rad, between Electra and Fast-Al-Al, between Kfir to the Red and Kfir to Schindler.

Arrangements of years

It is suspected that the prohibited arrangements continued between the companies for many years. For example, the arrangement between a buyer and a parent company has been going on since 2013 and the arrangement between a company and an electra lasted at least since 2015. These arrangements lasted until at least the opening of the investigation last year.

The letter of suspicion attributes to non-compete arrangements involving companies and their managers not to compete with their existing customers. Company representatives used codes between them to disguise coordination.

It is suspected that the prohibited arrangements lasted for many years // Photo: Getty Images

In addition, those involved adjusted the bids to submit to a customer receiving service from a competing company, and sometimes gave internal instructions to their employees not to submit a competing offer. The various representatives reached consensus on meetings, talks and messages they sent to each other.
The case was investigated by the Competition Authority's Investigation Department, and the open investigation was opened in March about a year ago. At the end of the hearing, a final decision will be made on whether to file charges against the suspects.

"Deny suspicions"

The report states that, "following an immediate report by the Company on March 13, 2019 regarding an investigation by the Competition Authority, the Company wishes to update that on January 26, 2020, a Competition Authority notice to which suspicion was attached was received, stating that there is suspicion of violations of the Company's Economic Competition Law and Penal Code. Certain employees in the Elevator Company's Elevator Division Ltd. ('Tzum'), a wholly owned subsidiary of the Company and certain employees of Tzum.

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The company did not receive the investigative materials, and the attorneys on its behalf cannot at this time address suspicions or assess the likelihood that the defense claims will be accepted, which support the failure to file such indictments. "Attorney Avner Finkelstein of Gornitzky & Co.'s office said in response" And Mr. Jackie Goldman firmly denies the suspicions against them, and they are assured that after the hearing, the Competition Authority will hold them back. "

Electra, which acquired the fasting operation in 2015, did not respond yesterday to Israel Today, but yesterday issued a report to the stock exchange regarding its suspicions. Schindler, Buyer and Kfir did not respond until the issue was closed.

Former Antitrust Attorney Dror Strum and now Director of the Institute for Economic Planning, told Israel Today that "cartel cases need to be understood that the meaning of prosecution includes the possibility of imprisonment. These are the things that executives are going to jail." This charge will not end with fines or service. These are the biggest lift companies in the market. Anyone who looks professionally at things sees that the cartel is under aggravating circumstances. These are senior executives who have been this way for years. "

"Elevator Cartel" // Archive photo: Ronnie Schitzer

Attorney Strum added that "this also has a significant impact on the civilian side. A company that had a tender that turned out to be a mock auction could sue the company that provided it with the elevator - a claim on the order of tens of percent of the order value, because prices are likely to be significantly inflated; After all, cartels do not need to inflate significant prices unnecessarily. "

The meaning to the individual

According to Strom, "the individual also has significance. In antitrust or competition law, the citizen can also sue. Residential buildings, malls and companies roll the costs to the final customer, which means that every customer has paid some of these costs - so that the final consumer also has the right to claim. This is a fruitful pillow for class action lawsuits. "

Adv. Strum notes that "this very hearing is a warning sign for all the big companies, who think they are too big to reach. The Competition Authority's announcement hints at wiretapping. Many executives think they are sweeping a secret in cellular, and now they can understand that they are on target. "