Investigate if there is a “pact of steel” in Germany

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assembly line of Bosch

on June 23, dozens of agents of the German federal office for competition (Bundeskartellamt) registered the headquarters of several manufacturers and suppliers in the country, without disclosing names. Are the spokespersons of the companies named have revealed that they are being object of research, something nothing wrong a priori.

The spokesperson of General Motors has denied that Opel is being investigated, so that may be another manufacturer with a plant in the country. There would not be ruled out that the case of Ford, which has two factories in: Saarlouis and Cologne, although it may be a third major supplier.

investigates whether these companies have formed a cartel to agree on prices, but instead of doing it on their products, they would have done on their raw materials, in this case steel. In other words, the six companies that may have agreed the maximum price at which to buy the steel to the iron and steel industry of the country, to gain a competitive advantage.

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the Factory of Dingolfing (BMW)

According to data from the World Steel Association, is used an average of 900 kg of steel per car, is the most widely used material. In recent years, we are combining steels of different grades of resistance, but is also sometimes used aluminum or carbon fiber. The goal is to reduce the weight of the car.

If you use harder materials -that is to say, with increased torsional stiffness – can be used in less quantity to the weight, so the engines will have to make a smaller effort. That translates directly into a reduction of consumption and pollutant emissions, as well as the carbon dioxide (CO2).

But in the cars of mass production the steel is and will remain the king of the materials. The manufacturers make huge purchases in the steel industry, and with years of advance. If there is a covenant of prices, the economic impact is quite considerable.

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Production of the Volkswagen Polo to Landaben, Navarra

The German federation of the steel sold to the automotive industry in its territory, the fourth part of their production in 2015, that is to say, 37.800 million euros. Both sectors work side by side, because they work with steel of specification very specific.

Although the records in the headquarters of the six companies were carried out on the 23rd of June, what we have known today through the agency itself. The process can take between three and five years, so that we will not know for a speedy resolution of this matter.

The German authorities may impose a fine equivalent to 10% of turnover of the guilty. For the moment, the record of punishment is what led companies, cement producers, who were condemned to pay 700 million euros, although the amount is ended by reducing to 400 million.

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String mounting axis in the plant of Daimler in Hamburg

What is wrong that are agreed upon purchase price?

When independent enterprises agree to agree prices, are forming a cartel, a practice contrary to the competition that is prohibited in the European Union. It is common in the cartels is to set a minimum price for the sale of goods or services, so that no harm between them.

researchers need to find the evidence that they have agreed prices with the steel industry, to which the steel has a more advantageous price. Those who are not within the cartel may have bought the steel more expensive, so that they have higher costs, and have a lower margin if they want to be competitive.

In previous occasions, several companies in the automotive sector have been investigated by agreeing on prices of components, not by the acquisition of raw materials. The steel companies will keep quiet waiting for that to appear more information.