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Danfoss fined £77 million by EC for price fixing by German subsidiary

Danfoss has settled with the European Commission over its compressor subsidiary breaking competition rules

Danfoss has settled with the European Commission over its German subsidiary Danfoss Flensburg GmbH, breaking European competition rules from 2004 to 2007. The manufacturer said Flensburg “exchanged information with competitors in an attempt to coordinate prices on certain household compressors and light commercial compressors sold in Europe.”

Niels B. Christiansen, President & CEO of Danfoss, said: “We are distressed that this could happen in the Danfoss name. It goes against everything our company stands for, and I can add that the employees involved no longer work at Danfoss. In addition, we have taken a number of steps to further strengthen our internal control mechanisms and to alert our employees to unethical and unacceptable behavior.”

According to Mr Christiansen, the case shows ‘how difficult it is for companies to discover cases like these within their own walls’. “There was nothing in the profit and loss accounts of the German subsidiary that raised our suspicions. The business was performing poorly for a number of years, and the performance didn’t change in the period during which we now know the violations took place,” he said.

Danfoss said it first became aware of the case when the European Commission made unannounced inspections of several of the company’s offices in February of 2009. It added: “since then the Group has cooperated with the European Commission and the competition authorities in a number of countries in order to get to the bottom of the case. Earlier this year, Danfoss entered a plea agreement with the American Justice Department for $3 million, whereas the competition authorities in New Zealand and Canada decided to end their investigations. Investigations are continuing in Brazil, Mexico and South Africa, and there are pending civil lawsuits in the USA and Canada.”

The manufacturer said that as a consequence of the case, Danfoss has established a new, independent internal audit department that can make unannounced visits to the Group’s companies.

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