BBA fined of 100 million euros for forming a monopoly group to buy steel

Germany’s anti-monopoly agency said on November 21st it would fine bmw, Volkswagen and Daimler, the country’s three biggest carmakers, a total of 100m euros for forming a cartel to buy steel. Cartel organizations are one of the most common monopoly organizations in capitalist countries and are composed of various product producers. In order to obtain high profits, it has agreed to form a monopoly in one or more aspects, such as dividing the market, setting the output of goods, and setting the price of commodities.

On the other hand, it maintains its independence in the economic activities of commodities. Because the monopoly organization has a strong multifaceted attributes, so it is not easy to be investigated by the market and government regulators, but often can make huge profits.

100 million euros fined for forming a monopoly group to buy steel BBA

German prosecutors say that since 2004 and 2013, car companies such as BMW, Volkswagen and Daimler have regularly organized meetings with steelmakers and other companies in the relevant supply chain to discuss uniform steel surcharges and develop pricing strategies.

The move has led to a reactive approach to product pricing by steel producers and has also affected profitability for their companies. And, as the car market goes down, the overall auto industry is performing less well, and the profitability of steel producers has declined. In the end, steel suppliers unilaterally changed pricing patterns and even threatened to stop supplying steel products, and the carmakers agreed to the demands of the steel producers.

German prosecutors say the illegal steel trade caused by the cartel began in 2016. BMW, Volkswagen and Daimler are understood to have accepted the fines. BMW said it would pay a total fine of 28million euros. A Daimler spokesman said the company would pay a fine of 23.5 million euros.

Volkswagen Group, on the other hand, declined to say how much it would pay the fine it paid, but said it welcomed the conclusion of the Incalt investigation and the transparency of the law.

In addition, the German cartel office says steel products are often used to make components such as crankshafts, gears or steering rods, often worth less than 1 per cent of the total value of cars. In other words, the penalty losses far exceeded the profits of the cartels.

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