Four years ago several firms manufacturing high voltage cables, and US investment bank Goldman Sachs, were fined US$371 million for running a cartel. Sputnik spoke to a source in the cable industry who says a small group of companies still control it and charge extortionate prices to data centers, solar and wind farms and other hi-tech businesses.
In 2014 Prysmian, Nexans and six other high voltage cable manufacturers were fined 302 million euros ($371million) by European Union regulators.
The EU’s anti-trust authority said the power cable cartel ran for 10 years from 1999 with the companies agreeing between each other to allocate customers and share markets, rather than competing and offering lower prices.
The European Commission found Goldman Sachs, who took a seat on the board of Prysmian after it was demerged from Italian tire maker Pirelli, played a key role in the cartel.
Goldman Sachs acquired Prysmian via one of its private equity funds in 2005 but has since sold its holding.
‘Nothing Has Changed’
But Bill Sinclair, a cable supplier in the UK, said very little has changed in the cable industry since the 2014 fine.
“It was a slap on the wrist for these companies. The cable industry globally is worth $150 billion so that fine was a drop in the ocean to them,” Mr. Sinclair told Sputnik.
High voltage cables, which usually run underground, are designed to allow electricity to travel long distances without losing voltage and are essential to connect an energy supply, be it a provider such as a solar farm or a user like a factory or computer center.
The biggest cost in the manufacturing is for the copper that is the main component but another major factor is that manufacturers need very expensive switchgear equipment in order to test it before they can sell it.
The other companies involved were Danish company NKT Holding, Exsym Corporation, from Japan, J-Power Systems, LS Cable and Viscas Corporation from South Korea, and US giant, General Cable Corporation, through its subsidiary Silec.
“We do not believe that there is evidence in the Commission’s allegations. We have not in any way been involved in any form of cartels. Therefore, we disagree with the decision and we will appeal,” NKT Chief Executive Michael Lyng told Reuters at the time.
Cable Companies Carved Up the Pie
In their ruling the European Commission claimed the cable companies had met in secret and carved up the pie to suit themselves.
“Part of this plan was to allocate important high voltage power cable projects in the European Economic Area, including large infrastructure and renewable energy projects such as offshore wind farms,” said the European Commission.
Mr. Sinclair said Britain was particularly badly affected by the restrictions in cable supplies because the UK’s cable industry had been decimated and “asset-stripped”.
He said successive British governments had turned a blind eye as the UK cable industry was run down over the years.
Brexit Fears for UK Firms Importing Cables
“There used to be loads of cable factories in Britain but they closed them all down and outsourced to the Qataris and then there was a lot of asset-stripping,” said Mr. Sinclair.
“British businesses buy between £3 billion ($4.14 billion) and £5 billion ($6.9 billion) worth of high voltage cable every year. It is needed for hospitals, data centers, railways and anything to do with energy supply, including renewable energy. But Britain has lost our own cable industry, it has been run down and now 90 percent of our cables comes from Turkey, Egypt and the European Union,” Mr. Sinclair told Sputnik.
In 1999 British firm BICC sold off its cable business to General Cable, of the US, for £275 million (US$379 million).
Ironically General Cable was sold to Prysmian in December last year for US$3 billion, a deal which was brokered by Goldman Sachs.
Mr. Sinclair said Brexit could now be a big problem for British businesses and energy suppliers as imports could be hit with WTO tariffs if the UK is forced to leave the EU customs union without any replacement regime.
He said successive UK governments were to blame because they had failed to prevent “parasitic activities” which have eaten away at strategically vital industries like high voltage cables.
Sourse: sputniknews.com
