Pirelli to appeal EC cable cartel fine

Pirelli & C. S.p.A states that it will appeal the European Commission’s decision regarding cable cartel activity. While the Commission does not directly name Pirelli as a participant in an alleged cartel in the underground and submarine power cable market, it deems the Italian company “jointly and severally liable” as Pirelli owned alleged cartel protagonist Prysmian Cables and Systems (formerly Pirelli’s Cables and Systems division) until 2005, and therefore “exercised a decisive influence” over the business for the first six years of the decade-long cartel. The European Commission has imposed a shared fine of €67.31 million on Pirelli and Prysmian.

At the centre of Pirelli’s appeal will be whether this “parental liability” principle can be applied to the company. In a statement released yesterday, Pirelli & C. SpA states that after the completion of its own legal analysis, which was supported by external legal opinion, it “firmly believes that there are no grounds” to charge it with parental liability and that, as it denies involvement in the alleged wrongdoing of its former subsidiary, the ultimate full responsibility for the violation – and payment of the fine – lies solely with the company directly involved in the alleged infringement. For these reasons, Pirelli says it expects no financial impact from the European Commission’s decision.

The European Commission’s investigation into cartel activity began in 2009 and investigated alleged dealings dating back ten years. The investigation concerned most of the sector’s global key players, including Prysmian Cables and Systems, as well as their controlling companies, which – in the case of Prysmian – included Pirelli, which owned the company’s share capital from 1999 to 2005, and Goldman Sachs, to whom Pirelli sold the cable business in 2005.

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