General Electric (NYSE:GE) is in an uproar as it kicks up a lawsuit against Whirlpool (NYSE:WHR) and two European suppliers over an alleged pricing cartel that’s been going on for years.
GE’s lawsuit is against Embraco North America Inc. (a Whirlpool-controlled venture), Danfoss A/S in Denmark, and Household Compressors Holding SpA in Italy. GE has accused them of setting prices at “supra-competitive levels” and claims it was hurt by their actions.
A Whirlpool spokeswoman responded, saying that the company had no comment on the lawsuit other than that “Embraco does not believe that it has caused any harm to GE.” The other two companies in GE’s accusations were not available for comment.
This would not be the first time something like this has happened in the industry. In fact, just 3 years ago, Embraco and Panasonic (NYSE:PC) were charged $140.9 million in criminal fines for fixing prices of refrigerator compressors from October 2004 to December 2007.
GE claims that Embraco has done it again, only with different partners in crime. It says one of the tactics was to agree on an extra high price increase, then lower the price through agreements so that it was still artificially high.
According to the claims, GE believes it has not only been made to overpay, but has also been deprived of innovation, which is detrimental to businesses in the technology industry and may have damaged revenues and profits for GE.
GE had a slow 2012 for its appliance business — which it had previously tried to sell — and may see the lawsuit as a means for making up some of the money, as it is asking for 3 times the monetary damages as compensation.
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