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Feds opens probe of cooling equipment makers

Date: 2/19/2009

By STEPHEN MANNING
AP Business Writer

WASHINGTON (AP) — The Justice Department said Thursday that it has opened an antitrust investigation of the compressor industry, part of a global probe of possible price fixing and other anticompetitive practices at companies that supply the cooling parts for appliances like refrigerators and air conditioners.

Authorities in Europe and Brazil also raided offices of several compressor producers this week as they investigated a possible global cartel among companies that make the equipment.

In the United States, home appliance maker Whirlpool Corp. said Thursday that it received a grand jury subpoena earlier this week and that investigators visited company facilities in Brazil and Italy. Compressor manufacturer Tecumseh Products Co. said on Wednesday that it was subpoenaed by the Justice Department and received a request for information from Brazilian authorities.

Tecumseh said the requests related to pricing issues.

Justice Department spokeswoman Gina Talamona confirmed that authorities were probing “anticompetitive practices” in the compressor industry and were working with foreign investigators. She did not provide any further details.

Compressors are part of the system that creates the cold air that keeps food fresh or frozen. It compresses cooling fluid then passes it through the network of coils commonly found on the back of refrigerators.

Both Tecumseh, based in Ann Arbor, Mich., and Benton Harbor, Mich.-based Whirlpool said in statements that they planned to cooperate with investigators and that no charges were pending against them or any employees.

The companies operate through subsidiaries in Brazil and do a substantial amount of business in the South American country. About 12 percent of Whirlpool’s 2007 sales were in Brazil, according to company regulatory filings. Tecumseh had Brazilian sales of $194 million in 2007, roughly 17 percent of the company’s global sales.

Tecumseh spokeswoman Teresa Hess said the company sells products to Whirlpool, including a small amount in the Brazilian market, even though the two are competitors.

Brazil’s justice ministry said in a statement that authorities seized documents in the southeastern state of Sao Paulo and southern state of Santa Catarina as part of an investigation of a possible cartel of companies over compressors used in refrigerators, air conditioners and water fountains.

The investigation began near the end of 2008 after one of the companies allegedly involved advised authorities of the cartel in exchange for administrative and criminal immunity. It includes Brazil’s federal police, the justice ministry and the Sao Paulo state prosecutor’s office.

The justice ministry statement said the unidentified companies allegedly agreed to raise prices and traded commercially sensitive information, hindering free competition. The negotiations allegedly took place through e-mails, phone calls and meetings, including at restaurants and hotels.

The Danish group Danfoss S/A said that it was being investigated by antitrust authorities in Germany, Denmark and the United States on suspicion that it was part of a global cartel. Investigators visited company facilities in all three countries, Danfoss said. The company said it was certain that top management was not taking part in any form of collusion.

European authorities did not identify the other companies under investigation.

Shares of Whirlpool fell $2.78, or 9.6 percent, to close at $26.15, while Tecumseh shares rose 24 cents to close at $6.84.
——

Associated Press Writer Tales Azzoni in Sao Paulo contributed to this report.

Copyright 2009 The Associated Press.


Attorney Gordon Johnson :: g@gordonjohnson.com :: :: Facebook :: 800-992-9447
Past Chair Traumatic Brain Injury Litigation Group, American Association of Justice

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