Everything about Diehl, the German group fined by the EU Antitrust for a cartel on hand grenades
For fourteen years two companies shared the hand grenade market. The German group Diehl will now have to pay 1.2 million euros, while its Swiss competitor Ruag will be able to avoid the fine. It is the first time that the EU Antitrust intervenes in the defense industry sector
For fourteen years two European companies shared the hand grenade market.
On September 21, the European Commission fined the German company Diehl 1.2 million euros for participating in a cartel on the sale of hand grenades together with its Swiss rival Ruag. Both companies admitted their involvement in the cartel and agreed to settle the case.
Ruag avoided the fine because it disclosed the cartel to the Commission under the leniency program. Ruag avoided a fine of 2.5 million euros; Diehl benefited from the 50% reduction because he cooperated with Brussels, which also applied a 10% reduction. EU officials raided the company's premises to collect evidence for the investigation in November 2021.
“This is the first antitrust decision in the defense sector,” said European Competition Commissioner Didier Reynders, quoted by Spiegel . “At a time when geopolitical circumstances are changing, this shows that we will not tolerate cartels in any sector of the economy, even strategic ones.”
All the details.
WHAT HAS THE EU ANTITRUST FOUND
The Brussels antitrust investigation revealed that the two manufacturers have been sharing domestic markets in the European Economic Area for almost 14 years.
According to the EU Antitrust note, Diehl and Ruag agreed to sell hand grenades only in the countries assigned to each other between 2007 and 2021. Only the manufacturer assigned to a certain area could sell military hand grenades there, unless there was the explicit consent of the other.
Hence the decision to impose a fine of 1.2 billion euros on Diehl.
NOT JUST BOMBS, WHAT GERMAN DIEHL DOES
In recent months Diehl has become known as the manufacturer of the Iris-T air defense system, which Berlin supplies to Ukraine mainly to protect Kiev from Russian missile attacks.
Iris-T systems consist of eight surface-to-air missiles mounted on trucks and can shoot down enemy aircraft or rockets. The Iris-T, produced by the Diehl Degense division, can hit missiles at an altitude of up to 20 kilometers and at a distance of up to 40 kilometers. According to Chancellor Scholz, the system allows you to protect "an entire city from Russian air raids". So far, Germany has supplied Kiev with two Iris-T units. Berlin has committed to supplying six more IRIS-T units to Kiev and expects to receive the first of the six systems for its air force in October 2024.
THE PRODUCTION OF THE IRIS-T SYSTEM
And now Diehl Defense aims to significantly increase production of its IRIS-T air defense system to meet growing demand due to Russia's war against Ukraine. Program manager Harald Buschek announced this at the beginning of September.
In 2025, the German company plans to build at least eight systems, this year three to four, the Diehl manager specified, quoted by Reuters . He added that missile production will be tripled this year and further doubled next year, with expected production of around 400-500 missiles starting in 2024.
Before Russia's invasion of Ukraine, only a few Western nations had purchased the system, reflecting a common post-Cold War trend of reducing air defenses as the main threat from Russia was believed to have disappeared, Reuters further notes. Now, member countries of the Atlantic Alliance are rushing to order the Iris-T for their armies, with several countries on NATO's eastern flank, such as Estonia and Latvia, expected to sign contracts in the coming weeks.
THE ACTIVITIES OF SWITZERLAND RUAG
The state-owned Ruag company is Switzerland's main arms exporter. As already mentioned, the Swiss company, owned by the Confederation, avoided a fine of 2.5 million euros since it revealed the cartel to the Commission under the leniency programme.
In 2018, Ruag came into the spotlight following reports that its hand grenades ended up in the hands of ISIS in Syria.
As Swissinfo recently pointed out, Switzerland's neutrality laws prohibit the export of war material to countries in conflict. This also applies today to the war in Ukraine. Switzerland has not allowed exports to Ukraine since Russia invaded Crimea in 2014.
In past years, the Swiss government has reduced arms exports to the United Arab Emirates and reviewed sales to other countries following an investigation into the discovery of Swiss-made hand grenades in Syria. The results of a joint Swiss-UAE investigation found that the grenades detected in Syria were part of a shipment to the Emirates in 2003 and 2004.
In a 2019 statement, Ruag claimed that the hand grenades may have been among 250,000 delivered 15 years earlier to the United Arab Emirates, before being transferred to Syria.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/tutto-su-diehl-il-gruppo-tedesco-multato-dallantitrust-ue-per-un-cartello-sulle-bombe-a-mano/ on Fri, 22 Sep 2023 06:10:50 +0000.