Schaeffler Makes $249 Million Provision for Possible Legal Risk

  • Provision for potential third-party claims in antitrust case
  • Company reiterates 2015 operating margin goal of 12% to 13%

Schaeffler AG is setting aside an additional 230 million euros ($249 million) to meet potential third-party claims after the ball bearings maker was found to collude on pricing with competitors in an investigation by the European Union last year. 

The provision is set to “meet potential claims by third parties in relation to the EU cartel probe that concluded in March 2014,” the Herzogenaurach, Germany-based company said Thursday in a statement. It’ll be accounted for as a one-time charge in fourth-quarter earnings before interest and tax. Schaeffler said it still expects an operating margin of 12 percent to 13 percent for 2015.

Regulators have stepped up their scrutiny on auto-parts makers. In the U.S., companies including Bridgestone Corp. have agreed to pay more than $2 billion in fines. The EU has probes into manufacturers of car safety systems, heating and cooling components and vehicle lighting. Daimler AG, the world’s biggest truckmaker, in December 2014 boosted by 600 million euros a provision for a possible EU antitrust fine for suspected price-fixing related to commercial vehicles.

In the ball bearings case, Schaeffler was fined 370.5 million euros. SKF AB, the world’s largest maker of ball bearings, received a 315.1 million-euro penalty and NTN Corp. had to pay 201.4 million euros. A fifth company to be investigated, Jtekt Corp., received an 86 million-euro fine for blowing the whistle on the cartel and prompting the auto-parts investigation, the EU said. Schaeffler in March 2014 took a 380 million-euro provision after the fine. 

Ball bearings are used in cars and trucks to reduce friction in wheels, gearboxes and air-conditioning systems.

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