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Business

Business Briefs

German insurers under fire from cartel office; Federal Labor Office in the red; Munich Airport flying high; Chipmaker Infineon posts a loss; record number of businesses going bust in Berlin.

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Allianz and six other major insurers are accused of price rigging.

German insurers accused of price fixing

After a year-long probe, Germany's Federal Cartel Office is accusing seven German insurers of illegal price fixing. The antitrust authority has sent notices to seven leading companies informing them they face fines in the hundreds of millions of euros if the charges of collusion are eventually proved. According to the Financial Times Deutschland, the seven -- Allianz, Axa, Aachener und Münchener, Gothaer Allgemeine, Victoria, Gerling and HDI -- are suspected of first agreeing to fix premium levels for industrial clients in 1999. Over the next several years, premium rates for those clients rose dramatically, and in 2002 the insurance industry saw profits rise by 12 percent, even though growth in the sector had been stagnant for years due in part to intense competition. The insurers in question have several weeks to answer the accusations. Allianz has denied the charges, while at the same time admitting that some companies might have unwittingly contravened antitrust regulations. A spokesmen for Allianz said the insurer had already arranged for reserves to cover possible fines.

Federal labor office facing deficits in the billions

During the first half of 2003, Germany's Federal Labor Office racked up a deficit of €5.2 billion ($5.9 billion). The disbursements for unemployment benefits alone surpassed expectations by 25.2 percent. The deficit could further rise if the economy does not meet government growth predictions of .75 percent. The Labor Office predicts it will need a federal grant of up to €7.5 billion by the end of year. All in all, the Labor Office has paid out €15.3 billion in unemployment benefits during the current year. Part of the reason for the ballooning deficits, according to a Labor Office spokesman, is the decline in the number of contributors paying into the system through payroll deductions. Revenues are €873 million under needed levels. Labor Office head Florian Gerster has not ruled out the possibility that Germany's unemployment rate could surpass the 5 million mark at the end of this year.

Munich airport catches an updraft

After a decline in the number of passengers passing through its facility last year, Munich's International Airport is enjoying an upsurge in 2003. While passenger traffic in Frankfurt and at most other major European airports has declined, Munich is experiencing the fastest growth among Europe's top ten. In the first six months of this year, the airport counted 11.6 million passengers passing through its gates, up 7 percent from the same period last year. The number of takeoffs and landings grew by 6 percent and air freight was up by 2 percent. Airport Director Michael Kerkloh said Munich's reserve capacity and advantageous location were fueling the growth spurt.

Chipmaker Infineon suffers quarterly loss of €116 million

Munich-based computer chipmaker Infineon announced on Tuesday it lost €116 million ($135 million) in its third fiscal quarter that ended on June 30, versus a loss of €76 million a year earlier. The new numbers are the ninth straight quarterly loss reported by Europe's second-largest chipmaker. Despite the poor showing, Infineon has done better than many analysts had expected. In the second quarter of this fiscal year, the company posted losses of €328 million. Infineon executives said the outlook was finally brightening for a semiconductor industry that has taken a battering over the past two years. The company issued an upbeat forecast, saying that improving productivity, cost-cutting and continued structural reforms would keep losses down. Executives also said they saw rising demand for the company's most important product, computer memory chips, and expected the market to move in a positive direction throughout the rest of this year.

Business failures in Berlin at record highs

The number of firms going out of business in the German capital has reached new highs. According to Berlin's Statistical Office, 459 companies declared insolvency in April, an increase of 47.5 percent over the previous month. Housing and property management companies have been especially hard hit, as have the construction and services industries. According to the Statistical Office, the reason behind the increase in business failures is the economic downturn that has held steady over the past three years and shows no sign of slowing. A survey carried out in May by the Berlin chamber of commerce found that nearly one in two companies in the capital are experiencing falling turnover and depressed revenues. The trend in Berlin reflects the nationwide situation. Germany as a whole experienced a record number of insolvencies in April.

Compiled with information from wire services and other sources.