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Price-Fixing Glass Makers Fined: Facts Overview
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The European Commission has imposed fines, totalling € 486 900 000 on Asahi, Guardian, Pilkington and Saint-Gobain for coordinating price increases and other commercial conditions for deliveries of flat glass in the EEA, in violation of the EC Treaty’s and the EEA Agreement’s ban on cartels and restrictive business practices (Article 81 of the EC Treaty and Article 53 of the EEA Agreement).
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 Between early 2004 and early 2005, Asahi, Guardian, Pilkington and Saint-Gobain managed to raise or otherwise stabilise prices through a series of meetings and other illicit contacts. The case began on the Commission's own initiative. This is the second case in which the Commission has applied its new 2006 Guidelines (see IP/06/857) for the calculation of the fine.
Competition Commissioner Neelie Kroes said: "The Commission will not tolerate companies cheating consumers and business customers by fixing prices and depriving them of the benefits of the Single Market. Fortunately this cartel was discovered by the Commission with the help of the Member States' National Competition Authorities, in the context of the European Competition Network. This case demonstrates clearly the benefits of enhanced co-operation between the Commission and the National Competition Authorities ".
The Commission started this investigation on its own initiative on the basis of market information provided by several Member States' National Competition Authorities. Dawn raids were carried out in February and March 2005 at the premises of Asahi's and Guardian’s European subsidiaries and the premises of Pilkington, Saint-Gobain and the European Association of Flat Glass Producers. After the first raid Asahi and its European subsidiary Glaverbel (recently renamed “AGC Flat Glass Europe”) made an application under the EU 2002 Leniency Notice. They co-operated with the Commission and provided additional evidence. The Commission has powers to enter premises without notice and search documents and paper and electronic files.
The cartel
The cartel concerned flat glass for use in the construction sector, which includes basic float glass, low emissivity glass (i.e. glass coated with microscopically thin metal or metallic oxide layers to improve its insulating qualities), laminated glass and unprocessed mirror glass. The Commission states that in 2004 these companies' sales to independent customers in the EEA amounted to €1 700 million. The main customers of flat glass for use in the construction sector are processors, which transform this glass into finished products, such as double-glazing windows, fire-resistant glass and mirrors, all of which are commonly used in large buildings but also in private houses and apartments. It is these processors who may most of all have lost out.
Asahi, Guardian, Pilkington and Saint-Gobain, with a combined share of at least 80% of the flat glass market in the EEA, organised several rounds of price increases, fixed minimum prices and other commercial conditions in an endeavour to raise or otherwise stabilise prices. They also monitored the implementation of the price increase agreements, the Commission says. Although the full judgment is awaited it seems clear that significant infringement of the competition rules was found.
The evidence uncovered describes in detail several meetings in restaurants and hotels in different European countries during which Asahi, Guardian, Pilkington and Saint-Gobain discussed and agreed the level and timing of price increases (including which undertaking was to lead the price increase), target prices, minimum prices and/or exchanged sensitive commercial information.
Fines
The fines were:
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Name and location of undertaking
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Fine*
(€)
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Asahi (Japan)
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65 000 000
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Guardian (USA)
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148 000 000
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Pilkington (UK)
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140 000 000
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Saint-Gobain (France)
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133 900 000
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TOTAL
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486 900 000
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(*) Legal entities within the undertaking may be held jointly and severally liable for the whole or part of the fine imposed.
Action for damages
Any person or firm affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages, submitting elements of the published decision as evidence that the behaviour took place and was illegal. Even though the Commission has fined the companies concerned, damages may be awarded without these being reduced on account of the Commission fine. A Green Paper on private enforcement has been published. For more information on the Commission’s action against cartels, see MEMO/07/520.
Competition lawyers such as the writer’s firm have undertaken damages actions for the corporate victims of cartels such as this. Where there is a prior infringement proven by the competition authorities the litigation to recover damages is known as a “follow on” action which can rely on the finding of infringement and evidence before the Commission. This makes cases simpler than where there is no such finding. The writer had a 50 day trial in one competition damages case in the UK, the first to reach a full trial in the English courts, where there was no prior decision, simply an EU statement of objections and the case was harder to prove.
The UK Office of Fair Trading has been consulting on and has now published its proposals for making damages actions easier in the UK a trend also being followed by the European Commission. A number of different law firms and even private equity companies and US anti trust litigators are emerging within the UK interested in pursuing competition damages cases of this kind. Sometimes the case can be run on a no-win, no-free basis. Any buyer of flat glass from the companies concerned which as paid more for the product than would have been the case had the goods been sold in a free market has a potential right to recover the difference from the suppliers concerned.
Action
• If at risk of breach of the EU or local competition laws check current agreements and practices and consider introducing a competition law compliance programme and dawn raids policy
• Ascertain whether flat glass has been bought from any of the defendants in the period the cartel operated
• Consider making a claim for damages perhaps in conjunction with other victims too
• Include in commercial contracts and conditions of purchase from buyers in future a warranty that there are no illegal arrangements of this type in place and an indemnity or promise that if there is a breach of such a clause the suppliers will pay all the resulting costs to the buyer
• Look out for behaviour which indicated collusion in future such as prices suddenly coming into line having been widely divergent or listen out for rumours in the trade.
Contribution of © European Community, 2007 and Susan Singleton (lawyer)
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Photos: GlassOnWeb.com
Last review: December, 2007 |
Total comments: 5 Showing: last 3
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| Other Net Sources |
Singletons
Susan Singleton, LLB, Solicitor, Singletons.
EU
EU web page.
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