Commission fines companies in copper plumbing tubes cartel
European Commission - IP/04/1065 03/09/2004
Brussels, 3 September 2004
The European Commission has decided to fine a group of companies a total of € 222,3 million for operating a cartel in the European market for water, heating and gas tubes for a period of up to 12 years. These are Sweden’s Boliden group, Halcor S.A. of Greece, HME Nederland BV, the IMI group (UK), the KME group (Germany, Italy and France), Mueller Industries, Inc. (USA, UK and France), Finland’s Outokumpu and Wieland Werke AG of Germany. Today’s decision takes to 4,55 billion euro the total amount of fines imposed by the present Commission for antitrust violations in the European Union since it took office in October 1999.
“Because of the companies’ illegal behaviour, European consumers paid more for plumbing replacement work or when buying a house than if the healthy forces of competition had been at play. Today’s decision again illustrates the relentless fight against cartels by this Commission”, said Competition Commissioner Mario Monti.
The Commission concluded that the main producers of the copper water, heating and gas tubes that go into houses and buildings operated a cartel between June 1988 and March 2001 in most of the European Economic Area in a clear breach of EU Treaty and EEA Agreement rules that outlaw restrictive business practices (Articles 81 and 53 respectively).
The market was worth around € 1.15 billion a year in 2000, the cartel’s last full year.
The Commission was informed about the illegal behaviour in January 2001, when Mueller Industries approached it in application of the 1996 Leniency Notice, which enables a company to escape a fine if it is the first to reveal the existence of a cartel.
The investigation carried out by the Commission has shown that the companies operated a well-structured, classic cartel with codenames, meetings in anonymous airport lounges and the clear objective to avoid competition through the allocation of production volumes and market shares, the setting of price targets and increases as well as other commercial terms for plain copper plumbing tubes (and, as far as the KME and the Wieland groups are concerned, plastic-coated copper plumbing tubes).
“The objective is to keep the prices in the high price level countries high – if possible to increase even more”, wrote one of the companies in notes taken during the first European-wide meeting, on 29 September 1989, at the “Airport Forum” in Zurich, where they also agreed to meet again, less than a month later, in the negotiation room of the Amsterdam airport. At the meetings they would also monitor implementation of the illegal arrangements by exchanging information on sales, orders, market shares and pricing.
The cartel was organised at three levels, the first and oldest being the so-called Sanco club -- Sanco being the brand name for a quality copper plumbing tube – initially between KME and Boliden and later also including Tréfimétaux, Europa Metalli and Wieland.
Outokumpu and IMI joined a year later, in September 1989, and Mueller in 1997, creating what became known as the "group of the five" largest European producers: the three plus Wieland and KME (including subsidiaries Tréfimétaux and Europa Metalli).
In view of the gravity of the facts, the duration of the violations, the relative size of the companies and their relative degree of cooperation with the investigation, the Commission has imposed the following fines:
- Boliden AB, Boliden Fabrication AB and Boliden Cuivre & Zinc S.A.: € 32,6 million
- Halcor S.A.: € 9,16 million
- HME Nederland BV: € 4,49 million
- IMI plc, IMI Kynoch Ltd. and Yorkshire Copper Tube Ltd.: € 44,98 million
- KM Europa Metal AG, Tréfimétaux SA and Europa Metalli SpA: € 67,08 million
- Mueller Industries, Inc., WTC Holding Company, Inc., Mueller Europe Ltd., DENO Holding Company, Inc. and DENO Acquisition EURL: € 0
- Outokumpu Oyj and Outokumpu Copper Products OY: € 36,14 million
- Wieland Werke AG, Austria Buntmetall AG and Buntmetall Amstetten Ges.m.b.H.: € 27,8411 million
The fines on Outokumpu, the KME group, Wieland and Halcor reflect a reduction for providing information voluntarily, which helped establish the infringements. Outokumpu’s fine also reflects the fact that the company was already caught violating competition law in 1990 in the stainless steel cartel (see IP/90/584).