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Commission fines companies in Spanish raw tobacco market

European Commission - IP/04/1256   20/10/2004

Other available languages: FR DE ES IT

IP/04/1256

Brussels, 20 October 2004

Commission fines companies in Spanish raw tobacco market

The European Commission has fined five companies active in the Spanish raw tobacco processing market a total of € 20 million for colluding on the prices paid to, and the quantities bought from, the tobacco growers in Spain. The concerned processors of raw tobacco are Compañia Española de Tabaco en Rama (Cetarsa), Agroexpansión, World Wide Tobacco España (WWTE), Tabacos Españoles (Taes) and Deltafina, the Italian tobacco processor which is also the main buyer of tobacco in Spain. The Commission also imposed small fines on the tobacco growers for engaging in collective price negotiations.

The agriculture sector is not immune from competition rules. The behaviour of the Spanish companies and Deltafina is not covered by the Common Agricultural Policy and is also in violation of EU rules banning price fixing agreements and other behaviour which restricts competition,” commented Competition Commissioner Mario Monti.

Between 1996 and 2001, Cetarsa, Agroexpansión, WWTE, Taes, i.e. the entirety of the processing sector in Spain, together with Deltafina fixed the prices to be paid to growers and shared the quantities of raw tobacco that each of them would buy at the time of delivery.

“...Everyone wants peace... an agreement on prices is not possible without an agreement on quantities,” wrote WWTE to Deltafina in 1997, according to a document in the Commission’s file. The processors’ cartel was reinforced in 1998 through a sophisticated enforcement system of exchanges of information and compulsory tobacco transfers.

During the same period, the unions representing the Spanish tobacco growers (ASAJA, UPA, COAG and CCAE[1]) agreed among themselves price ranges and minimum prices to be later negotiated with processors for introduction in the “cultivation contracts”, which provide a general price framework to be used later when the tobacco is delivered to fix the final prices.

The behaviour of all the companies cannot be imputed to the European Union’s Common Organisation of the Market in raw tobacco.

As the conduct is a very serious breach of Article 81 of the EU treaty that took place in a market of relatively limited size (€ 25 million per year), the decision imposes the following fines[2]:

Deltafina EUR 11,880,000

Cetarsa: EUR 3,631,500

WWTE EUR 1,822,500

Agroexpansión EUR 2,592,000

Taes EUR 108,000

ASAJA EUR 1,000

UPA EUR 1,000

COAG EUR 1,000

CCAE EUR 1,000

Deltafina got the highest fine because it is the biggest buyer in the Spanish tobacco processing sector and also acted as the cartel’s leader. The fines on the processors reflect a reduction for co-operating with the Commission’s investigation.

The Commission has decided to impose only a symbolic fine on the tobacco growers owing to the role played by the Spanish regulatory framework in this case. This circumstance was also taken into account in calculating the processors’ fines.

Background

This is the second time that the Commission takes a decision with fines in the agricultural sector. In April 2003, the Commission also imposed fines on French federations in the beef sector for having taken part in an agreement to set a minimum price for some categories of beef and to suspend or limit imports into France[3].


[1] Asociación agraria de jóvenes agricultores (ASAJA), Unión de pequeños agricultores (UPA), Coordinadora de organizaciones de agricultores y ganaderos (COAG) and Confederación de cooperativas agrarias de España (CCAE).

[2] The parent companies of WWTE (Standard Commercial Corporation, Standard Commercial Tobacco Co. Inc. and Trans-continental leaf tobacco Corporation Ltd.) and of Agroexpansión (Dimon Inc.) are jointly and severally liable for the fines imposed on their subsidiaries.

[3] See IP/03/479 of 2 April 2003


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