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Brussels, 26 October 2004

Commission fines Coats and Prym for a cartel in the needle market and other haberdashery products

The European Commission has fined Coats and Prym a total of €60 million for, together with a third company Entaco, operating a cartel in the needle market and for segmenting the European market for haberdashery products (including needles, pins, buttons, fasteners and zips) between September 1994 and the end of 1999. Entaco received full immunity from fines for bringing the market sharing agreements to the Commission’s knowledge.

“Cartel behaviour is the worst kind of antitrust violations since it earns companies illicit profits on the back of customers and, ultimately, end consumers. I have made the fight against cartels, big or small, one of the key priorities of my mandate and I am happy that one of the last decisions in this field concerns a product clearly recognisable by consumers,” said Competition Commissioner Mario Monti.

The Commission has today taken a decision finding that British companies Coats Holdings Ltd and Entaco Group Ltd as well William Prym GmbH&Co. KG of Germany together with their subsidiaries violated European Union competition rules between 10 September 1994 and the end of 1999 by entering into a series of written agreements amounting, in practice, to a tripartite agreement under which they shared or contributed to sharing product markets. Specifically they shared the needle market and kept Entaco from competing in other haberdashery markets such as pins or fasteners.

The markets concerned are essential to the garment and leather industry and are also used by end consumers in their daily lives.

This cartel decision is unique in the sense that it concerns a pure product and geographic market sharing agreement. Most cartels consist in price agreements or sometimes in the allocation of production or sales quotas by country between the different market players. But the ultimate goal is always to increase prices at the expense of customers and consumers. In this case, the product market sharing agreements also intervened at both the manufacturing and distribution level (both wholesale and retail. The evidence in the Commission’s file shows that Coats, one of the main distributors of needles and other haberdashery products in Europe, forced Entaco to enter and maintain market sharing agreements with Prym at the manufacturing level in exchange for the protection of its own private label needle brand “Milward” from competition by the brands made buy itself and Prym.

The Commission found that the companies’ behaviour was a very serious breach of Article 81 of the EU treaty. The European haberdashery market was estimated at more than one billion euros in 2003 but since the cartel’s impact was limited according to the Commission’s analysis, the following fines were imposed[1]:

Coats: €30 million

Prym: €30 million

Entaco benefited from full immunity of fines because it came forward and disclosed information which enabled the Commission to take this decision.

[1] Jointly and severally liable with their subsidiaries

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