Competition : Commission fines 16 firms €290 million for industrial bags cartel
European Commission - IP/05/1508 30/11/2005
Brussels, 30 November 2005
The European Commission has fined 16 firms €290.71 million for operating a cartel in the plastic industrial bags market, in clear violation of EC Treaty rules which forbid cartels and other restrictive business practices (Article 81). In this instance competitors, with a view to increasing their profits, agreed amongst themselves on prices and sales quotas by geographical area, shared the orders of large customers, organised collusive bidding for invitations to tender and exchanged information on their sales volumes, to the detriment of competition, their customers and consumers. Plastic industrial bags are used to pack various products, mainly of an industrial nature, but also products destined for consumers, such as raw materials, fertilizer, agricultural products, animal feed and building materials. The level of the fines confirms the Commission’s determination to crack down hard on firms that take part in cartels.
Competition Commissioner Neelie Kroes said “Cartels are the worst obstacle to competition and I intend to penalise firms that operate them and so jeopardise the very basis of our market economy and harm consumers. I am sending a very clear message to company directors that such practices are unacceptable”.
After surprise inspections of producers in June 2002 and the investigations that followed, the Commission found that they had secretly agreed amongst themselves, some for over 20 years, on sales prices in Germany, the Benelux countries, France and Spain. The Commission started investigating on the basis of information brought to its attention by one of the members of the cartel, British Polythene Industries (BPI), under the Commission’s antitrust leniency arrangements (see IP/02/247 and MEMO/02/23). As a result, BPI enjoyed full immunity for being the first to provide the Commission with the decisive evidence of the cartel’s existence which allowed inspections to be organised.
It was the sales directors and even the managing directors, often at meetings of their professional association Valveplast, who agreed amongst themselves on various aspects of the cartel. Internal memos stating, for example:
“It was subsequently decided to appoint a leader for each customer in order to coordinate the rise in prices” or
“In view of the risk taken in this type of meeting and the documentation passed on, this document and all those relating to VALVEPLAST which indicate figures for allocating markets and prices must be destroyed”
were seized during the inspections and are evidence not only that the agreements existed but that the producers were aware that their behaviour was illegal.
Together, the producers concerned controlled most of the market in industrial bags in the countries covered by the cartel. In 2001 the market in industrial bags in these countries was estimated at some €265 million.
The Commission regards this as a very serious offence. In fixing the amount of the fines, the Commission took account of the size of the market in the countries affected by the cartel, the length of time the cartel had been operating, the relative weight of the firms involved and their global dimension.
The cooperation offered by some companies that provided useful information for the exposure of the infringement was rewarded in accordance with the Commission’s leniency notice. As mentioned above, BPI was given full immunity, and several other firms had their fines reduced in return for the information they provided.
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 being reduced on account of the Commission fine.
For more information on the Commission’s action against cartels, see MEMO/05/454.
Fines imposed and reductions granted by the Commission: