Competition: Commission fines copper fittings producers €314.76 million for price fixing cartel
European Commission - IP/06/1222 20/09/2006
Brussels, 20th September 2006
The European Commission has fined 30 companies a total of €314.76 million for participating in a copper fittings cartel, in violation of the EC Treaty’s ban on restrictive business practices (Article 81). The 11 groups to which these companies belong are Aalberts, IMI, Delta, Advanced Fluid Connections, Legris, Frabo, Mueller, Tomkins, Flowflex, Viegener and Sanha Kaimer. Between 1988 and 2004, the companies fixed prices, discounts and rebates, agreed on mechanisms to coordinate price increases, allocated customers and exchanged commercially important and confidential information. Four of these groups, namely Aalberts, Delta, Advanced Fluid Connections and Legris had their fines increased by 60% because they continued their illegal arrangements after the Commission’s initial inspections. Advanced Fluid Connections’ fine was increased by a further 50% for providing the Commission with misleading information. Mueller received full immunity from fines under the Commission’s leniency programme, as it was the first company to come forward with information about the cartel.
Competition Commissioner Neelie Kroes said “We will not tolerate cartels and will take all measures to stamp them out. We will not only punish firms severely for cartel behaviour, but also increase the fines for flagrantly continuing after a Commission dawn raid and for providing wrong or misleading information.”
The product concerned is copper fittings, including copper alloy fittings (e.g. gunmetal, brass and other copper-based alloys). A fitting connects tubes used to conduct water, air, gas, etc. in plumbing, heating, sanitation and other installations. There are various types of fittings known as end-feed, solder ring, compression, press and push-fit which were all covered by the cartel, with the result that business and retail consumers were paying higher prices.
The investigation was prompted by an application for leniency lodged by Mueller in January 2001, under the 1996 Leniency Notice. Subsequently, the Commission carried out unannounced inspections. Later the Commission issued requests for information which triggered applications for reduction of fines by several undertakings.
The cartel Decision is based on numerous documents, corporate statements and witness interviews provided by the leniency applicants, together with documents discovered by the Commission during the on-site inspections. The Commission’s file includes some 80,000 pages of documents which contain evidence spanning the entire period of the cartel.
As far back as 1988, hand-written notes reveal that the UK competitors increased prices based on a specific coded figure for each company. The competitors agreed to implement the price increase “following the same procedure as last time”.
In 1991, several hand-written notes record the new price lists the competitors had agreed on for Germany, Spain, Italy, France, Greece, UK, Portugal and Sweden, and indicated the planned order in which those price hikes would be implemented.
On 26 January 2001, competitors met in Paris to discuss the state of play of price increases, country-by-country and company-by-company. Handwritten notes show that the price increase that the competitors planned together had been achieved in France, was still on-going in Germany and was delayed in Spain. The competitors also discussed a new price structure and price level for the UK. Finally, the companies took care to explain that the collusive meetings would continue despite the fact that Delta (now Advanced Fluid Connections) was to be sold to another company.
These practices are a very serious infringement of EC Treaty rules. In fixing the fines, the Commission took into account the size of the EEA market for the product, the duration of the cartel and the size of the firms involved. The Commission increased the fines by 60% for Aalberts, Delta, Advanced Fluid Connections and Legris, because they continued the illegal arrangements after the inspections. Advanced Fluid Connections had its fine increased by a further 50% for providing the Commission with misleading information.
The cooperation of companies that provided important information on the infringement was rewarded, in line with the Commission’s 1996 Leniency Notice. Consequently, Mueller was granted full immunity, and the fines of IMI, Delta and Frabo were reduced. The grant of reductions in fines depends not only on its value but also on how early the information is disclosed. Although Advanced Fluid Connections provided information, it received no fine reduction, as the information was misleading.
The total fines imposed in this case (EUR 314.76 million) make it the fifth largest set of fines ever imposed on a single cartel.
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 (see IP/05/1634 and MEMO/05/489).
For more information on the Commission’s action against cartels, see MEMO/06/337.
Fines imposed and reductions granted by the Commission:
(*) the corresponding legal entities may be held jointly and severally
responsible for the whole or part of the fine imposed