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Brussels, 12th September 2007
Antitrust: Commission welcomes Court of First Instance judgments in needles and other haberdashery products cartel case
The European Commission welcomes today’s judgments by the European Court of First Instance dismissing the action by Prym and partly the action by Coats against the Commission’s decision in October 2004 fining two producers for a Europe-wide hard haberdashery cartel (cases T-30/05 and T-36/05). The Court of First Instance confirmed the existence of the cartel. The CFI, however, reduced the level of fine imposed on Prym from €30 million to €27 million and on Coats from €30million to €20 million. The total fine imposed by the Commission was €60 million; following the CFI judgments that has been reduced to €47 million. Around 80% of the fine has therefore been maintained.
On 26 October 2004, the Commission fined producers of needles and other haberdashery products a total of €60 million for participating in a Europe-wide cartel between 1994 and 1999 declaring that the three producers Coats, Prym and Entaco infringed Article 81 EC by engaging in concerted practices and entering into a series of formally bilateral agreements which amounted to a tripartite agreement having the object and the effect of sharing the European hard haberdashery market and partitioning the European market for needles. The companies fined were the UK company Coats Holdings Limited and J.&P. Coats Limited (€30 million) and the German company William Prym GmbH & Co. KG and Prym Consumer GmbH & Co. KG (€30 million). Entaco Limited received full immunity from fines under the 1996 Leniency Notice for bringing the agreements to the Commission's knowledge (see IP/04/1313).
The judgments of the Court of First Instance
T-36/05 Coats Holdings and Coats v Commission
In January 2005, Coats lodged an application for annulment of Commission's decision of October 2004 claiming that it was not a party to the cartel. The Commission welcomes the fact that the CFI confirmed Coats' liability for the infringement (although as "facilitator" only). The CFI found that the Commission did not bring enough evidence to support Coats' participation in the cartel from March 1997 onwards and therefore reduced the fine to €20 million.
T-30/05 Prym and Prym Consumer v Commission
The CFI dismissed Prym's action. As regards the attenuating circumstances in the Commission's decision, the CFI reduced the fine for Prym as the Commission did not sufficiently explain why it did not grant a reduction to Prym for not having contested the facts in the Statement of Objections.
The market of hard haberdashery products consists of various types of needles (e.g. hand sewing and craft needles, pins and knitting pins) and of zip fasteners and other types of fasteners (e.g. four-piece fasteners, press studs, hooks) for the garment, leather goods, shoe and cardboard industries as well as for end consumers' use. The cartel practices concerned both production and distribution levels (wholesale and retail).
The investigation started in the autumn of 2001 when the Commission carried out inspections at the premises of Community producers of hard and soft haberdashery on the basis of information provided by Entaco Limited.
In order to prevent the emergence of Entaco as a competitor on the hard haberdashery market, the participants in the cartel signed two sets of bilateral agreements between Entaco and Prym on the one hand and Entaco and Coats on the other, linked by inter-conditional clauses which created a chain of inter-connections reflecting that the formally bilateral contracts were in fact one tripartite agreement.
The result of this agreement was to share the geographic and product hard haberdashery market; the product market sharing protected Prym from Entaco's possible entry into haberdashery product markets other than needles and the geographical market sharing protected Prym in Continental Europe from Entaco's competition in the needles market while Entaco got an exclusive supply agreement with Coats in the UK and Italy and Prym agreed to source all its requirements for several types of needles from Entaco. In addition, the overall scheme was implemented through meetings and other contacts as well as through a compensation scheme. The cartel functioned for a period of more than five years.
The companies' conduct in this case was a very serious infringement of the competition rules as set out under Article 81 EC.