Vice President of the European Commission responsible for competition policy
BATHROOM FITTINGS CARTEL
Brussels, 23 June 2010
Ladies and Gentlemen
The Commission has ended a long-running cartel between Europe’s major bathroom equipment manufacturers. The cartel
covered six countries;
ran for twelve years;
involved 17 company groups, many of which are well know to the public.
The trade associations provided the setting for the cartel meetings. The Commission has documentation to prove hundreds of such meetings during which the cartel members:
agreed minimum prices,
agreed annual price increases
and coordinated price increases following specific events, such as increases in the prices of raw materials.
The cartel affected a wide range of bathroom fixtures and fittings, including toilets and cisterns, washbasins, sinks, baths, shower cubicles, bath screens and taps.
Given the size and duration of the cartel, the Commission has imposed a total fine of €622 million.
This cartel will have harmed many businesses - large and small. It will have harmed consumers. There will be few of the 240 million people in the six countries covered by this cartel, who will not have been affected.
I can think of no recent case that better illustrates the need for strong competition enforcement, in particular during an economic crisis.
Competition and the Economic and Financial Crisis
The Commission will continue to enforce the competition rules, and will continue to protect law abiding companies and citizens from those who conspire against them. We will continue to set fines at a level that acts as a real deterrent.
At the same time, the Commission is aware that some companies, particularly in today’s economic climate, may be in financial difficulties. Those companies should not be made bankrupt because of the Commission's fine. Where their financial difficulties are real, the Commission will take that into account and lower the fine.
I have explained to the College last week how we deal with companies' claims that they are unable pay [demandes invoquant l'incapacité à payer1]. Unsurprisingly, given the crisis, those claims have increased in the last year.
The Commission takes those claims seriously and assesses them carefully.
The methodology to assess them is foreseen in the Fining Guidelines of 2006 and we have refined it. What we assess is whether the fine we are planning to impose would cause, as it is alleged, the bankruptcy of the company. Of course, for this to happen the company would need to be in a very bad shape already and the fine would push it over the cliff.
But we would not want to provoke a company's bankruptcy. Competition policy is about promoting competition, not eliminating firms from the market place.
In the case of the bathroom fittings cartel, we have first granted the reductions under the Leniency Programme that you can see in the press release: the 100% reduction for Masco for revealing the cartel to the Commission. Grohe and Ideal Standards also benefitted of a 30% reduction, each, for helping the Commission prove the facts.
The final figures of three companies also include a 50% reduction because of the difficult financial situation. Another two received a reduction of 25% for the same reason.
You will understand that the companies would not like me to reveal their names.
Of the 17 groups, a total of 10 had claimed they would be unable to pay the fine, but after a very careful assessment the Commission found the claims to be justified only in half of the cases and reduced the amounts to a level they should be able to pay.
Let me underline that in assessing inability- to-pay claims, the Commission looks at the companies' annual financial statements, including the provisional one for the current year and at future projections. The Commission also examines the financial ratios that measure a company’s solidity, profitability, solvency and liquidity as well as its relations with banks and shareholders. The analysis is company-specific and aims to be objective and quantifiable to ensure equal treatment and preserve the deterrence aspect of EU competition rules.
Reduction in Scope of the Cartel
There is one other point to which I would like to draw your attention. In this cartel, as in very many previous ones, the Commission has narrowed down the scope of its case following submissions by the parties. Most notably we dropped objections against two companies – we addressed 19 different groups in the Statement of Objections, compared to 17 in the final decision. We have also reduced our assessment of the duration of the cartel.
To conclude, today’s decision, as you can see, has a great many facets:
A narrowing down of the Commission’s case in response to the defendants’ submissions;
Strong competition enforcement where the Commission can prove its case;
With substantial fines to ensure deterrence;
As well as a tempering of these fines in cases of genuine need.
I am now happy to take your questions on this case.
In the Note the French is: Absence de capacité contributive;