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Glass Manufacturers Fined For Price-Fixing

The European Commission (EC) announced its decision to fine four glass manufacturing companies a total of EUR 486.9 million (approximately USD $719.2 million) for price-fixing yesterday.

According to a statement issued by Neelie Kroes, the European Commissioner for Competition Policy, at a press conference held in Brussels today, Japan-based Asahi Glass Co.'s subsidiary AGC Flat Glass Europe in Belgium has been fined EUR 65 million (USD $96 million); Auburn Hills, Mich.-based Guardian Industries will be fined EUR 148 million (USD $218.6 million); Pilkington, a member of NSG Group headquartered in the United Kingdom, is fined EUR 140 million (USD $206.8 million); and Saint-Gobain in France is fined EUR 133.9 million (USD $197.7 million).

"The Commission has established that in 2004 and 2005 representatives of these companies met covertly at hotels and restaurants around Europe. At these meetings they conspired to increase prices for flat glass, discussing both the amount and the timing of price increases," Kroes said in his statement. "The companies profited from selling flat glass at artificially inflated prices."

Peter Walters, Group vice president, notes that the company has not yet received the full report of the EC's findings.

"We were shocked by the Commission's decision and we feel rather strongly that the facts don't justify the outcome, at least as it pertains to Guardian," Walters says. "When we get the findings we're going to take some time and examine what our options are, including legal options."

According to a statement issued by AGC Flat Glass Europe, neither that company nor its parent company has yet received the full text of the EC decision either. Upon receipt, the companies will examine the decision and determine accordingly their future course of action.

The company was aware of the decision prior to today's announcement. "The European Commission conducted onsite inspections at the premises of AGC Flat Glass Europe on February 22 and 23, 2005, and issued a Statement of Objections to AGC Flat Glass Europe and Asahi Glass early March, 2007. Both companies have cooperated with the Commission during the investigation," said the statement released by the company.

Today's announcement was not a surprise to Sophie Chevallon, exterior communications director of Saint Gobain, either.

"We knew that we would have a fine," she says. "We recognize the facts in the case."

According to Kroes, "The fine is based on a variety of factors set out in the Commission's 2006 Notice on Fines. The factors include the turnover of the companies on the affected market, as well as the duration and gravity of the infringements."

Guardian received the highest of the fines issued. Walters explains that the EC does a "complex mathematical analysis" to determine the amounts of the fines. "We're the smallest of the companies in Europe, but we're the largest supplier of independent customers," he says. Walters says he expects that is the reason the calculation ended up the way it did.

According to the statement from the EC, Asahi's fine was most lenient due to "substantial cooperation under the Leniency Notice."

Chevallon notes that Saint Gobain expects another fine from the EC either at the end of the first quarter or beginning of second quarter 2008 regarding its auto glass division.

"The sanction could be a lot higher than this one," Chevallon says, explaining that the period of time being investigated is longer for the automotive glass case than it was for flat glass.

According to Walters, Guardian will not be a part of the auto glass sanction.

Representatives from Pilkington declined to comment until the full text of the report is received.

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