EU Commission Fines Nine Hardware Companies €86 Million for Price-Fixing

April 5th, 2012 by DWM Magazine

The European (EU) Commission has fined nine European producers of mountings for windows a total of € 85 876 000 (more than $112 million USD) for operating a cartel by which they agreed on common price increases, in breach of EU antitrust rules. The collusion lasted from November 1999 to July 2007 and affected European buyers of windows across all member states of the EU and European Economic Area (EEA), according to an announcement from the EU. The companies are Roto, Gretsch-Unitas, Siegenia, Winkhaus, Hautau, Fuhr, Strenger (all of Germany), Maco of Austria and AGB of Italy. According to the announcement, Roto received full immunity from fines under the Commission’s 2006 Leniency Notice, as it was the first to provide information about the cartel. It adds that the fine for Gretsch-Unitas was reduced by 45 percent and the fine for Maco by 25 percent in view of their cooperation in the investigation.

“For more than seven years, buyers of windows throughout Europe have had to face a cartel. We are determined to fight such illegal practices, whether they come from large multinationals or family-owned companies,” says Commission vice president in charge of competition policy Joaquín Almunia. “While we have ensured that the fines we imposed today remain proportionate, they are high compared to the companies’ turnover and will make them think twice if they ever think of fixing prices again.”

According to the release, the cartel was well organized and the meetings followed a regular pattern: every year in the third week of November the parties met at the occasion of trade association meetings in Germany. These regular meetings were called the “Permanent Conference.” In the morning before the official meetings, the parties sat together in order to set a price increase for the following year or to agree on a surcharge for raw material costs. In the course of the following year, the cartelists met again to inform each other about the various steps they had taken to implement the agreed price increase. Local sales representatives all over Europe also had regular contacts to ensure the success of the cartel.

According to the EU, the fines were set on the basis of the EU 2006 Guidelines on fines. The Commission took into account the companies’ sales of the products concerned in the EEA, the very serious nature of the infringement, its EEA-wide scope and its duration, adds the release. For most of the parties to this case, mountings for windows constitute a large fraction of their turnover and because of this the fines of nearly all parties would have been capped at 10 percent of their total turnover, the legal maximum foreseen in the Antitrust Regulation, according to the EU. Exceptionally, the Commission reported that it exercised its discretion in accordance with point 37 of the Guidelines and reduced the fines in a way that takes into account the mono-product nature of the companies and their differences in participation in the infringement.

According to the release, one of the companies invoked its inability to pay the fine under paragraph 35 of the 2006 Guidelines on Fines. The Commission thoroughly assessed the application on the basis of a financial and qualitative analysis of the ability of the company concerned and its shareholders to pay the final amount of the fine imposed, taking into account the likely effect such payment would have on the economic viability of the company. As a result of this assessment, the Commission granted a reduction of 45 percent of the fine.

The Commission’s investigation started with unannounced inspections in July 2007; it later adopted a Statement of Objections against the companies in June 2010 on which they had the opportunity to comment and be heard.

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