Bathroom cartel fined € 622M by EU
The European Commission has fined 17 bathroom equipment manufacturers a total of € 622 250 783 for a price fixing cartel covering six EU countries.
“These 17 companies fixed prices for baths, sinks, taps and other bathroom fittings for 12 years in six countries covering 240 million people. The cartel will have harmed businesses such as builders and plumbers and, ultimately, a large number of families. However, as the objective of anti-cartel enforcement is not to precipitate the fall of companies in financial difficulties, the Commission reduced the fines on five companies to a level they could afford. Companies should be in no doubt that the Commission will continue its fight on cartels and the level of fines will continue to be such that it should dissuade them from engaging in illegal behaviour in the first place,” said Joaquín Almunia, Commission Vice President and Competition Commissioner.
Ideal Standard, owned by U.S. private equity company Bain Capital LLC, received the single biggest fine of 326 million euros. Villeroy & Boch was fined 71 million euros.
Back in 2004, the EU raided the offices of Grohe, American Standard and other bathroom-products makers in five European countries and in March 2007 sent official objections to a number of the companies, including Grohe and American Standard.
According to the EU, the coordination took place during meetings of national trade associations in Germany (over 100 meetings), Austria (over 80), Italy (65), and also Belgium, France and The Netherlands, and in bilateral contacts. It consisted of fixing price increases, minimum prices, and rebates, and exchanging sensitive business information.
How did all of this came to light? US firm Masco, whose main subsidiaries are Hansgrohe and Hüppe, got full immunity under the Leniency Program as it was the first to provide information about the cartel to the European Commission.
Financial problems of related companies made the EU decide to lower the fines for these specific companies. The size of the fines “shouldn’t push the companies off the cliff,” Almunia said. “We wouldn’t want a company to go bankrupt because of a fine.”
The fine against Villeroy & Boch is “not justified” according to the company and it announced it will take legal measures to respond. Ideal Standard’s fine was cut by 30 percent reduction because it cooperated with the investigation. Still the penalty is claimed to be “ excessive” and the company sees “strong grounds to appeal.”
Villeroy & Boch shares Villeroy & Boch fell 1.24 euros, or 24 percent, to 3.883 euros in Frankfurt trading, the biggest drop since October 1998. Would this be the time to finally do some home improvement? Will we actually see a drop in bathroom furniture prices now the price rigging is behind us?
http://www.businessweek.com/news/2010-06-23/ideal-standard-villeroy-fined-on-eu-bathroom-cartel.html
