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January 29, 2014 01:00 AM

European Commission fines foam cartel for price fixing

Rubber & Plastics News Report
Urethanes Technology International
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    BRUSSELS—The European Union Commission has fined Recticel S.A., Carpenter Co., Greiner Holding A.G. and Eurofoam Group around $155 million for their part in a foam cartel.

    Vita Group, which alerted the commission, escaped a fine.

    U.S.-based Carpenter was fined $102 million for its part in the cartel. The commission said it was Carpenter's Europeans subsidiaries that were involved in the cartel, and that the U.S. firm was held liable only on the basis of being the parent company.

    According to the commission, the companies—along with Vita—colluded to fix the price of various types of foam in 10 EU member states: Austria, Belgium, Estonia, France, Germany, Hungary, the Netherlands, Poland, Romania and the United Kingdom, between 2005 and 2010.

    "Cartels harm our entire economy and cannot be tolerated," said Joaquin Almunia, the commission's vice president in charge of competition policy. "This case illustrates how essential it is to keep fighting and sanctioning such illegal behavior."

    Vita escaped a fine on the basis that the company revealed the existence of the cartel to EU officials. Recticel, Greiner and Eurofoam—a joint venture between Recticel and Greiner—each received a 50-percent reduction on the fine under the commission's lenience program after cooperating during the investigation.

    Belguim-based Recticel was fined $10.1 million for its own its involvement. In addition, the Eurofoam joint venture between Recticel and Greiner was fined more than $43 million.

    Recticel has yet to release its financial figures for 2013, in which the impact of the fine will be reflected. The companies have 90 days to pay, but the commission said Recticel will request to pay the fine over several years.

    Austria's Greiner was fined $33 million.

    In December, Recticel's external communications and investor relations manager, Michel De Smedt, said the company already was bracing itself for 2014 to be a "tough trading year."

    Between 2011 and 2012, year-on-year sales fell 4.3 percent to $1.8 billion.

    According to the commission, the cartel passed on raw material price increases to customers in order to avoid aggressive price competition between the four producers. Price coordination meetings took place at all levels of European management, and players in the cartel would meet on the margins of European and national associations. The cartel members also shared their contacts, the commission said in a news release.

    "Recticel and Eurofoam decided to cooperate with the commission under its leniency program and have continued that through to the present day," Recital said in a statement. "When the commission offered the option of settlement, Recticel and Eurofoam decided to pursue the settlement process in order to accelerate resolution of the matter. Recticel's fine accordingly reflects discounts for cooperation."

    The firms manufacture flexible polyurethane foam, the majority of which is used in mattresses or sofas. Car seats account for about 25 percent of the total flexible foam market.

    The companies have the right to appeal the decision.

    Related Articles
    Sleep Innovations to buy Flexible Foam Products
    Showa pleads guilty to price fixing
    Auto parts maker to expand production in Poland
    German agency fines Recticel $10.8 million for price fixing
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