Cartel fined 478 million Euros

The European Commission today imposed fines totalling 478 million Euros on four companies that operated a long-running cartel on the market for plasterboard.

The European Commission today imposed fines totalling 478 million Euros on four companies which operated a long-running cartel on the market for plasterboard.

The plasterboard market, which had a turnover of more than 1.2 billion Euros in 1997 (the last full year of the infringement) is the largest in terms of value to have been covered by a Commission cartel decision over the last ten years or so.

The cartel, made up of Lafarge (France), BPB (UK), Gebrüder Knauf Westdeutsche Gipswerke (Germany) and Gyproc Benelux (Belgium), affected 80% of consumers in France, the United Kingdom, Germany and the Benelux countries.

The cartel was formed at a meeting held in London in early 1992. At the meeting, representatives of BPB and Knauf decided to end what they called the ‘price war’ that was then taking place and expressed the common desire to reduce competition to a level that suited their interests on the German, French, United Kingdom and Benelux markets. In previous years, the price of plasterboard had fallen sharply as a result of fierce competition.

Following the London meeting, a secret information-exchange system was set up to monitor market trends and avoid over-aggressive competition. Lafarge and subsequently Gyproc also joined the system, in mid-1992 and June 1996 respectively.

The information assembled by the Commission shows that, on the United Kingdom market, BPB, Knauf and Lafarge repeatedly, through high-level contacts, exchanged information on their sales volumes so as to provide mutual reassurance that the price war had ended. Similarly, they repeatedly gave each other advance warning of price increases.

Top representatives of the companies also met in a hotel at Versailles in 1996 in order to prevent a new price war in Germany in the mid-1990s, when the four companies were simultaneously increasing their production capacity in Germany and imports from eastern Europe, particularly Poland, were rising. Other meetings followed in Brussels, in 1997, and in The Hague, in 1998, in order to share out or at least stabilise market shares in Germany.

These high-level meetings were followed up by repeated concerted action by BPB, Knauf, Lafarge and Gyproc on the application of price rises on the Germany market between 1996 and 1998. This concerted action took the form of discussions on the fringes of trade association meetings, the sending to competitors of letters announcing price increases to customers and even the sending, to the private addresses of the directors of the German subsidiaries, of the instructions given to sales forces.

‘The building industry is the pulse of the economy. The substantial amount of the fine reflects the size of the market, the impact of the illicit agreement on the consumer and the repeated infringement of the competition rules by two of the companies,’ said Mario Monti, the Commission Member with special responsibility for competition.

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