Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC takes action against retail food packaging, car battery recycling cartels, (Jun 24, 2015)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has imposed fines on eight manufacturers and two distributors of retail food packaging trays in the combined amount of €115 865 000 for having participated in at least one of five separate cartels, the EC announced today. The eight manufacturers are Huhtamäki of Finland; Nespak and Vitembal of France; Silver Plastics of Germany; Coopbox, Magic Pack, and Sirap-Gema of Italy; and Linpac of the U.K. The two distributors are Ovarpack of Portugal and Propack of the U.K.

The companies fixed prices and allocated customers of polystyrene foam or polypropylene rigid trays, in breach of European Union (EU) antitrust rules. Polystyrene foam and polypropylene rigid trays are used for packaging food sold in shops or supermarkets, for products such as cheese, meat, fish or cake.

The Commission's investigation revealed the existence of five separate cartels for retail food packaging in a large part of the European Economic Area. From the early 2000s and for periods ranging from just over a year to almost eight years, and with some differences between the cartels, the companies fixed prices, allocated customers and markets, engaged in bid-rigging, and exchanged commercially-sensitive information. Each of the cartels operated within the framework of multilateral and bilateral contacts usually held on the fringes of legitimate industry gatherings. Physical meetings were complemented by numerous emails and phone exchanges.

In a statement, Margrethe Vestager, EU Commissioner in charge of competition policy, said "[f]ighting cartels is a very high priority for the European Commission. This is because of the serious harm cartels cause to consumers and businesses. And the huge damage cartels inflict on the economy as a whole in terms of removing incentives to compete on prices or to innovate.”

“The fines imposed reflect the seriousness of the infringements, the turnover generated by the products affected by the cartels and the duration and degree of each company's participation,” Vestager noted. “They should deter companies from engaging in such harmful behavior. At the same time, we encourage companies to cooperate with us to uncover and investigate cartels. That's why, as usual, the individual fines have been adjusted to reflect whether or not a company has chosen to provide evidence to help the Commission prove the infringements, as many of them have.”

Additionally, the EC has sent a statement of objections, informing five lead recycling companies that they are suspected of having participated in a purchasing cartel for scrap lead-acid batteries, in breach of EU antitrust rules that prohibit anticompetitive business practices such as collusion on prices and market sharing. In Europe, practically all lead-acid batteries are recycled once they are no longer used. Car batteries make up the majority of these batteries. Recycling companies buy scrap batteries from various suppliers and extract the lead from them. The lead from scrap car batteries can then be re-used to make new products.

The Commission’s investigation began with unannounced inspections in September 2012.The Commission has concerns that, from 2009 to 2012, the companies participated in a cartel aimed at fixing the purchase prices for scrap lead-acid batteries in Belgium, France, Germany and the Netherlands. The statement of objections alleges that these companies agreed or coordinated their behavior only in order to maintain higher profit margins. As a result, they may have lowered the prices paid to scrap dealers, many of which are small and medium-sized companies. Since such behavior would likely reduce the value of used batteries sold for scrap, this could ultimately be to the detriment of sellers.

Regarding the statement of objections, Vestager commented, “Unlike in most cartels where companies usually conspire to increase their sales prices, the companies in this case appear to have colluded to reduce their purchase prices. This may seem like desirable outcome, as the companies' purpose was to cut input prices and to reduce price volatility. However, the preliminary conclusion of our investigation is that the main goal of the cartel members was in fact simply to maintain higher profit margins. The cartel members may have lowered the prices paid to scrap dealers, many of which are small and medium-sized companies. This would then feed through in lower prices for used batteries sold for scrap, ultimately to the detriment of sellers. The result, the Commission alleges, was the same as in any price-fixing cartel: disrupting the normal functioning of the market and preventing competition on price.”

Companies: Huhtamäki; Nespak; Societe Industrielle Vitembal SAS; Silver Plastics; Coopbox; Magic Pack; Sirap-Gema; Linpac; Ovarpack Embalagens S.A.; Propack Packaging & Disposables

News: Antitrust