Bundeskartellamt fines price cartel in paper wholesale sector Eur 57.6 million
04.05.2004
The Bundeskartellamt has imposed fines totalling Eur 57.6 million against 12 companies and 46 persons responsible in the paper wholesale sector for illegal price agreements. According to the Bundeskartellamt’s findings the following companies were involved in the agreements:
· G. Schneider & Söhne GmbH & Co. KG, Ettlingen,
· Papier Union GmbH & Co. KG, Hamburg,
· Classen Papier GmbH, Essen, or Classen Holding KG, Essen,
· Deutsche Papier Vertriebs GmbH, Augsburg,
· companies of the Igepa-group (Interessengemeinschaft Papier):
- Freytag & Petersen GmbH & Co., Cologne,
- E. Michaelis & Co. (GmbH & Co.), Reinbek,
- Vereinigte Papier Papiergroßhandlungen GmbH & Co. KG, Hemmingen,
- Drissler & Co. Papiergroßhandel GmbH & Co. KG, Frankfurt,
- Hansa-Papier GmbH & Co. KG, Bremen,
- Igepa Papiergroßhandel GmbH, Queis,
as well as two SMEs that have been acquired in the meantime by one of the larger paper companies.
The Bundeskartellamt has uncovered a total of 10 regional cartels some involving the multiple memberships of individual persons. The subject of the agreements in the ten regional cartels were the prices of paper for illustration printing, offset and carbonless paper for the so-called warehousing business (supply of printing houses from wholesale stores up to an order quantity of three tons.) The sanctioned agreements took place during various periods between May 1995 and April 2000. The sales volume involved amounted to approximately 1 billion Euros.
The agreements were based on general arrangements that were modified in regular meetings of the cartel members. The price agreements not only related to so-called “general customers” but also to individual so-called “special customers” (in particular, large printing houses). In addition, standstill agreements were reached in which paper wholesalers guaranteed that they would not engage in mutual price competition and would not lure customers away from one other.
Compliance with the agreements was constantly ensured by a system of continuous monitoring and information exchange. Non-compliance with the agreements was discovered by external agents working on behalf of the cartel members and was terminated during cartel meetings or in bilateral talks.
The President of the Bundeskartellamt, Dr Böge, stated: “The cartel agreements enabled the companies involved in the respective regional cartels to permanently raise prices for the types of paper involved to a level they could not have reached through effective competition. The agreements not only harmed the printing houses as direct customers but also their customers as well as end consumers”
. According to Böge, a decisive factor in the successful completion of the investigations was that “following the searches in April 2000, a number of small competitors cooperated with the Bundeskartellamt and several individuals from different companies made full confessions in the course of the proceedings.”
Dr Böge went on to say: “I find the lack of a sense of wrongdoing among most of the involved companies alarming, especially since the Land competition authority of North-Rhine/Westphalia had already imposed legally binding fines of a total of DM 1.75 million in February 1993 for the same malpractice. Obviously, these fines were still too low.”
The companies can file an appeal against the Bundeskartellamt’s administrative orders imposing the fines within two weeks.
Dr Böge on this issue: “As in similar cases, talks with the parties involved have established that – despite the striking evidence – appeals are to be expected, if only because the companies hope to gain extra interest profit through a longer duration of court proceedings. In order to reduce this incentive I advocate the obligation to pay interest on fines from the day they are imposed as envisaged in the forthcoming amendment of the Act Against Restraints of Competition (ARC). This would also help to prevent the Düsseldorf Higher Regional Court from being overburdened with too many appeals. A similar provision on interest payments already exists within the cartel proceedings of the EU commission. Of course, the possibility of customers who have suffered losses to sue cartel members for damages must not be affected by such a provision.”