EU fines urethane foam makers for price fixing

RUBBER & PLASTICS NEWS
URETHANES TECHNOLOGY INTERNATIONAL

Published: January 30, 2014 10:04 am ET
Updated: January 30, 2014 10:09 am ET

Related to this story

Topics Automotive, Polyurethane, Europe, Furniture

BRUSSELS—The European Union Commission has fined Recticel SA, Carpenter Co., Greiner Holding AG and Eurofoam Group around $155 million for their part in a foam cartel.

Grand Cayman-based Vita Group, which alerted the commission, escaped a fine.

Carpenter of Richmond, Va., 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. Brussels-based Recticel, Greiner of Kremsmünster, Austria, and Vienna-based 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.

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.


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EU fines urethane foam makers for price fixing

RUBBER & PLASTICS NEWS
URETHANES TECHNOLOGY INTERNATIONAL

Published: January 30, 2014 10:04 am ET
Updated: January 30, 2014 10:09 am ET

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