Nearly two years after launching an antitrust investigation in the industrial plastic sack market, the European Commission has issued formal allegations against 43 companies suspected of involvement in a price-fixing cartel.
The commission in Brussels, Belgium, cited 15 companies and many of their units, including British Polythene Industries plc of Greenock, Scotland; UPM-Kymmene Corp. of Helsinki, Finland; and Low & Bonar plc of London. The companies were given eight weeks to respond in writing to EC's case, which includes allegations of ``allocating markets and fixing prices,'' according to UPM-Kymmene.
Operating cartels is considered a serious breach of European Union antitrust legislation and companies found guilty in the past have faced heavy fines.
UPM-Kymmene agreed to respond to the EC as requested, but noted it sold the polyethylene film and sacks business of its Converting Materials Division to Rheinische Kunststoffwerke GmbH of Worms, Germany, in December 2000. The business included plants in Finland and France.
For BPI, the April 29 citation marks the second time in three years that it has been investigated by the EC for alleged breach of antitrust law. In August 2001, officials from the commission's competition directorate raided its premises seeking evidence against firms operating a price-fixing cartel in the industrial and agricultural stretch films market.
On that occasion, BPI was among six companies suspected of cartel involvement.
In early 2002, BPI admitted it had been in breach of EU competition law. BPI admitted that its ``previous practices have not been compliant with these regulations'' and that ``infringements have taken place.'' The firm implemented a companywide compliance program.
Low & Bonar confirmed it received the EC allegation statement, but said it has not been in the industrial plastic sack business since 1997, when it sold its Belgian packaging business to BPI.
``We will, of course, cooperate with the commission in its inquiry and will be reviewing the lengthy documentation accompanying the statement of objection,'' L&B said May 10.
But, the company warned, given the sale 61/2 years ago ``and subsequent changes to group management, access to information is accordingly limited.''
The business sold in 1997 was Bonar Phormium Packaging NV of Zele, Belgium, a maker of agricultural silage stretch wrap that also printed PE film for form-fill-seal applications and pallet protection, and converted pallet covers and heavy-duty sacks.
BPI has admitted it supplied information that sparked the industrial bags investigation.
In a new statement, BPI said that in November 2001, after realizing that the firm was breaking EU competition law, it revealed to EC details of the bag market cartel activity in mainland Europe.
In return for its cooperation, BPI applied for leniency in its own case. Under Commission rules, penalties on companies that cooperate can be reduced by 75 percent or be completely waived, according to BPI.
The inquiry covers practices between 1982 and 2001 of industrial bag converting operations in mainland Europe that BPI acquired in 1997 from Wavin and Low & Bonar.
Companies have to respond to the statement of objection allegations by June 28, and EC expects to reach a decision sometime next year.
Infringements of European competition law can include not only market sharing and price fixing, but also activities like exchanging market information.