Foam producers fined EUR 114 million as EU Competition Commission reaches cartel settlement

Foam producers fined EUR 114 million as EU Competition Commission reaches cartel settlement

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Author: Jaime Jones

On 29 January 2014, the European Commission announced that it had fined four producers of flexible polyurethane foam products a total of EUR 114,077,000 for their participation in a cartel.

The Commission found that Vita, Carpenter, Recticel and Eurofoam operated the cartel for the purposes of co-ordinating the sale prices of polyurethane foam for comfort and technical applications for a five-year period from October 2005 until July 2010, by organising meetings on the margins of European and national associations. The cartelists were also in contact by telephone and other means.

The price co-ordination, which was designed to avoid aggressive price competition and to pass on raw material price increases of bulk chemicals, affected foam used in products such as upholstered furniture, mattresses and car seats in ten Member States including the UK.

Vita revealed the existence of the cartel to the Commission who then conducted unannounced inspections (so-called "dawn raids") on 27 July 2010. The settlement decision is the tenth reached by the EU Commission since the settlement procedure was introduced in June 2008. The procedure enables the Commission to shorten its investigation where the investigated parties admit their participation in the cartel and accept liability for fines. Cartelists are able to secure a 10% reduction in fines as a result of agreeing to settle the case with the Commission.

Vita received a 100% reduction in its fine of EUR 61.7 million under the Commission's Leniency Notice for informing the Commission of the cartel. After a 10% Settlement Notice reduction, Carpenter was fined a shade over EUR 75 million for its role in the cartel, the largest of the fines handed out. Recitcel and Eurofoam (a joint venture between Recticel and Greiner Holding AG) both received a 50% reduction in their fines for co-operation under the Leniency Notice, as well as the further 10% discount for settling the case under the Settlement Notice which significantly reduced their fines.

The case follows hot on the heels of the Euro interest rate derivatives cartel case in December, where the Commission imposed fines of over EUR 1 billion. Both cases highlight the Commission's commitment to eradicate cartel behaviour and should serve as a warning to businesses not to participate in such arrangements.

JoaquĆ­n Almunia, the EU Commission's Vice-President for competition policy, speaking about the polyurethane foam case said that cartels "harm our entire economy and cannot be tolerated". And he reiterated the Commission's commitment to "keep fighting and sanctioning" illegal cartel behaviour.

About the author

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Jaime Jones

Solicitor

03700 86 5153

Jaime is a solicitor in our specialist EU & competition law team. As well as advising clients in all sectors on a range of competition law issues, Jaime also has a specialism in Public Procurement law and advises both public and private sector clients on the application of the procurement rules.

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