Glass Industry

Flat Glass Cartel and Guidelines on Non-Horizontal Mergers

Neelie Kroes
European Commissioner for Competition Policy
Introductory remarks at press conference
Brussels, 28th November 2007

Good morning ladies and gentlemen,

I would like to talk to you today concerning an antitrust decision just adopted by the Commission.

The Commission has uncovered and punished an international cartel that fixed the prices of flat glass, which is used in the manufacture of glass products such as double glazing and safety glass. The cartel involved:

Asahi of Japan,
Guardian of the US,
Pilkington of the UK and
Saint-Gobain of France.

The Commission has established that in 2004 and 2005 representatives of these companies met covertly at hotels and restaurants around Europe. At these meetings they conspired to increase prices for flat glass, discussing both the amount and the timing of price increases.

The companies profited from selling flat glass at artificially inflated prices. The direct victims were the buyers of the flat glass, companies who made products such as double-glazing and safety glass. But the final victims were once again European consumers, who had to pay the price for the glass used in buildings, private homes and apartments.

The flat glass market was worth about one thousand seven hundred million euros in 2004. So the companies, and their shareholders, will have done very well out of this cartel. Until today.

It is right that the punishment in this case is severe, in order to achieve a sufficient deterrent effect. It is a great pity that the Commission's many previous cartel decisions did not deter these companies from forming this cartel in 2004. The Commission has backed my recommendation for a fine of 486 million 900 thousand euros.

Guardian is fined 148 million euros
Pilkington is fined 140 million euros
Saint-Gobain is fined 133 million 900 thousand euros
After substantial cooperation under the Leniency Notice, Asahi has been fined 65 million euros.

The fine is based on a variety of factors set out in the Commission's 2006 Notice on Fines. The factors include the turnover of the companies on the affected market, as well as the duration and gravity of the infringements.

I cannot comment on the individual stages in calculating the fines of the various companies in this case because of unresolved questions over the confidentiality of their turnover figures. The important thing is that the fine as a whole is sufficiently deterrent, so that none of these companies will be tempted to infringe the rules again in future. I believe we have achieved that aim in this case. I can indicate that the Commission did not apply an aggravating factor to Saint Gobain for being a repeat offender because the most recent previous decision was a long time before the flat glass cartel was proved to have begun.

The companies involved knew all too well that what they were doing was illegal. They thought that they would not be found out. They thought that the increased prices that they agreed were worth the risk. They were wrong.

The Commission discovered this cartel with the help of the Member States' National Competition Authorities and so launched the investigation on its own initiative rather than an immunity application. So the Commission's message today is very simple.

Companies that engage in cartels will be found out, whether or not one of their members blows the whistle. And when such cartels are found out, the punishment will be severe because the Commission will not tolerate companies cheating consumers and business customers by fixing prices and depriving them of the benefits of the Single Market.

I would also like to mention that the Commission has this morning adopted Guidelines for the assessment of mergers between companies that are in a so-called vertical or conglomerate relationship.

A vertical merger would typically be the acquisition of a supplier by a customer: for example a steel manufacturer acquiring a supplier of iron ore. A conglomerate merger would concern companies whose activities are complementary or otherwise related, for example, a company producing razors buying a company producing shaving foam.

Such mergers are also known as "non-horizontal mergers", and the majority of them do not raise competition problems.

These Guidelines, which include practical examples, will help companies to understand how the Commission will analyse the impact of such mergers on competition and so anticipate which cases are likely to be seen by the Commission as being not problematic.

The Commission is the first major competition jurisdiction in the world to adopt such comprehensive and practical guidance on non-horizontal mergers.

Source: Commission Européenne