Speech/08/604 Neelie Kroes European Commissioner for Competition Policy Car Glass Cartel

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Neelie Kroes

European Commissioner for Competition Policy

Car Glass Cartel

Opening remarks at press conference

Brussels, 12th November 2008

Ladies and gentlemen

I regret that today I have to announce yet another cartel decision by the Commission, yet another example of unlawful corporate behaviour.

Four car glass manufacturers, Saint Gobain, Asahi, Pilkington and Soliver, cheated the car industry and millions of car buyers for five years, between early 1998 and early 2003. The Commission has fined them a total of €1 383 896 000 for sharing among themselves the market for car glass.

This is the largest fine ever imposed on a cartel in Europe.

The products covered by the cartel were windscreens, side windows and rear windows for new cars, and branded replacements for these items sold by authorised repairers.

The overall fines are high because of the large market (worth two billion euros in the last year of the cartel), the seriousness of the case, and Saint-Gobain's earlier offences. The Commission has imposed such high fines because it cannot and will not tolerate such illegal behaviour. Management of companies that damage consumers and European industry by running cartels must learn their lessons the hard way – if you cheat, you will get a heavy fine.

The four companies controlled about 90% of the glass used in the EEA in new cars and for original branded replacement glass for cars at that time.

For up to five years, these companies allocated customers amongst themselves for over 90% of the glass used by the car manufacturers in the production of the 14 million cars a year sold in the EEA - as well as for use as spare parts within their networks of authorised repairers.

The evidence uncovered by the Commission revealed several meetings at airports and hotels in various European cities (for example in Frankfurt, Paris and Brussels). At these meetings, Asahi, Pilkington, Saint-Gobain and Soliver discussed the allocation of car glass to be supplied for forthcoming new car models and renegotiations of on-going contracts. They also exchanged commercially lucrative and confidential information.

For this unethical and wholly illegal behaviour, Saint Gobain has been fined €896 000 000 for 5 years participation in the cartel. This includes an increase of 60% as Saint Gobain is a repeat offender – it was fined in 1984 and 1988 for cartels in the flat glass sector in Italy and Benelux.

Pilkington has been fined €370 000 000 for 5 years participation in the cartel.

AGC Asahi has been fined €113 500 000 for 4.5 years.

Soliver has been fined €4 396 000 for 1.5 years.

The total fine is €1 383 896 000

When the Member States passed legislation in the early 1960s to give the Commission power to set fines in antitrust cases, they recognised, in view of the huge economic damage that antitrust violations can wreak on the Single Market, that the Commission should be entitled to impose very heavy fines liable to dissuade companies from such behaviour. As a result they stipulated that fines could be up to 10% of the total annual turnover of the companies involved. The fine on Saint Gobain may be the largest ever for a cartel, but it still falls well short of that cap.

When I revised the guidelines on fines in 2006, I made clear that the level of fines would be linked more closely to the economic damage caused by the illegal behaviour and ensure a sufficient deterrent effect. In particular, I wanted to take greater account of the size of the market affected and of the duration of the cartel. With a cartelised market of over two billion euros in the final year of the cartel, with a duration of up to five years, and with companies such as St Gobain (annual turnover of over € 43 billion) and Pilkington (annual turnover of over € 3.7 billion), the fines today reflect fully this approach.

Finally, I would like to touch upon where all this money from fines goes. In a nutshell, it goes to the EU budget. Every euro paid in fines is one euro less that the Member States have to pay, and so ultimately taxpayers benefit.

That, however, is scant consolation to the car manufacturers and millions of households affected by this cartel.

This is precisely why I have been trying to make it easier for consumers and companies to seek redress through the courts when they have suffered from anticompetitive behaviour. I am looking forward to the European Parliament's Opinion on our White Paper on private damages actions after which we can start to put in place concrete measures to facilitate such redress.

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