OREANDA-NEWS. June 26, 2015.

Statement by EU Commissioner for Competition Margrethe Vestager:

"Fighting cartels is a very high priority for the European Commission. This is because of the serious harm cartels cause to consumers and businesses. And the huge damage cartels inflict on the economy as a whole in terms of removing incentives to compete on prices or to innovate.

Today the Commission has decided to impose fines totalling over €115 million euros on ten companies for running cartels in retail food packaging. In fact, eight manufacturers and two distributors ran five separate cartels concerning trays used for retail packaging of food such as cheese, meat, fish and cakes. The kind of trays we are all familiar with when we do our shopping.

These polystyrene foam and rigid trays only cost a few euro cents each but retailers use many billions of them every year in the countries affected by these cartels. So you can get some idea of the potential damage done to retailers, and in turn to consumers, when companies get together to agree on prices and to share markets between themselves.

Each of the cartels covered a different European region which together included the majority of EU Member States. One covered France, another Italy, another Central and Eastern Europe (the Czech Republic, Hungary, Poland and Slovakia), another North-West Europe (Belgium, Denmark, Finland, Germany, Luxembourg, the Netherlands, Norway and Sweden) and the fifth one covered South-West Europe (Spain and Portugal).

The cartels lasted between one and almost eight years between 2000 and 2008.

The eight manufacturers (Coopbox, Huhtam?ki, Linpac, Magic Pack, Nespak, Silver Plastics, Sirap-Gema and Vitembal) and two distributors (Ovarpack and Propack) participated in all or some of the five cartels. With some variations between the cartels, the companies involved engaged in a range of classic cartel activities: they coordinated prices, allocated customers and markets, coordinated their bids for tenders and exchanged commercially-sensitive information.

This is the third cartel decision adopted this year. It was adopted under the ordinary procedure, rather than the settlement procedure. This shows that the Commission remains flexible – we choose whichever procedure best serves the Commission's commitment to fighting cartels and restoring competition.

The fines imposed reflect the seriousness of the infringements, the turnover generated by the products affected by the cartels and the duration and degree of each company's participation. They should deter companies from engaging in such harmful behaviour.

At the same time, we encourage companies to cooperate with us to uncover and investigate cartels. That's why, as usual, the individual fines have been adjusted to reflect whether or not a company has chosen to provide evidence to help the Commission prove the infringements (as many of them have).

This is not all we have done against cartels today. While I can only hope that most of the cartelised retail food packaging has at least been recycled after use, the other cartel case that I want to talk to you about is about a product that has already entered the recycling process. Today we have sent statements of objections to five companies that we suspect of having operated a cartel in the market for recycling lead from used car batteries.

The statements of objections allege that, from 2009 to 2012, these five companies agreed on prices for scrap lead-acid batteries in Germany, France, the Netherlands, and Belgium.

Unlike in most cartels where companies usually conspire to increase their sales prices, the companies in this case appear to have colluded to reduce their purchase prices.

This may seem like desirable outcome, as the companies' purpose was to cut input prices and to reduce price volatility. However, the preliminary conclusion of our investigation is that the main goal of the cartel members was in fact simply to maintain higher profit margins. The cartel members may have lowered the prices paid to scrap dealers, many of which are small and medium-sized companies. This would then feed through in lower prices for used batteries sold for scrap, ultimately to the detriment of sellers.

The result, the Commission alleges, was the same as in any price-fixing cartel: disrupting the normal functioning of the market and preventing competition on price.

Artificially fixing the price of lead from recycled batteries, as the Commission suspects, is a very serious matter because it interferes with the effective functioning of the recycling market.

Around 80% of lead scrap comes from waste lead-acid car batteries and practically all car batteries undergo recycling at their end of life. Recycling companies process the batteries in various steps to produce pure lead or lead alloys, most of which is used for making new car batteries.

The concept of the ‘circular economy’ refers to re-using, repairing, refurbishing and recycling existing materials and products. Car battery recycling essentially functions in a closed-loop cycle but the behaviour of these companies would interfere with this loop and affect the circular economy.

If the existence of the cartel were to be confirmed, putting an end to such price fixing would make the market for recycling lead from car batteries more efficient.

The parties now have the opportunity to reply to the Commission's allegations in the statement of objections."