Police raid offices of numerous forest companies over cartel suspicions

UPM provided police with information voluntarily

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Competition authorities from both Finland and the EU raided the offices of Europe's largest forest industry companies on Tuesday. The EU investigators sought evidence of a cartel in the paper industry, and the Finnish authorities suspect that the companies have cooperated in setting prices in the timber trade.
      UPM, one of Finland's leading forest sector companies, was the source of material that launched the investigation. In January, UPM provided the authorities with information on how deals are made in the forest industry. Consequently, the company may escape without a fine if evidence on a cartel is discovered.
      Cartel fines can be up to ten percent of a company's net sales. According to the new competition legislation, a whistle-blowing company can be pardoned from the fines.
      UPM started its own investigation into cooperation with competitors one year ago. According to Reko Aalto-Setälä, UPM General Counsel, odd things began to emerge during the inquiry.
     
Finnish Competition Authority Director General Matti Purasjoki says that the evidence on a cartel in raw timber purchases is strong owing to the information that UPM provided. "UPM has told us everything, and we have information on all of Finland", the confident Director General said.
      Implicated in this cartel are UPM itself, Stora Enso, and Metsäliitto. Both Stora Enso and Metsäliitto, the parent company of M-real, deny breaking any competition laws. The offices of Stora Enso and Metsäliitto were raided by Finnish Competition Authority inspectors on Tuesday.
      The authorities have suspected the existence of such a cartel for years in Finland, but no firm proof has been found. Three years ago, the companies were convicted of illegal price cooperation in the Mikkeli region, but the sentences were very lenient.
      If a cartel is now discovered, the cooperation will be forbidden, and then the case will go to court. Purasjoki stated that the suspected cooperation continued up to 2002 at least, but perhaps even longer.
     
The European strain of the investigation has its roots in the United States, where authorities first suspected UPM of being a member in a labelstock cartel. These investigations have uncovered evidence that competition laws may have been violated in Europe as well, and in other paper products that just labelstock adhesives.
      UPM instigated its internal investigation after the U.S. suspicions surfaced. It has been in contact with competition authorities in the EU, Canada, and the U.S. UPM first contacted the authorities on January 15th, and the company's President and CEO Juha Niemelä announced his resignation on January 29th.
      According to the information of Helsingin Sanomat, the cartel incident was one of several reasons behind Niemelä's decision to leave the company.


Previously in HS International Edition:
  Juha Niemelä unexpectedly resigns as CEO of UPM-Kymmene (30.1.2004)

Links:
  UPM press release

Helsingin Sanomat