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Competition Authority says large forest companies violated law

Wood cartel allegedly maintained for years


Competition Authority says large forest companies violated law
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The Finnish Competition Authority (FCA) says that three large Finnish pulp and paper manufacturers deliberately violated the law on competition by exchanging information with each other on the price of timber.
      In a report that was issued on Tuesday, the authority assesses the behaviour of Metsäliitto, Stora Enso, and UPM on the wood market from 1997 to 2004. The officials say that the companies have committed serious violations of the law.
      According to the officials, the cartel was maintained by the heads of forestry and the regional directors of the companies. Lower-ranking managers were not let into the operations.
     
A key witness in the case is Jorma Saarimaa, regional head of UPM’s acquisition area in Southern Finland.
      "According to Saarimaa, all regional managers of UPM-Kymmene, Stora Enso, and Metsäliitto who took part in a meeting on the matter, knew how illegal the discussions were. According to Saarimaa, it was also made clear that no documents were to be made of the meeting", the FCA report states.
     
The FCA began to investigate possible price cooperation among forest companies three years ago, when UPM contacted the authority.
     In addition to wood purchases, the officials learned of possible illegal cooperation on the paper markets of Europe and the United States.
      The evidence provided by UPM was not sufficient for charges to be brought on the European market. In the United States, Stora Enso faces a fine of EUR 7.5 million.
      The biggest case focuses on wood purchases in Finland, where the Competition Authority is proposing fines of EUR 30 million on Stora Enso, and EUR 21 million on Metsäliitto. Whistle-blower UPM is getting off without a fine.
     
Stora Enso admits that its forest managers have met with representatives of its competitors. However, the company denies that the aim of the meetings was to engage in banned cooperation, insisting that the meeting involved a discussion on a general level.
      Metsäliitto began to cooperate with authorities at a fairly late stage last spring. The Finnish Competition Authority rewarded the company, a cooperative owned by Finnish foreign owners, with a reduction of EUR nine million in their possible fines.
     
Keeping wood prices under control was not enough for the companies, according to the FCA report. UPM forest manager Hannu Vainio says that agreements were made on common efforts to push prices down.
      The matter was handled through the company’s regional managers. "Vainio might communicate to his subordinates that a competitor knows that it is paying too much, and plans to change its pricing", the FCA report states.
      Jorma Saarimaa say that he and the regional managers of the competitors held discussions on the market situation, compared prices paid by the companies, and agreed on ways to prevent prices from rising, and to push the prices down.


Previously in HS International Edition:
  Competition Authority accuses Stora Enso and Metsäliitto of price fixing (22.12.2006)
  Stora Enso subsidiary faces price fixing charges in USA (14.12.2006)
  European Commission drops paper cartel investigation (17.11.2006)
  Victory for Finnish paper manufacturers in cartel dispute (10.8.2006)
  Paper maker UPM gets massive fine for leading role in industrial bag cartel (1.12.2005)

Helsingin Sanomat


  24.1.2007 - TODAY
 Competition Authority says large forest companies violated law

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