Paper maker UPM gets massive fine for leading role in industrial bag cartel

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The Finnish paper manufacturing giant UPM was handed down a fine of over EUR 56 million by the European Commission for its role in a price-fixing cartel in the manufacture of plastic industrial bags.
      The Commission imposed a total of EUR 290 million in fines against 16 companies involved in the cartel. UPM’s fine was the heaviest, and unlike a number of the other companies, it did not get any leniency.
      The British company BPI was let off without a fine because it revealed the other members of the cartel to the investigators. A number of other companies, which cooperated with the Commission’s investigators, had their fines lowered.
      Commission spokesman Jonathan Todd says that UPM got the biggest fine, because the company had a leading role in the cartel negotiations. UPM was also penalised for not cooperating with the Commission during the investigation.
      "Cartels are the worst obstacle to competition, and I intend to penalise firms that operate them and so jeopardise the very basis of our market economy and harm consumers. I am sending a very clear message to company directors that such practices are unacceptable", said Neelie Kroes, the European Commissioner for Competition in a statement issued on Wednesday.
     
UPM is saying little about the case. The company’s lawyer Petri Meurman said that UPM would examine the decision, after which a possible appeal would be considered.
      "This is the Commission’s decision. They have followed their own rules", Meurman said. UPM has two months to file a possible appeal.
      The fine puts a serious dent in UPM’s result for this year. In the first three quarters, the company’s profit before taxes was EUR 348 million.
     
The Commission says that the companies involved had secretly agreed on sales prices, had divided orders of major clients amongst themselves, and had agreed on the size of bids for contracts during more than two decades.
      The cartel agreements were negotiated by the sales executives or CEOs of the companies involved within the Valveplast trade association.
      UPM sold the Rosenlew industrial bag production that was under its ownership in December 2000. In 2001 the market for plastic industrial bags was estimated to be worth about EUR 265 million.


Previously in HS International Edition:
  Document reveals strict conditions for severance package for ex-UPM CEO Juha Niemelä (31.5.2005)

Links:
  European Commission Press Release 30.11.2005: Commission fines 16 firms EUR 290 million for industrial bags cartel

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