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European Commission Fines Auto Glass Manufacturers for Price-Fixing

The European Commission has imposed fines, totaling 1.7 billion U.S. dollars (1.4 billion Euros), on Asahi, Pilkington, Saint-Gobain and Soliver for illegal market sharing and exchange of commercially sensitive information regarding deliveries of auto glass in the European Economic Area (EEA).

According to a statement released by the commission this morning, between early 1998 and early 2003 these companies allegedly "discussed target prices, market sharing and customer allocation in a series of meetings and other illicit contacts."
Belgium-based Soliver also took part in some of these discussions, according to the statement.

"These four companies controlled about 90 percent of the glass used in the EEA in new cars and for original branded replacement glass for cars at that time, a market worth about [$2.5 billion U.S. dollars] in the last full year of the infringement," writes the commission.
Commission officials say it started the cartel investigation on its own initiative following a tip-off from an anonymous source.

The Commission increased the fines to St. Gobain by 60 percent because it was a repeat offender, according to the statement, and Asahi provided additional information to help expose the infringement and its fine was reduced by 50 percent under the Leniency Notice. The Commission reports that these are the highest cartel fines it has ever imposed, both for an individual company ($1.1 billion U.S. dollars on Saint Gobain) and for a cartel as a whole.

"These companies cheated the car industry and car buyers for five years in a market worth two billion euros in the last year of the cartel," says competition commissioner Neelie Kroes. "The overall fines are high because of the large market, 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 behavior. Management and shareholders 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 Commission started this investigation on its own initiative on the basis of reliable information provided by an anonymous informant, officials report. The information prompted the Commission to carry out surprise inspections in 2005 at several sites of auto glass manufacturers in Europe.

After the inspections, Asahi Glass Co. and its European subsidiary, AGC Flat Glass Europe (formerly 'Glaverbel), filed an application under the 2002 Leniency Notice. Under the Leniency Notice, companies can benefit from a reduction of up to 100 percent if they enhance the Commission's ability to discover secret cartels. Asahi/Glaverbel cooperated fully with the Commission and provided additional information to help to expose the infringement and its fine was reduced by 50 percent.

Asahi, Pilkington, Saint-Gobain and Soliver had regular discussions "with a view to allocating between themselves car glass supplies to car manufacturers in response to their tenders and to keeping the market shares of each individual car glass supplier as stable as possible at the European level," the Commission reports.

The evidence uncovered by the Commission revealed several meetings at airports and hotels in different European cities (for example in Frankfurt, Paris and at Charles de Gaulle (Paris) and Zaventem (Brussels) airport hotels) during which Asahi, Pilkington, Saint-Gobain and Soliver discussed the allocation of car glass to be supplied for upcoming car models to be produced and renegotiations of on-going contracts, and exchanged commercially lucrative and confidential information, according to the press release issued by the Commission.

The fines in this case are based on the "2006 Guidelines on Fines." Under these Guidelines, fines reflect the overall economic significance of the infringement as well as the share of each company involved. In setting the fines, the Commission took into account the respective affected sales of the companies involved as well as the combined market share and the geographical scope of the cartel agreements.

The Commission increased the fines for Saint-Gobain by 60 percent because it was a repeat offender, having already been fined for cartel activities in previous Commission decisions in 1988 for Flat Glass Benelux and 1984 for Flat Glass Italy.

The fines are as follows:

Company Reduction under the Leniency Notice (%) Reduction under the Leniency Notice (U.S. dollars) Approx. Fine (U.S. dollars)
Saint-Gobain (France) 0 0 1.1 billion
Asahi/AGC Flat Glass (Japan) 50 1.4 billion 142 million
Pilkington (UK) 0 0 464 million
Soliver (Belgium) 0 0 6 million
Total N/A N/A 1.7 billion



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