A recent European Commission decision is one of many against cartels in the building and construction industry. Given this spotlight, awareness of the rules and compliance with them is a business priority. Awareness of how competition law infringements may be used as a 'sword' could also be a key strategic advantage.
Commission fines companies in copper plumbing tubes cartel
The European Commission decided on 3 September 2004 to fine a group of companies a total of 222.3m for operating a cartel in the European market for water, heating and gas tubes for a period of 12 years. The companies are Sweden's Boliden group, Halcor S.A. of Greece, HME Nederland BV, IMI Group (UK), KME Group (Germany, France and Italy), Mueller Industries Inc. (USA, UK and France), Outokumpu (Finland) and Wieland Werke AG of Germany. Together they orchestrated a secret cartel allocating production volumes and market shares and setting price targets, price increases and other commercial terms for plumbing tubes. As a result, European consumers paid more for plumbing replacement work or when buying a house. The Commission found out about the cartel when Mueller applied for leniency in 2001. Mueller was granted full immunity as it was the first to come forward with decisive information.
Importance of compliance
This was the 17th European Commission cartel decision in the building and construction sector, adding further to the 1.5 billion of fines already levied. Over a quarter of all cartel cases have been in the building and construction sector. Given this industry profile, awareness of the rules and compliance with them is a key business priority. Our Competition Survival Pack (or CSP) is aimed at providing building and construction firms with this awareness and guidance for compliance.
Suffering loss as a result of another's anti-competitive behaviour – claiming for damages
Armed with the European Commission's decision, it will be easier for third parties who have suffered loss as a result of the cartel to claim damages from the cartel members.
In fact, recent legal developments have generally made it easier for the victims of anti-competitive behaviour to claim damages through the courts:
- the creation of a specialist court, the Competition Appeal Tribunal (CAT), capable of hearing damages claims based on breaches of UK and EC competition law (introduced by the Enterprise Act 2002 in June 2003)
- the European Commission's modernisation programme effective from May 2004, emphasising the "key role" national courts have to play in the local enforcement of competition law and
- the breakthrough for UK competition damages actions when for the first time, in May 2004, the Court of Appeal awarded damages based on infringement of competition law.
We expect to see more claims based on competition law, particularly to the CAT. Certain customers of the vitamins manufacturers whom the Commission found to have participated in a cartel infringing Article 81 have in fact lodged the first two cases at the CAT, claiming damages for losses suffered as a result of the operation of the cartel.
If you have suffered loss as a result of an infringement of the competition rules, for instance if the cartel activities of your suppliers have forced you to pay too much for your materials, now is the time to think about making a claim for damages.
For further information contact Salim Gunny on +44(0)20 7367 3458 or at [email protected]