European Commission welcomes EU court's decision to uphold its fines on plasterboard producers in 2002 cartel case

BRUSSELS , July 8, 2008 (press release) – The European Commission welcomes today’s judgments by the European Court of First Instance dismissing the great majority of the actions by four producers of plasterboard against the Commission’s decision in November 2002 fining them for operating a long running cartel on the market for plasterboard in the Benelux countries, Germany, France, and the UK (cases T-50/03, T-52/03, T-53/03 and T-54/03). The Court of First Instance confirmed the existence and duration of the cartel and upheld the fines imposed on all but one addressee. The CFI reduced the level of fine imposed on BPB PLC from € 138.6 million to 118.8 million by granting additional 10% reduction of the fine above the 30% already granted by the Commission on account of cooperation provided by BPB PLC during the investigation. The total fine imposed by the Commission was €478.32 million; following the CFI judgement that has been reduced to €458.52 million. 96% of the fine has therefore been maintained.  

On 27 November 2002, the Commission fined BPB PLC (United Kingdom), Gebrüder Knauf Westdeutsche Gipswerke KG (Germany), Société Lafarge SA (France) and Gyproc Benelux SA/NV (Belgium) for participating in a cartel on the market for plasterboard, a product which is widely used in the building industry and by DIY practitioners, in the United Kingdom, Germany, France and the Benelux countries between 1992 and 1998 (see IP/02/1744).

Court of First Instance judgments

In February 2003 all four producers fined brought actions against the Commission before the Court of First Instance claiming, inter alia, that the Commission violated their rights of defence by not providing access to evidence used in the decision, that the infringement had not been sufficiently proven, that the Commission was wrong in its characterisation of the violation as a 'single and continuous' infringement, that the Commission erred in its assessment of the duration of participation of some undertakings in the infringement, that the liability for the infringement had been incorrectly attributed and the Commission had erred in calculating the fines and in defining the roles played by various undertakings.

In its judgments, the Court of First Instance rejects all of the applicants' arguments seeking annulment of the decision. As regards the fines imposed, it confirms in its entirety the Commission decision imposing fines on Knauf, Lafarge and Gyproc. The same can be said to a large extent about BPB PLC although the Court of First Instance grants BPB PLC an additional reduction of 10% on top of the 30% already granted by the Commission on the basis of cooperation provided by BPB PLC during the investigation.

Thus the total amount of the fine imposed on BPB PLC is reduced by the Court of First Instance to €118.8 million. As regards other pleas the Commission welcomes the confirmation from the Court of First Instance, inter alia, that there is no general right to access other parties' replies to the Statement of Objections, that aggravating circumstance on account of repeated infringement may be fully taken into account even in cases where part of the infringement precedes an earlier Commission decision penalising a similar violation. Also, the CFI confirmed the Commission's finding of the cartel being a single infringement although covering different countries in the EEA. Furthermore, the Commission's analysis of the responsibility of parent undertakings was upheld.

The cartel

Plasterboard is a manufactured product used as a prefabricated construction material or by DIY practitioners and consists of a sheet of gypsum plaster sandwiched between two sheets of paper or some other material.

Following an investigation during which it carried out surprise inspections in 1998, the Commission concluded that, between 1992 and 1998, BPB PLC, Gebrüder Knauf Westdeutsche Gipswerke KG and Société Lafarge SA participated in a plasterboard cartel in the United Kingdom, Germany, France and the Benelux countries. Gyproc Benelux SA/NV joined the cartel in 1996. The companies covered by the decision produce virtually all the plasterboard manufactured in the countries concerned, which in turn represented 80% of the market for plasterboard in the European Union at the time of the infringement.

The cartel started at a meeting held in London in early 1992 at which the representatives of BPB and Knauf decided to end what they called the "price war" that was then taking place and expressed the common desire to reduce competition to a level that suited their interests on the German, French, United Kingdom and Benelux markets. In previous years, the price of plasterboard had fallen sharply as a result of fierce competition, which had directly benefited consumers.

Following the London meeting, a secret information-exchange system was set up to monitor market trends and avoid over-aggressive competition. Lafarge and subsequently Gyproc also joined the system, in mid-1992 and June 1996 respectively. On the United Kingdom market, BPB, Knauf and Lafarge repeatedly, through high-level contacts, exchanged their sales volumes information in order to provide mutual reassurance that the price war had ended. Similarly, they repeatedly gave each other advance warning of price increases.

Top representatives of the companies also met in a hotel at Versailles in 1996, on the fringes of a trade association congress, in order to prevent a new price war in Germany in the mid-1990s. Other meetings followed in Brussels, in 1997, and in The Hague, in 1998, in order to share out or at least stabilise market shares in Germany.

These high-level meetings were followed up, at a lower level, by repeated concerted action by BPB, Knauf, Lafarge and Gyproc on the application of price rises on the Germany market between 1996 and 1998. This concerted action took the form of discussions on the fringes of trade association meetings, the sending to competitors of letters announcing price increases to customers and even the sending, to the private addresses of the directors of the German subsidiaries, of the instructions given to sales forces.

Such conduct constitutes a very serious infringement of the antitrust rules laid down in Article 81 of the EC Treaty.

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