Sonae subsidiary Glunz faces fine of up to €27.7M after agreeing terms of settlement with German competition authority to end investigation into wood-based panels market
July 22, 2011
– Sonae Indústria, SGPS, SA announces that its indirectly held German subsidiary, Glunz AG, has agreed with the German Competition Authority (Bundeskartellamt) upon the terms of an agreement (settlement) which will put an end to an ongoing investigation into the wood-based boards market, in which both Glunz AG as well as other boards producers with activities in Germany are parties. This settlement – which only becomes effective when the German Competition Authority makes a final decision in the above-mentioned investigation – imposes on Glunz AG, the obligation of paying a fine of an amount to be determined but which shall not exceed 27.7 million euros, payable in six annual instalments, the first two being of 2 million euros each, and the remaining of increasing amounts. The six instalments shall be followed by a seventh instalment representing the payment of interest.
Sonae Indústria, SGPS, SA had been convinced of the adequacy and effectiveness of the procedures implemented for the supervision of the activities of its subsidiaries as well as of their due compliance with the various laws applicable to their operations, in particular in relation to competition. As a result, the company was surprised to be informed, initially, that an investigation had been opened by the German Competition Authority and, afterwards, with the conclusions reached by the latter.
Sonae Indústria, SGPS, SA has dedicated itself, consistently, to the recovery of Glunz, providing the company with considerable financial resources, despite the fact that Glunz has not yet achieved positive results since its acquisition (with the exception of one year). Given the difficult economic and financial conditions experienced by Glunz since its acquisition in 1998 – difficulties which were also being felt during the period in which the alleged infraction is deemed to have occurred - Sonae Indústria, SGPS, SA regrets that Glunz should now be subject to this penalty, which will clearly make the challenge of assuring Glunz’s success in the medium and long term – to which Sonae Indústria is strongly committed – a more demanding one.
Sonae Indústria, SGPS, SA considers that the settlement reached between Glunz AG and the German Competition Authority is the best outcome in terms of the future of the company and the one that best serves the interests of Sonae Indústria, SGPS, SA and of its subsidiaries. The settlement was not only an indispensible step to close the ongoing investigation without further delay, but also to limit the amount of liability and to obtain a deferred instalment payment plan.
Sonae Indústria, SGPS, SA is and intends to continue to be justly recognised for the way it abides by the rules and values of competition based on merit, the force of free markets and unrestricted respect for the consumer. In order to achieve that goal, we will immediately reinforce the promotion and dissemination of the existing compliance initiatives within the Group, which shall be redesigned to ensure that all parts of our organisation, across all geographies have a deeper and more complete awareness of and a more rigorous respect for their legal obligations.