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ACR firms' appeal against copper cartel fines overturned

THREE leading air conditioning and refrigeration copper pipe producers fined nearly Euro79m in 2003 for participating in a copper cartel, have had their appeal overturned by a European Court.
The three companies Wieland-Werke AG, Outokumpu Oy and KME (which included Tréfimétaux of France and Europa Metalli of Italy) were found guilty in December 2003 of operating a cartel 'to the detriment of their customers and, ultimately, European businesses and households'.

The European Commission fined Finnish company Outokumpu Euro18.13m, the KME Group Euro39.81m and the German company Wieland-Werke Euro 20.79m for their participation in the cartel, between May 1988 and March 2001. In 2004, the three companies appealed to the Court of First Instance for Europe about the grounds for the calculation and the amount of the fine, but the appeal was overturned on May 6.

A statement from the European court said: 'The three companies concerned brought an action before the Court of First Instance to have their respective fines annulled or reduced. The court ruled that the commission was not required, when assessing the size of the market, to deduct production costs. It further held that the commission correctly applied its rules in increasing the fines on Wieland-Werke and the KME Group by reason of the duration of the infringement and did not make any obvious error in assessing the cooperation of those two companies.

'In addition, as regards the increase in the fine imposed on Outokumpu by reason of repeat infringement, the court takes the view that, even if the previous cartel did not result in a fine by reason of special circumstances, that does not prevent the commission from making a finding of repeat infringement against that company. The simple fact that, despite an earlier finding of a near-identical infringement of the competition rules, Outokumpu decided to continue its participation in the cartel on the industrial tubes market justifies an increase in the fine'.

The cartel consisted of fixing prices, co-ordinating price increases and sharing markets, particularly by the allocation of customers and market shares and the exchange of confidential information.

In a statement Outokumpu said 'Outokumpu booked a EUR 18 million provision for the fine in 2003, which means that this decision will have no profit impact. Outokumpu has exited from the copper fabrication business by divesting the major part of the business in 2005 and the remaining in April 2008'.

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