03 July 2015

CNMC fines 18 undertakings €57.7 million in the paper and corrugated cardboard sector

On 23 June 2015, the Spanish Competition Authority (CNMC) announced the adoption of a decision fining 18 operators (including one association of undertakings) in the paper and corrugated cardboard manufacturing sector.

This decision is taken as a result of the formal infringement proceedings (S/0469/13) opened against eleven undertakings and one association of undertakings initiated in May 2013, which were subsequently expanded in order to include eleven more companies.

The Spanish watchdog considers that the aforementioned companies were involved in a single continuing breach of Article 1 of the Spanish Competition Act 15/2007 and of Article 101 TFEU as a result of the collective recommendations, information exchanges and price fixings that were agreed.

Two different markets were identified by the CNMC: (i) the manufacture of paper pulp and paper for the production of corrugated cardboard market; and (ii) the manufacture of corrugated cardboard and its conversion into packages.

The anti-competitive conduct took place between 2002 and 2013 in both markets through “regional roundtables” where manufacturers of the relevant region agreed on prices, information exchanges, customers sharing in the manufacture of corrugated cardboard and its conversion into the packages market. The Spanish watchdog noted that many of the recommendations were issued through the media.

Both markets are intrinsically related as variations in production rates and prices of paper have a direct impact in the final price of packages as a result of paper being the main raw material for the production of corrugated cardboard. Additionally, a cartel in this market has a direct impact in all economic sectors as paperboard packages are used by companies in all sectors hence an increase in their price will impact on the final customers in all markets.

According to Spanish law, the amount of fines, which can be up to 10% of the turnover of the previous year, shall be determined after taking into account several elements such as the seriousness and duration of the infraction and the company's collaboration with the watchdog. Therefore, by way of example, the amount of fines vary from the €19 million fine imposed on Industrias Celulosa Aragonesa, S.A. (SAICA) to the €200,000 fine imposed on the association of undertakings AFCO.

Any decision taken by the CNMC cannot be challenged via an administrative review. However, the companies involved may challenge the decision before the Audiencia Nacional, the judicial body in charge of reviewing administrative decisions issued by the CNMC, within two months of receiving the notification of the resolution.

Finally, any person or company that has suffered adverse effects from the anti-competitive practices mentioned above is entitled to seek loss and damage before the Spanish civil courts.

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