Cartels - A Review.

The airline price-fixing investigation, reported on in November 2006, is a good example of the use of the OFT's powers due to the Enterprise Act 2002. The BA/Virgin Atlantic price-fixing cartel investigation is a criminal and civil investigation into fuel surcharges under the Enterprise Act 2002 and in conjunction with the US Department of Justice. As a consequence, BA's commercial director Martin George and head of communications Iain Burns resigned in October 2006.

On October 1 2004 the Competition Appeal Tribunal delivered its judgment in two appeals (as to liability) brought by JJB and Allsports against the OFT's August 2003 decision of the OFT, in which it concluded that a number of separate infringements of the Chapter 1 prohibition had occurred in 2000 and 2001 involving price fixing between a supplier and manufacturer of replica kit (Umbro) and various retailers of such kit (including JJB, Allsports, Blacks, JD, Sports Soccer and Sportsetail). The OFT had imposed fines totalling [pounds]18.6 million.

The UK's Enterprise Act 2002 gives the Office of Fair Trading and the Serious Fraud Office enforcement regimes similar to those of the United States. Section 188 of the Enterprise Act 2002 creates a specific criminal offence, when an individual dishonestly agrees with one or more persons that two or more businesses will engage in certain prohibited cartel arrangements, such as price-fixing or bid- rigging is punishable with a maximum of five years' imprisonment and/or an unlimited fine. The Enterprise Act also creates a series of independent offences for failing to cooperate with, or obstructing, an investigation.

The SFO has separate powers to prosecute individuals and in April 2006 the SFO launched criminal proceedings against nine individuals and five companies for allegedly conspiring to defraud the NHS in relation to a fraud that involved restricting the supply of certain drugs between January 1996 and December 2000. On 25th January2007, the US has extradition proceedings against Ian Norris. Norris's appeals were dismissed against an English High Court ruling extraditing him to the US to face charges of conspiracy to fix prices, obstructing the course of justice, and interference with witnesses. The US authorities allege that Mr Norris discussed and exchanged price quotations and submitted collusive, non-competitive or otherwise rigged bids. They also allege that he did so dishonestly. The Court found that "secrecy, which almost always must have as its object misleading customers into believing that they are paying a market or near market price, instead of one rigged by suppliers in the market, is and was at the material time clearly capable of being regarded by an English jury as dishonest".

A UK cartel offence under section 188 of the Enterprise Act 2002 is limited to individuals. The Enterprise Act gives the Office of Fair Trading powers to investigate individuals suspected of having committed the criminal cartel offence. These powers include the power to require persons to answer questions, provide information and produce documents and to enter and search premises under a warrant. Where documents are produced, the OFT may take copies or extracts from them and require the person producing the documents to provide an explanation of any of them. Where documents are not produced, the OFT may require the person who was required to produce them to state, to the best of his knowledge or belief, where they are. The Enterprise Act also gives the OFT the power of intrusive surveillance along with the related power to interfere with property. A warrant issued by a High Court judge will permit the OFT to enter the premises using such force\ as is necessary and to search and take possession of documents which appear to be of the kind in respect of which the warrant was granted, including original documents and information held electronically and accessible from the premises. The OFT can also seize material where it is not reasonably practicable, to determine the extent to which it may be seized or for the seizable material to be separated from the non-seizable material in which it is comprised.

One wonders why there have not been many other cartel cases in the UK since the Enterprise Act came into force. Is it a signal that the UK is more or less cartel- free?

What has the SFO said about cartels?

A review of the subject since 2002 reveals that the Serious Fraud Office seemed keen to cooperate with the OFT but that nothing was forthcoming until this BA/Virgin cartel investigation on airlines fuel surcharges.

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How does this situation compare with other countries?

Argentina

In the second half of 2005 inflation rates in Argentina increased led to price increases. The Argentina Ministry of Economy then requested that the National Commission for the Defence of Competition perform certain market investigations into alleged cartel activity. The industries currently under investigation were plastics and plastic containers; meat markets; public works; work-risk insurance companies; and supermarkets. Penalties if found guilty, are similar to the sanctions imposed on participants in the cement and liquid oxygen markets for their cartel activities. Regarding the cement market, the commission concluded an investigation that started in 1999 and covers the period from 1981 to 1999. According to the commission, the participants in this market created a cartel to arrange market quotas and fix prices, and also shared sensitive competitive information. It also concluded that this conduct was contrary to the general economic interest. The decision, taken on July 25 2005, imposed a fine on five companies and their trade association of a total amount of Ps309 million (approximately $110 million).

Australia

On June 30 2003 the Australian Competition and Consumer Commission's (ACCC) Leniency Policy for Cartel Conduct was announced and entered into force. It aims to encourage corporations and their executives to blow the whistle on hard-core cartel behaviour, such as price fixing, bid rigging and market sharing. Australia is one of the last key competition law jurisdictions to adopt a leniency policy for hard-core cartel conduct. The policy bears a strong resemblance to its US and Canadian counterparts

Austria

On January 1 2006 the new Cartel Act came into force in Austria. As the legislature was eager to bring Austrian cartel legislation as far as possible into line with EU cartel legislation, the law implemented the long-established EU system of not only punishing members of a cartel with high fines, but also rewarding those members of a cartel who 'blow the whistle' before the authorities know about the cartel. Mirroring EU cartel law, Section 1 of the Cartel Act 2005 prohibits agreements between undertakings, decisions by associations of undertakings and concerted practices that have as their object or effect the prevention, restriction or distortion of competition.

Section 1(2) of the new act, which sets out examples, also repeats the wording of Article 81(1) of the EC Treaty. In addition, the EU system of legal exemption from the general prohibition of cartels (Article 81(3) of the EC Treaty) is mirrored in Section 2 of the new act. Accordingly, the registration of cartels will no longer be necessary or possible in Austria.

The Act has been used against a well-known Austria-based company after it disobeyed the merger control rules and on June 7 2005 the Cartel Court fined the company C1.5 million for illegally implementing a merger. Although the merger was later cleared, the court's decision is final. In May 2004 the Austrian company took over a British company active in the same business area. The company and the target are the only suppliers of the niche product in question. The company is the main provider worldwide of this product and has patented it. The target was not active in Austria. The legal opinion of a consulted (non-Austrian) attorney said the merger would have no immediate predictable effect on the Austrian market and so there was no need for notification. Following this opinion, the Cartel Court was not notified of the intended acquisition and implementation started. Due to complaints about the merger from competitors, the Federal Cartel Authority began to investigate. It stated that the thresholds for merger notification had been met and applied to the Cartel Court in May 2004 to fine the company.

Another Austrian cartel case is Europay Austria Zahlungsverkehrssysteme GmbH which operates Maestro was fined C5 million in December 2006 for an alleged illegal cartel and abuse of a dominant market position. The cartel court in Austria stated that the hardcore cartel was operated by agreement between Europay and major Austrian banks, and was intended to close off the market and impede competition. The fine is the highest set by the Cartel Court since the fine system was introduced into the Cartel Law in 2002.

Brazil

On September 15 2004 the Administrative Council for Economic Defence (CADE) handed down its decision on the issue of whether a joint decrease in discount tariffs by the four largest Brazilian airlines pursuant to a meeting of their chief executive offers (CEOs) constituted evidence of a cartel practice. On August 9 1999, just days after a meeting between the CEOs of VARIG, TAM, TRANSBRASIL and VASP, all four companies decreased their discount tariffs for the Sfo Paulo/Rio de Janeiro shuttle service. This resulted in a 10% increase of the tariffs.

Another Brazilian cartel was the newspaper cartel. On March 9 2005 the Administrative Council for Economic Defence ruled on whether a price increase for the three largest circulation newspapers in the state of Rio de Janeiro - made on the same day and of the same percentage - constituted evidence of a cartel. On March 6 1999 the newspapers Editor O Dia SA, Infoglobo Comunicacaoes Ltda and Jornal do Brasil increased their cover prices by 20% and published identical explanatory notes which had been elaborated by the Syndicate of Newspaper and Magazine Owners of Rio de Janeiro State.

Canada

In 2005 further convictions were obtained in respect of the Canadian Competition Bureau's long-running international graphite electrodes cartel investigation and Robert J Hart, a former senior vice president of UCAR International Inc, pleaded guilty under Section 45(1) of the Competition Act and was fined C$50,000 by the Federal Court of Canada for his role in a conspiracy to fix the price of graphite electrodes. Mitsubishi Corporation was convicted and fined C$1 million by the Ontario Superior Court of Justice for aiding and abetting the implementation in Canada of a foreign-directed conspiracy to fix the price of graphite electrodes, contrary to Section 46(1) of the Competition Act. Nippon Carbon Co Ltd pleaded guilty and was fined C$100,000 by the Federal Court of Canada for aiding and abetting an international conspiracy to fix the price of graphite electrodes.

In another Canadian cartel case, in August 2005 Ajinomoto Co Inc and CJ Corp pleaded guilty of participating in a price-fixing cartel in respect of nucleotides (which are used as flavour enhancers in, for example, soups and sauces). The companies were fined C$1.5 million and C$175,000, respectively, for their participation in the cartel.

Also, in November 2005 Labatt pleaded guilty to a charge of price maintenance on discount beer sold by nine independent convenience/grocery retailers in Sherbrooke and other parts of Quebec. As a result, Labatt was fined C$250,000 and a prohibition order was issued against the company.

Czech Republic

Under the Act on Protection of Economic Competition 'cartel behaviour' is defined as the entering into of agreements where the main aim is to:-directly or indirectly fix prices or other business terms and conditions; limit or control the production, sale, research and development of investments; divide markets or sources of supply; attach conditions to the conclusion of a contract, which by their nature or according to commercial usage and fair business practices have no connection with such contracts; apply varying conditions to identical or equivalent transactions with other entities, thereby placing them at a competitive disadvantage; or oblige the parties to an agreement to refrain from trading with entities that are not parties to it, or otherwise harm them (eg, by group boycott).

Such agreements are null and void unless the Office for the Protection of Economic Competition grants an exemption from the prohibition by decision or decree. The office may impose administrative fines on entities that violate the act or issue decisions ordering that they refrain from the prohibited activities under the agreement.

Denmark

In November 1991 Aalborg Portland received a statement of objection concerning its participation in a European-wide cartel, which was allegedly still in existence at that time. In November 1994 the commission issued a decision against a number of European cement producers. On appeal, the European Court of First Instance upheld the commission's decision, but reduced the fine applicable to Aalborg Portland, ruling that its infringement ceased in 1988.

European Union

In January 2007, the European Commission imposed fines of C314.7 million on 30 companies for price fixing in the copper fittings sector. The commission fined the 30 companies (belonging to 11 different groups) a total of C314.7 million for their participation in a cartel in the copper fittings market involving: - price fixing; rebate fixing; coordinated price increases; customer allocations; and exchanges of commercially sensitive information. In the course of its investigation, which was prompted by a leniency application lodged by Mueller, the commission found significant evidence of the existence of the cartel between 1998 and 2004, including handwritten notes and evidence of cartel meetings. The commission's file also included witness interviews and corporate statements by leniency applicants.

In July 2006 The European Commission fined seven companies C388 million for their participation in a bleaching chemicals cartel involving information exchanges, the setting of production quotas, market share allocation and price fixing.

The fines on some companies - Aalberts, Delta, Advanced Fluid Connections and Legris - were increased by 60% because they had continued to engage in cartel activity even after the dawn raids had taken place.

In December 2002 Degussa made an application to the commission for immunity from fines in connection with cartel activity in the acrylic glass market. The commission subsequently carried out a series of dawn raids which triggered applications by Arkema and Lucite for a leniency reduction. During its investigation, the commission found that between 1997 and 2002, the companies had agreed on prices and exchanged confidential information. The cartel participants had met several times in hotels to plan coordinated price increases in January and November 2000. ICI was fined C91.4 million and Quinn Barlo C9 million. Arkema and ICI both had their fines increased by 50% as this was not the first time these companies had been fined for cartel behaviour. As a result of Degussa's leniency application, the commission granted it full immunity from fines. Arkema and Lucite also had their fines reduced by 40% and 30% to C219.1 million and C25 million respectively in return for information provided to the commission throughout the investigation.

On December 11 2001 the commission fined six companies active in the zinc phosphate market a total of C11.95 million for participation in a cartel. Britannia Alloys & Chemicals submitted that the commission had infringed Article 15(2) as, when calculating the 10% maximum threshold limit, it took into account Britannia's turnover in a business year other than that preceding the decision. Their appeal was dismissed.

Finland

In Spring 2002 the Competition Authority launched dawn raids at the premises of several asphalt undertakings. The dawn raids were based on suspicions that arose from prior investigations which hinted that certain asphalt undertakings had divided the market among themselves and engaged in price cooperation and collusive bidding. In November 2002 the authority launched dawn raids, again triggered by its own investigations pointing to market sharing, price cooperation and collusive bidding, at the premises of several contractors and wholesalers in the roofing felt sector.

France

In November 2005 the Competition Council imposed important fines on the following Parisian hotels for operating an illegal cartel by colluding on price strategies and sharing sales figures:- the Crillon Hotel; the Four Seasons Hotel George V; the Ritz Hotel; the Plaza Athenee Hotel; the Meurice Hotel; and the Hotel Le Bristol.

Germany

In a first instance decision on April 1 2004 the Dortmund District Court awarded a seven-figure sum to an industrial customer as compensation for the excessive prices charged by a participant in a vitamin cartel.

In another cartel case on April 5 2001, the intervener, PrimaCom AG, appealed to the D'sseldorf Court of Appeal against an FCO decision, dated April 4 2001, which authorized the acquisition by Callahan Nordrhein-Westfalen GmbH of all shares in NetCologne. Without any hearing of the other parties or the FCO, the court issued an interim injunction pursuant to Sections 65(3) (1-3), 64(3) and 60(3) of the German Act against Restraints of Competition, preventing the parties from executing the authorized merger.

On July 10 2001 Deutsche Shell GmbH and RWE AG notified the European Commission of an intended merger through which Deutsche Shell planned to incorporate its domestic oil business into DEA Mineral|l AG and to participate in DEA with an initial shareholding of 50%, and subsequently with a majority holding. DEA is a member company of the RWE group, through RWE-DEA Aktiengesellschaft.

Meanwhile, on July 27 2001 BP plc, and E.ON AG notified the European Commission of an intended merger by which BP intended to acquire initially 51% of the shares in Veba Oel AG (Aral). Veba is a wholly owned subsidiary of E.ON. On September 6 2001, in response to a Federal Cartel Office application dated August 20 2001, the European Commission again issued a decision referring the case to the Federal Cartel Office in respect of that part of the transaction which concerned the domestic mineral oil markets.

On August 23 2001, in response to an application made by the Federal Cartel Office on August 3 2001, the European Commission issued a decision referring the case to the Federal Cartel Office in respect of that part of the transaction which concerned the domestic mineral oil markets.

In 1999 German publisher Gruner + Jahr established a 50/50 joint venture with RBA Publicaciones Internacionales, the publisher of the Spanish edition of the National Geographic magazine. The joint venture signed a licence agreement with the National Geographic Society for a 10-year licence to publish a German edition of National Geographic. Although the FCO was notified of the establishment of the joint venture, the licence was not mentioned. On the contrary, the parties informed the FCO that the joint venture would not be in a position to issue a German edition of National Geographic as RBA's licence did not extend to Germany. On this basis, the FCO approved the concentration without further investigation. The FCO became aware of the licence agreement only in 2004, when Gruner + Jahr approached the authority to discuss its intention to acquire sole control over the joint venture. On August 3 2004 the German Federal Cartel Office (FCO) ruled that the purchase of a licence for the National Geographic magazine constituted a notifiable concentration, as the title in question was well established and did not have to be introduced to the market. The disputed licence agreement was subsequently prohibited as it strengthened the publisher's dominant position in the German market for popular science journals

In its Vacuum Cleaner Bags decision of October 5 2004 the court made it clear that the geographical scope of a market may go beyond the territory of Germany.

In a number of cases, the FCO investigated utilities' refusal to grant third-party access to their grid. The utilities under investigation included Elektromark, Energie Baden-W'rttemberg, Bewag, VEAG and Stadtwerke Karlsruhe.

On November 4 1999 the FCO initiated proceedings against Stadtwerke M'nchen, the local utility in Munich. Stadtwerke M'nchen refuses to grant access to its grid to other utilities, and requires the installation of a separate metre for each customer. On November 23 1999, the FCO prohibited Scandlines Deutschland GmbH's refusal to let competing ferry services use the harbour of Puttgarden. Scandlines Deutschland GmbH is controlled jointly by Deutsche Bahn AG and the Kingdom of Denmark. It operates ferry services between Puttgarden in Germany and R[degrees]dby in Denmark. The FCO found that Scandlines Deutschland GmbH has a dominant position with respect to the harbour facilities as well as the downstream market of ferry services between Puttgarden and R[degrees]dby.

On September 20 1999 the German Federal Cartel Office (FCO) prohibited a planned joint venture between Henkel KGaA and Luhns GmbH, because it would have reinforced Henkel's dominant position in the universal laundry detergents market.

Ireland

The statutory prohibition of cartels in Irish law is contained in the Competition Acts. The Competition Act 1991 introduced into Irish law for the first time a prohibition of anti-competitive agreements in terms substantively identical to the prohibition contained in Article 81 of the EC Treaty. The Competition Act 1996 introduced criminal sanctions for competition law violations, including cartel participation

In July 2003 the Irish Competition Authority initiated criminal proceedings against a number of farmers, claiming their participation in a protest at the docking of a ship importing grain amounted to a collective boycott in violation of Irish competition rules.

Italy

On January 18 2007 the Italian Competition Authority decided to open an investigation into an alleged cartel in the fuel retail distribution sector. The authority claims that petrol companies have established parallel pricing practices involving exchanges of information and price signalling. This is the first case in which the authority has dealt with the highly controversial issue of price signalling. The outcome of the case is expected to establish new rules on the relationship between market operators which may be vitally important for the marketing and pricing policies of firms, especially those operating in oligopolies.

The decision was made public on January 23 2007; on the same day the authority raided the offices of several petrol companies looking for evidence of the alleged practices. The subjects of the proceedings are the main petrol companies active in Italy - Eni, Esso, Kuwait, Shell, Tamoil, Total, API, IP and ERG. The proceedings are expected to conclude on March 31 2008.

Having analyzed fuel price trends between 2003 and 2006 and having found prices in Italy to be higher than in the rest of the European Union, the authority has focused on the parties' pricing behaviour. The authority claims that petrol companies have been using a set of mechanisms to make the market more transparent, indicating that ENI is the prime mover. In October 2004 ENI adopted a new method of determining suggested prices. It replaced a formula which followed Platts' quotations closely and resulted in frequent (although often very small) changes in price with a formula which follows the main trends in the variation of the quotations, making adjustments less frequent but more consistent.

After an initial period of a few months in which rival companies maintained a different pricing method, the competitors seem to have aligned their pricing policies with that of ENI; the authority maintains that they have been following signals from the price leader.

The authority observes that all of the companies in question make their suggested prices available to Staffetta Quotidiana, detailing the base component and all potentially applicable differentials, which are then published in a special supplement dealing with retail prices of refined petroleum products.

In June 2001 the authority launched an investigation to determine whether the 10 major cigarette manufacturers active in the Italian market (including Philip Morris, British American Tobacco and Italy's former state owned giant, the now-privatized Ente Tabacchi Italiani-ETI), accounting for almost 100% of the market, had set up a price-fixing cartel. The authority's suspicions were raised by the fact that the last price increase was announced by the press as identical for nearly all brands of cigarettes a few days before the producers' official announcement was made public on March 30 2001.The authority alleged that since cigarette prices in the Italian market were liberalized in 1993, the producers under investigation have applied almost identical price increases simultaneously.

At the end of May 2001 the Antitrust Authority commenced an investigation aimed at ascertaining whether Camed, a company which, through its subsidiary Bacini Napoletani, held the exclusive right to use the docks where ships are repaired in the port of Naples, had abused its dominant position to discriminate against competitors in the downstream market of ship repair and maintenance services.In the authority's view, Camed-Bacini Napoletani's behaviour has significantly hindered the development of the ship repair and maintenance services market in Naples harbour over the previous five years.

Korea

In 2002, the Korea Fair Trade Commission imposed combined civil penalties of over $8 million on six graphite electrode producers from Germany, Japan and the United States for their participation in an illegal international cartel.

The companies subjected to the corrective measures, their countries of incorporation and the penalties imposed are as follows: SGL Carbon Aktiengesellschaft (Germany) - $731,000; Nippon Carbon Co Ltd (Japan) - $2.7 million;SEC Corporation (Japan) - $27,000; Showa Denko KK (Japan) - $3.3 million; Tokai Carbon Co Ltd (Japan): $913,000; and UCAR International Inc (United States): $513,000.These six companies, which account for around 80% of the global graphite electrode market, had held several meetings between May 1992 and February 1998 and reached agreements on prices and allocation of the world market (including Korea) and implemented those agreements.

Latvia

After an investigation which lasted for over a year, the Competition Council has concluded that in the period between July 2002 and April 2003, Latvian egg producers had participated in a cartel agreement to fix the prices of hen eggs, in contravention of the Competition Law. The Competition Council began its investigation into the egg market in May 2003, after information appeared in the media about a decision of Latvia's leading egg producer - which has a market share of about 50% - to increase the price of hen eggs by one santim (approximately C0.014) per 10 eggs.

In order to prevent consumers from switching to cheaper eggs produced by other companies, the leading egg producer advised all members of the Latvian Egg Producers' Association The council proved that each company could regulate its commercial actions through informal meetings of the egg producers, safe in the knowledge that its competitors would act in the same way.

During a 10-month period in 2006 the Competition Council has taken 10 decisions regarding potential cartels within company operations. Five of those decisions have established violations and imposed penalties.

In October 2006, with the council imposed penalties for the establishment of a cartel by two energy sector companies of Lats133, 812 (C190,390) and Lats7, 591 (C10,800) respectively. In this case the council established the existence of a cartel when state-owned electricity company Latvenergo filed an application with the council indicating that both tender participants had submitted identical proposals to a tender announced by Latvenergo. The council concluded that the competitors had coordinated their tender offers with the purpose of participating in the tender and that the aim of the applicants' agreement was to create competition conditions that did not correspond to normal market conditions In finding that the competitors' activities had resulted in the preclusion, restriction and alteration of competition, the council imposed penalties on each company in the amount of 1% of each company's net sales for 2005.

Netherlands

In 2007, BASF and Basell claim to have suffered damage as a result of the organic peroxides cartel. BASF alleged that the damage it suffered as a result of the cartel exceeded C140 million; Basell claimed that its damage amounted to C28.2 million. Akzo Nobel received full leniency for its participation in the cartel.

In July 2002 the Competition Authority presented the conclusions of its investigation of the Dutch construction sector. A combination functions as a medium for the exchange of information as well as a sanction mechanism for maintaining the cartel.

New Zealand

In 2006 the commission successfully obtained record-breaking penalties in New Zealand's largest-ever cartel prosecution. The high-profile case concerned an extensive cartel arrangement between firms in the domestic markets for wood chemicals and treated timber; all of the firms involved had agreed to price fixing, bid rigging and attempts to exclude a new entrant from the market. The fines in the civil and criminal actions totalled over NZ$5 million (US$3.4 million) Portugal

The Competition Authority recently imposed a fine of C910,000 on four undertakings for their alleged involvement in a cartel in the salt sector. The cartel was deemed to have been active for at least eight years, between 1997 and 2005. An investigation began in March 2005 in response to a complaint; the decision was issued in July 2006 In 1997 Vatel, Salexpor, Sociedade Aveirense de Higiena[double dagger]fo de Sal (Vitasal) and Salmex entered into an agreement which established: - the market share of each participant by sales volume; a penalization or set-off system based on the undertakings' increases or decreases in sales; minimum prices; and the synchronization of price rises.

In order to maintain this market share freeze, the cartel members exchanged information on sales volumes on a monthly basis, allowing them to monitor each other's compliance with and deviations from the agreement. The authority found that the members held at least 15 meetings between May 2000 and January 2005.The undertakings were sentenced to a total fine of C910,728. Vatel was ordered to pay C544,672, Salexpor C225,347, Vitasal C109,149 and Salmex C31,560.

Singapore

The draft guidelinesof the Competition Act 2004 on investigation and enforcement largely follow the guidelines set down by the Office of Fair Trading (OFT) in the United Kingdom.

Sweden

In 2004 the Competition Authority filed a summons application with the Stockholm City Court requesting that fines of approximately Skr1.6 billion be imposed on 11 companies in the asphalt surface industry.

Also in 2004, following suspicions of cartel activity in the natural gas market, the Swedish Competition Authority joined forces with its Danish counterpart in dawn raids in Sweden and Denmark to secure evidence.

In 2003 five petrol companies were found guilty by the Stockholm City Court of operating as a cartel.

In 2002 the Swedish Competition Authority's suspicion as to the existence of a pipe cartel in Sweden was confirmed after extensive investigations. Legal proceedings were initiated by the Swedish Competition Authority at the Stockholm District Court against the pipe companies KWH Pipe Sverige AB, Uponor AB and Aktiebolaget Svenska Wavin, requesting the imposition of a total fine of Skr17.5 million.

Venezuela

On November 14 2003 Corporacin Televen CA filed suit against the two major Venezuelan television broadcasting companies, Corporacin Venezolana de Televisin (Venevisin) and RCTV CA, alleging violation of six articles of the Law for the Promotion and Protection of Free Competition, including Articles 6 and 10(1) and (3), which refer to exclusionary practices, price fixing and market division.

The superintendency found that Sercotel had been incorporated by Venevisin and RCTV in 1973, and that it was not only a company engaged in collection activities, but also the channel through which both television stations had exchanged strategic confidential information since then. There was clear evidence of concerted conduct between the two broadcasters in the sale of advertising space in open television. A conscious parallelism existed in the acts performed by both companies in their design, calculation and planning of the commercialization strategies for advertising space, which was shown in the contracts executed with advertisers.

The analysis of the facts and the pertinent legislation led the superintendency to conclude that the television broadcasting market in Venezuela is concentrated. Between them, RCTV and Venevisin enjoy approximately 70% of the market. Therefore, they have sufficient power to affect the market jointly; there was no explanation for the companies' strategy of offering preferential conditions to advertisers in order to attract their investment On February 24 2005 the superintendency ruled that the activities of Venevisin and RCTV restricted free competition in the manner set out in Articles 6 and 10(1) and (3) of the Pro-competition Law. It imposed fines of approximately $10 million on each company.

Conclusion

In comparison with other countries, it appears that the United Kingdom is a fair price trading area and it appears not to engage in criminal cartel offences.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mrs Sally Ramage

Sally Ramage

COPEHALE

COPPENHALL

STAFFORD

South Staffordshire

ST18 9BW

UNITED KINGDOM

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