EU fines bathroom suppliers for fixing prices, Ideal Standard to pay $400 million

By Aoife White, AP
Wednesday, June 23, 2010

EU fines Ideal Standard $400M for price-fixing

BRUSSELS — The European Union has fined bathroom supplier Ideal Standard €326 million ($400 million) for secret deals with 16 other companies to fix prices for sinks, baths, taps and fittings in six European countries.

The EU’s executive commission said Wednesday that the cartel “harmed businesses such as builders and plumbers and ultimately, a large number of families” in Germany, Austria, Italy, Belgium, France and the Netherlands.

The EU says seventeen bathroom suppliers coordinated sales prices from 1992 to 2004 in hundreds of meetings of a trade association and in individual contacts between companies. They agreed to fix price increases, minimum prices and rebates.

Ideal Standard International Group says it is “shielded from financial exposure” because of an agreement with Wabco Holdings Inc. that it would be liable for the fine after Ideal took over the European bath and kitchen business of Wabco’s former parent company, the American Standard Group, in November 2007.

Wabco, based in Piscataway, New Jersey, said it can pay the fine using its existing cash balances but that it considered it excessive.

“We also believe that we have strong grounds to appeal,” it said in a statement.

Also fined were Germany’s Villeroy & Boch which must pay €71.5 million, Finland’s Sanitec which was ordered to hand over €57 million and Grohe with a fine of €54.8 million, levying a total of €622 million on all the companies involved.

Villeroy & Boch said it would “probably appeal.” Sanitec said it was also weighing up a court challenge. Grohe said the size of the fine “will likely negatively impact anticipated investment decisions” and that it would review its options, including an appeal.

U.S.-based Masco Corp. — headquartered in Taylor, Michigan — won immunity for blowing the whistle on the others.

EU Competition Commissioner Joaquin Almunia said regulators had reduced the fines for five of the companies because they argued that high financial penalties could force them to collapse. He said the companies had asked the EU not to name them for seeking a discount.

“Those companies should not be made bankrupt because of the commission’s fine,” he said. “Our objective with the enforcement of competition rules is not to increase the number of bankruptcies in our economy.”

Three had their fines halved and two won a 25 percent reduction after EU officials checked their recent financial statements, current trading information and future projections.

Another five asked for reductions but did not get them, Almunia said. He told a European Parliament committee on Tuesday that the economic downturn has caused more companies to seek fine reductions.

EU fines can go as high as 10 percent of yearly global revenue for each year the companies broke the law — which can often rack up to hundreds of millions of euros.

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