Page last updated at 16:45 GMT, Wednesday, 12 November 2008

Glass makers hit with huge fine

SMashed windscreen
The European car glass cartel has been smashed

Four car glass makers have been hit with the European Commission's largest cartel fine after being found guilty of "cheating" car buyers.

Asahi Glass, Pilkington, Saint-Gobain and Soliver have been ordered to pay 1.38bn euros (1.14bn; $1.73bn).

Saint-Gobain alone was fined 896m euros after repeat offences. It said the fine was "excessive and disproportionate".

Asahi and Pilkington said they would decide what action to take once they had seen the full text of the decision.

The fine handed down to Saint-Gobain represents the biggest single cartel fine imposed on an individual company.

Manipulating the market

The companies were penalised for illegal market-sharing and exchanging commercially sensitive information.

The Commission found that they held regular discussions between 1998 and 2003 to allocate glass supplies to car manufacturers and keep their individual market shares as stable as possible.

Competition Commissioner Neelie Kroes said: "These companies cheated the car industry and car buyers for five years. The Commission has imposed such high fines because it cannot and will not tolerate such illegal behaviour."

The four companies control 90% of the glass used for new cars in the European Economic Area, a market that was worth 2bn euros in the last full year of the infringement.

Court of appeal

Saint-Gobain said that it intends to appeal against the Commission's decision in the Luxembourg Court of First Instance, despite the fact that it has yet to receive the exact terms of the Commission's findings.

The company had already set aside 560m euros, some way short of the actual fine of 896m euros.

It said the fine represented about 95% of the annual sales of Saint-Gobain's Original Equipment Manufacturer (OEM) automotive glass business in Europe, and "several decades' net income".

Financial impact

A statement from Pilkington said that the company had already made provisions of 250m for its fine. This falls some way short of the actual 377m euro (310m) fine.

This will result in a loss of 60m that will be recognised as an extraordinary item in the income statement for the second quarter of the current financial year.

However, the company said it would "examine the decision and decide on future action, including a possible appeal".

Similarly, Asahi Glass said that it would decide what action to take once it had received the full text of the Commission's decision.

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