In November 2004, the EU Commission dawn raided the offices of Grohe, American Standard and other bathroom manufacturers in a number of EU member countries. Masco whose products include those of Hansgrohe and Hueppe showers had blown the whistle on the alleged cartel, receiving immunity from fines as the first to provide information to the Commission. In March 2007, the Commission’s formal statement of objections said that 17 companies had coordinated their prices for bathroom fittings in Germany, Austria, Italy, Belgium, France and the Netherlands in the course of more than 200 trade association meetings between 1992 and 2004. In 2010, total fines of € 622.2 million were imposed on the 17 companies (except Masco) by the Commission’s decision finding them to have participated in a cartel fixing prices for baths, sinks, taps and other bathroom fittings for 12 years in the six countries.
On 16 September 2013, the Court of Justice of the EU’s General Court dismissed most of the appeals brought by the bathroom companies, including that of the whistleblower Masco. However, the General Court slashed by € 203.4 million the original fine of € 326.1 million that had been imposed on Ideal Standard and paid by Wabco Holdings Inc in September 2010 as part of the deal relating to its divestment by American Standard Companies in 2007.
Apparently, it had agreed to indemnify American Standard Companies Inc., now known as Trane Inc., and certain of its former entities involved in the cartel case. Trane is owned by Ingersoll-Rand Plc. The court reduced the fine because it found that the Commission had wrongly concluded that Ideal Standard colluded on the Italian ceramics market for longer than was proven.
This is a classic example of how long EU cartel cases last and how there can sometimes be a happy ending for someone other than the immunity applicant. However, it is normally only the whistleblower which escapes significant fines. The ultimate twist is that there is nothing to spare the bathroom fitting manufacturers from claims for damages, and even opt-out class actions, once the new Consumer Rights Bill comes into force. These cases may be brought not only in the Court of Session but also in the Competition Appeal Tribunal which can sit in Scotland as well as the rest of the UK.
If you want to learn more about competition compliance policies please contact the Brodies competition law team which will also be hosting a seminar with the Scottish Competition Law Forum on competition law damages and class or representative actions in November 2013.
On September 24, 2013