24 May 2024, 15:26
By Furniture News Jan 29, 2014

Foam producers fined €114m in cartel settlement

The European Commission has found that the four major producers of flexible polyurethane foam - Vita, Carpenter, Recticel and Eurofoam - participated in a cartel, and has imposed fines totalling €114,077,000.

Flexible polyurethane foam is mainly used in household furniture such as mattresses or sofas. Applications in the automotive sector – in particular for car seats - also account for around a quarter of the total flexible polyurethane foam market.

The European Commission reports that the companies colluded to co-ordinate the sales prices of various types of foam for nearly five years, from October 2005 until July 2010, in 10 EU Member States (Austria, Belgium, Estonia, France, Germany, Hungary, the Netherlands, Poland, Romania and the UK).

Vita was not fined as it benefited from immunity under the Commission's 2006 Leniency Notice for revealing the existence of the cartel to the Commission. Eurofoam (a joint venture between Recticel and Greiner Holding AG), Recticel and Greiner received reductions of their fines for their co-operation in the investigation under the Commission's leniency programme. Since all companies agreed to settle the case with the Commission, their fines were further reduced by 10%.

Commission vice president in charge of competition policy, Joaquín Almunia, says: "Cartels harm our entire economy and cannot be tolerated. This case illustrates how essential it is to keep fighting and sanctioning such illegal behaviour – here the cartelised product is both a key component of the furniture bought by all citizens, such as mattresses and sofas, and a significant input for certain businesses, for example car makers."

The aim of the cartel was to pass on raw material price increases of bulk chemicals to customers and avoid aggressive price competition between the four producers. In order to achieve this goal, the cartelists organised price co-ordination meetings at all levels of European management. The participants met on the margins of European and national associations and had numerous telephone and other bilateral contacts. The cartel operated for almost five years, from October 2005 until July 2010.

According to a BFM spokesperson, the UEA - European Furniture Manufacturers Association - formulated a complaint to the EU on pricing over three years ago.

Read more here.

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