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Cartel in European Envelopes | Executive Summary

Executive Summary

In December 2014 the European Commission concluded that 5 companies, namely Bong (Sweden), GPV and Hamelin (France), Mayer-Kuvert (Germany) and Tompla (Spain), had infringed Article 101 of the Treaty and Article 53 of the EEA Agreement by forming a cartel. The relevant markets in question are the European markets for standard and special printed envelopes. In both markets the geographic dimension is coincident, and although evidences suggest practices of cartelization took place in six European countries (Denmark, France, Germany, Norway, Sweden and UK), however it involved also customers from other countries. As to product dimension, the catalogue envelope market comprehends standard non-personalized envelopes of all sizes and colors. The special printed envelope product market relates to special printed envelopes (specially designed to meet customer’s specifications), also for all sizes and colors available.

Within this market the behavior of the participants of the collusion was not compliant with the regulations in Article 101 of the Treaty and Article 53 of the EEA Agreement which prohibit anti-competitive behavior.

According to the report of the Commission, there has been a single and continuous infringement of the law. The members had a single goal – customer´s allocation and price coordination. The cartel started on 8 October 2003 in an official industry meeting in Athens and continued until 22 April 2008, when the members met in Hofheim (Germany), and thus covered a specific period of time without breaks. Furthermore, all the participants were aware of the geographical scope of the cartel and finally, the contact between the participants was frequent. There were both multi and bilateral contacts, consisting physical meetings between members with the purpose of agreeing on the functioning of their collusion. Regarding those events, the Commission concluded that the participants engaged in agreements and concerted practices, which are forbidden under European vertical restraints regulations. Competitors and costumers were influence by their behavior differently than under perfect competition.

The main harm caused by this infringement was hindering competition. Instead of
competing with each other, these companies agreed to artificially increase prices for
envelopes across a number of member states. (EU Competition Commissioner, 2014). Firms were using illicit anti-competitive practices – allocation of customers and sales volumes, price coordination, price fixing, exchange of information and bid-rigging of crossborder tenders – competitive distortions that have the capability of damaging both the consumers and other firms operating in the market. This market is also characterized by several large consumers sourcing their envelopes from different countries. Since this cartel operated in EU/EFTA members, it could have a serious effect in the trade flow, in both trade organizations, as it could hamper or disturb it and remove the benefits of the wellestablished freedom of trade in both organizations.

Even though the Commission ascertained the gravity of anti-competitive behavior as very high, the imposed fines have been adjusted due to the participant’s involvement, its cooperation in regard of the Leniency Notice and the participant’s ability to pay.

Competition Policy | Group 5

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Author: studentnovasbe

Master student in Nova Sbe

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