EU levies hefty fine on car glass makers

The EU's antitrust chief on Wednesday fined car glass producers Asahi, Pilkington, Saint-Gobain and Soliver more than 1.3 billion euros ($1.66 billion) for price-fixing, the largest sum ever levied by the EU for a cartel.

France's Compagnie de Saint-Gobain SA must pay 896 million euros ($1.14 billion) _ more than any other company has been fined before.

The European Commission said the four companies control 90 percent of the glass used to make European cars, a market worth 2 billion euros in 2003.

EU Competition Commissioner Neelie Kroes said the companies fixed prices over a period of five years. She said the fines were high because European industry had to "learn the lessons the hard way."

"If you cheat, you will get a heavy fine," she said. "These companies cheated the car industry and car buyers for five years."

The EU said it increased Saint-Gobain's fine by 60 percent because the company was a cartel repeat offender. It was fined last year for an EU-wide window glass cartel, following earlier fines for a Belgian flat glass cartel in 1988 and a similar cartel on the Italian market in 1984.

Saint-Gobain said it had set aside only 560 million euros ($714 million) for the "excessive and disproportionate" fine. It said it would immediately appeal the EU decision to the EU Court of First Instance and would not have to pay the fine until its legal challenge is exhausted.

"The fine represents approximately 95 percent of the annual sales of Saint-Gobain's automotive glass business in Europe and several decades' net income," it said.

European antitrust regulators can fine companies up to 10 percent of global turnover for every year they broke the law. The money goes into the EU budget, usually funded by taxpayers, and is spent mostly on farm subsidies and research.

Kroes said the Saint-Gobain fine "may be the largest ever for a cartel but it still falls well short of that (10-percent) cap" because she said the company has an annual turnover of 43 billion euros ($55 billion).

Asahi Glass Co. of Japan was fined 113.5 million ($144.7 million) for its European subsidiary, formerly called Glaverbel. It got a 50 percent reduction because it cooperated with regulators. The company said it would explain the impact of the fine on its financial results at a later date.

Britain's Pilkington PLC _ owned by Japan's Nippon Sheet Glass Co. _ must pay 370 million euros($471.6 million). A smaller company, Belgian-based Soliver NV, was fined far less: 4.396 million euros ($5.6 million).

Regulators said Asahi, Pilkington and Saint-Gobain _ the three major suppliers of glass to European automakers _ met regularly to discuss target prices, shared out markets and allocated car maker customers from early 1998 to early 2003. Soliver only joined some of these meetings.

The companies made glass for car windscreens, car doors, rear windows and sunroofs.

The antitrust investigation was triggered by an anonymous tip-off, the EU executive said.

Kroes could not say how far the cartel had hiked car prices but encouraged customers to seek damages from the glass suppliers through the national courts.