The double-glazing spacer bar competition case (an example of blatant breaches!)
First published by Admin on December 08, 2017 in the following categories: Investigations
Here’s a look back at a serious and blatant breach of competition rules for you. In 2006, the Office of Fair Trading fined four suppliers of aluminium double-glazing spacer bars for taking part in rather clearly defined anti-competitive agreements.
The four parties had entered into anti-competitive agreements that breached both UK and EU law by breaching the Competition Act 1998 and the Functioning of the European Union. The guilty companies were EWS (Manufacturing) Limited; Ulmke Metals Limited; Thermoseal Group Limited; and Doube Quick Supplying Limited.
It was a big case at the time, with big fines imposed.
About the investigation
An anti-competitive agreement had been put in place to fix the price of spacer bars that were the most popular based on their size. The companies agreed they would target the particular companies they wanted to sell to and divide them up between the four of them.
The companies also agreed they would set a minimum price to quote to customers. This ensured they were not competing with each other, and also meant that customers had a limited choice in terms of competition.
This limited the customer’s access to fair competition and probably cost customers more money than they ought to have been paying.
The outcome of the investigation
The overall outcome was that the four companies involved were collectively fined £900,000.
As Ulmke Metals Limited was the whistle blower, their fine was removed as they were the first of the four companies to come forward to disclose the anti-competitive behaviour to the Office of Fair Trading. Thermoseal Group Limited received a 40% reduction of their original £380,000 fine to £228,420, as they were the second to come forward.
Under the Office of Fair Trading leniency policy, the fact the Ulmke came forward first entitled them to an exclusion from being fined. The leniency policy also allows other companies involved in anti-competitive behaviour who come forward and cooperate to potentially receive discounts off their fine as well, which is why Thermoseal Group Limited received a 40% reduction.
EWS received a fine of £490,050 and Double Quick Supplying Limited received a fine of £180,000. They did not receive a discount on their fines.
How their actions breached competition law
The four companies breached competition law by blatantly engaging in agreements prohibited by the Competition Act 1998. By the companies agreeing they would set a minimum price to quote to customers for the most popular aluminium bar, they engaged in obvious price-fixing. The Competition Act prohibits price fixing as it can reduce fair competition and the benefits of a variety of prices to choose from; usually lower prices.
The companies also agreed they would share the market by deciding together which companies they would sell to. In agreeing to target certain companies, this amounted to anti-competitive behaviour as well and also breached the Competition Act.