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Competition Appeal Tribunal upholds OFT decision in price fixing case

41/07    9 March 2007

The Competition Appeal Tribunal (CAT) today found in favour of the OFT in a case relating to price fixing and market sharing in the double glazing industry.

The CAT unanimously dismissed the appeal by Double Quick Supplyline Limited (DQS) (now known as Sepia Logistics Limited) and found that the penalty of £180,000 imposed on the company by the OFT was appropriate.

The appeal concerned the OFT's infringement decision of June 2006 which found that DQS had colluded with other suppliers in the supply of aluminium spacer bars, which are used to separate panes of glass in double-glazed doors and windows. The suppliers had attended a meeting in November 2002 and following an inspection of their premises, the OFT found evidence that they had engaged in price fixing and market sharing at that meeting. The decision was also directed to DQS' parent company, Precision Concepts Limited (PCL), which shares responsibility for paying the fine.

In August 2006, DQS and PCL appealed the amount of the penalty imposed and the fact that PCL was jointly responsible for the penalty. It was claimed that the OFT had incorrectly applied its guidance when calculating the penalty, in particular not giving a reduction due to the financial position of DQS.

The CAT has today rejected the appeal and awarded the OFT its costs in the case.

Brian McHenry, General Counsel to the OFT, said:

'The OFT welcomes the CAT's judgement. The decision confirms the need for strong penalties as a significant deterrent to stop companies breaking the law. Price fixing and market sharing cartels hurt consumers by creating higher prices and less choice while also damaging confidence in the wider economy. This case has emphasised that where a reduction to a penalty is sought, that party should provide the OFT with all the information necessary to substantiate any claim, it is not for the OFT to seek out such information'.

NOTES

1. In June 2006 the OFT imposed fines totalling £1.38million on double glazing industry firms EWS (Manufacturing) Limited, Thermoseal Group Limited, Double Quick Supplyline Limited and Ulmke Metals Limited. It followed an investigation into price fixing and market sharing in the aluminium spacer bar market.

2. The OFT concluded the companies participated in a cartel in which they agreed to fix prices and share the market for aluminium double glazing spacer bars, in breach of the Chapter I prohibition of the Competition Act 1998. The infringement took place in the last part of 2002 and was brought to an early end as a result of the OFT's intervention.

3. EWS was fined £490,050, Thermoseal was fined £380,700 (reduced to £228,420 for leniency), and DQS fined £180,000. In line with the OFT's leniency policy Ulmke Metals Limited, fined £330,000, was granted 100 per cent leniency in recognition of its cooperation with the OFT's investigation.

4. The case follows an earlier decision in November 2004 that prices had been fixed in the market for another double glazing raw material, desiccant, and brings the total fines for cartels in the double glazing industry to around £3.7million, reduced to around £2.5million by leniency.

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