European millers cartel fined €242.2 million

by World Grain Staff
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PARIS, FRANCE — The French Autorité de la Concurrence issued a decision on March 13 fining anticompetitive agreements by German and French millers in the packaged flour sector a total of €242.4 million.

The Autorité said a cartel of German and French millers aimed to limit imports of flour between France and Germany, while two anticompetitive agreements by French millers were aimed at fixing prices, limiting output and sharing the customer base for packaged flour.

An application for leniency from a German miller in April 2008 gave rise to the case. The Autorité de la concurrence, which was called the Conseil de la Concurrence at the time, opened an ex officio investigation into the flour milling sector.

The leniency procedure enables a company which hands over inside evidence of anticompetitive practices it may have been party to, to be granted under certain conditions, full or partial immunity from fines.

Unannounced inspections conducted in France and in Germany (through the German competition authority, the Budeskartellamt) gathered many pieces of evidence of these anticompetitive agreements. These raids were followed by an in-depth investigation.

In January 2010, the Autorité decided to conduct a separate investigation into practices implemented in the craft bakery sector. These practices are currently being investigated and will be the subject of another decision in due course.

The evidence ascertained that French and German millers concluded a “non-compete agreement” aimed at limiting their respective access to each other's markets and at maintaining French and German exports of packaged flour at a predetermined level (15,000 tonnes).

They met several times to work out the details of their agreement. They allocated certain customers based in France to each other, and agreed on principles for smoothing the prices of packaged flour imported from Germany in order to meet the agreed quota.

Infringements of competition law have been proven over a six-year period (from 2002 to 2008).

The Autorité said this cartel had a number of consequences :

  • It led to a market fragmentation between two E.U. member states (France and Germany) of a significant dimension, thereby directly impeding the interpenetration of economies which the Treaty of the E.U. seeks to bring about.
  • It protected French millers from the competition of their German counterparts and prevented the latter from stimulating competition on the French market.
  • In the food retail and hard-discount sectors, French millers were able to keep prices above the competitive level and to share the market, while German millers refrained from bidding in calls for tenders, including, from the end of the 1990s, tenders organized in the hard-discount sector.

The Autorité has considered that the seriousness of this anticompetitive agreement, which enabled the French millers to manipulate key factors of competition (prices, brands, allocation of customers, markets and outputs), caused significant harm to French consumers, in particular due to its very long duration.

Added to the other aspects of the sanctioned practices, in particular the crowding-out of German imports on the French market, it resulted in the whole market being foreclosed. The whole market was then under control, from the hard-discount segment to the food retailing sector, and all market segments of the packaged flour sector were concerned (national brands and private labels, low price brands and hard-discount).

There are other ongoing proceedings regarding the milling sector in Germany, The Netherlands and Belgium.

To view the Autorité’s full release on this click here .

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