In its decision on 3 March 2021, the Market Court confirmed the Finnish Competition and Consumer Authority’s (FCCA) proposal and found that three building insulation manufacturers are guilty of running a national price cartel. The Market Court’s decision was mainly in line with the FCCA’s proposal for penalty payments. The FCCA granted Styroplast Oy, one of the companies involved in the cartel, immunity from the penalty payments, as it was the first to contact the FCCA and provide information on the cartel.
In December 2018, the FCCA proposed that the Market Court impose a total of over EUR 4 million in penalty payments on Jackon Finland Oy (formerly ThermiSol Oy) and UK-Muovi Oy for involvement in a price cartel in the field of so-called EPS (expanded polystyrene) insulations, more commonly known as styrofoam. Jackon Finland, UK-Muovi and Styroplast agreed on price increases for EPS insulations for 2013 and 2014, as well as the amount, timing and manner of execution of the increases, in meetings and telephone conversations.
EPS insulation products are indispensable in construction, used primarily as thermal insulation in buildings, as technical insulation, and as sound insulation in new building and renovations. The cartel agreed on price increases especially for the best-selling products, i.e. floor and frost insulations.
The Market Court found that the companies have jointly sought to increase the price level of EPS insulations and to improve their profit margin by means of a price cartel covering the whole of Finland, which lasted from November 2012 to the summer of 2014. The Market Court did not find any proof indicating that the infringement would have continued until the end of 2014, as originally proposed by the FCCA.
The Market Court found the damaging nature of the cartel operations to be further highlighted by the fact that they involved price increases implemented simultaneously by the three biggest insulation manufacturers in Finland. The demand for EPS insulations is seasonal and increases significantly in the spring as construction projects begin. The price increases were scheduled to take place precisely when the seasonal demand peaked, which underlines the harmful nature of the cartel.
– It is important for the work against cartels that the Market Court has today verified the existence of a serious price cartel among insulation manufacturers, says FCCA Director Valtteri Virtanen.
Cartels should not be profitable for the participating companies
A cartel means that companies competing with each other agree, for example, on the prices of products or services, price increases or market division. The objective is to conceal the cartel agreement from customers and the public. Cartels are illegal because their main goal is to increase the profitability of the companies involved in the cartel. The sanction for participating in a cartel is a penalty payment imposed by a court of law on the basis of a proposal made by the FCCA.
The Market Court ordered Jackon Finland to pay EUR 2 million and UK-Muovi to pay EUR 1.2 million in penalty payments. The FCCA originally proposed that the Market Court impose a penalty payment of EUR 2.8 million on Jackon Finland and EUR 1.5 million on UK-Muovi for the cartel.
– This is a clear case of a price cartel. Price cartels increase prices to the detriment of customers and are, therefore, ultimately extremely harmful to consumers as well as the national economy. Cartel activities should result in penalties severe enough to prevent cartels from becoming profitable for the companies involved, emphasises Virtanen.
Market Court rulings can be appealed to the Supreme Administrative Court.
FCCA granted Styroplast immunity from penalty payments because it provided evidence on the cartel
Styroplast contacted the FCCA in November 2015 and was the first to provide the FCCA with information and evidence on the cartel. Therefore, the FCCA granted Styroplast immunity from the penalty payment.
– Only the first cartel member to reveal the cartel to an authority may be granted immunity from the penalty payments. Therefore, a company involved in a cartel should act before the others if it wants to avoid the penalty payments. However, the other cartel members also have an opportunity to apply for a reduced sanction if they provide the FCCA with new information and evidence of the infringement, explains Senior Adviser Pekka Mattila.
Read more:
- Market Court Decision (in Finnish)
- The FCCA proposes cartel penalty payments for EPS insulation producing ThermiSol and UK-Muovi (FCCA press release 4 December 2018)
Further information:
Head of Research Jarno Sukanen, tel. +358 29 505 3352
Senior Adviser Pekka Mattila, tel. +358 29 505 3324
Senior Adviser Minna-Maija Vainikka, tel. +358 29 505 3387
Director Valtteri Virtanen, tel. +358 29 505 3621
firstname.familyname@kkv.fi
Read more about cartels:
Be the first to report a cartel and receive immunity from fines. Instructions for immunity from penalty payments can be found on the FCCA website.
Tip us off regarding a cartel. The tip-off link for exposing cartels or other prohibited restrictions on competition on the FCCA website.