The Finnish Competition and Consumer Authority (FCCA) proposes that the Market Court impose a total of over four million euros in penalty payments on ThermiSol Oy and UK-Muovi Oy for prohibited cooperation between competitors in the EPS insulation market in Finland. The cartel raised the price level of EPS insulation and restricted competition between the companies. Styroplast Oy, which participated in the cartel, was granted immunity from the penalty payments because it was the first to contact the Authority and provide information on the cartel.
The investigation of the FCCA shows that ThermiSol, UK-Muovi, and Styroplast agreed on price increases for EPS insulation for 2013 and 2014, their amounts, timing, and manner of execution in meetings and telephone conversations.
The three biggest EPS insulation manufacturers in Finland, based on their market shares, participated in the price cartel covering all of Finland. Price fixing between businesses competing with each other is by its nature and effects one of the most serious restrictions of competition.
A cartel harms both consumers and businesses
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 was likely to raise construction costs for both publicly and privately funded construction projects, and its effects extended to individual consumers, businesses and public sector actors.
The harmfulness of the cartel is highlighted by the timing of agreed price increases to the beginning of the seasonal demand for EPS insulation. Price increases were agreed to be carried out in the spring before the start of the greatest demand, so that the parties to the cartel could maximize the profit made from the price increase. The practice targeted the most used types of EPS insulations in particular.
The first company to reveal the cartel receives immunity from the penalty payment
A participant in a cartel may, on certain conditions, receive immunity from or a reduction of the penalty payment. Styroplast contacted the Authority in November 2015 and was the first to give the Authority information about the cartel. The FCCA granted immunity from the penalty payment to Styroplast, as it revealed the existence of the cartel.
The FCCA proposes a 2.8 million euro penalty payment for ThermiSol and a 1.5 million euro penalty payment for UK-Muovi. The nature, extent, degree of gravity, and duration of the practices of the companies would have called for higher penalty payments than those proposed. According to the law, however, the penalty payment can not exceed ten per cent of the turnover of the undertaking for the year in which it last took part in the cartel.
Cartels are not going away
A cartel is a secret arrangement between companies, allowing its members to increase the price of their products, compared to genuine competition, for their own benefit. Ultimately, the check is picked up by customers, that is consumers, public buyers, and companies. For this reason they are illegal. Cartel activities should result in penalties severe enough to prevent cartels from becoming profitable.
“On the basis of the observations of the FCCA, there is no reason to assume that cartels would be a phenomenon of the past. There are no signs of decline in the number of serious tip-offs and contacts. From the point of view of customers and the economy this is, of course, a rather unpleasant observation,” says Antti Norkela, the Head of Cartel Detection in the FCCA.
Additional information:
- Senior Research Officer Minna-Maija Vainikka, tel. +358 (0)29 505 3387
- Head of Research Jarno Sukanen, tel. +358 (0)29 505 3352
- Head of Cartel Detection Antti Norkela, tel. +358 (0)29 505 3345
firstname.lastname@kkv.fi
Read more about FCCA Cartel Detection:
- 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.
- A cartel picks the consumers’ pocket. Interview with Head of Cartel Detection Antti Norkela in the FCCA Newsletter 4/2018 (in Finnish).
- Tip us off regarding a cartel. The tip-off link for exposing cartels or other prohibited restrictions on competition on the FCCA website.