Castorama and ICI have been fixing retail prices of paints and varnishes, found Marek Niechciał, the President of UOKiK, and imposed a fine of over PLN 45 million on the enterprises. The forbidden practice has been going on since 2004. The Office ordered the companies to abandon it

The antimonopoly proceeding was initiated in December 2006. The Office was checking whether Castorama, the owner of 36 DIY stores located all over Poland, and ICI, a painting products manufacturer, fixed the minimum retail price of fourteen products, such as Kolory Świata, Arktyczna Biel and Hammerite.

During the proceeding, UOKiK gathered extensive evidence that the unlawful agreement was concluded. At least since 2004 the companies have been fixing not only the final retail prices of ICI’s paints and varnishes, but also the constituents of the prices, such as the profit margin. This is evidenced, inter alia, by the wording of the electronic correspondence between the companies: “I have arranged…”, “I’m introducing ... according to the suggestions…”, “the summary of the arrangements of the last meeting…”, as well as the prices used by the stores belonging to the Castorama chain. The enterprises were acting in a deliberate and conscious way, gaining unjustified benefits for many years, and have not changed their conduct despite the launch of the antimonopoly proceeding.

The practice had anti-competitive effects first of all inside the ICI brand. Artificial inflating of prices by one of the company’s clients (Castorama) influenced the prices used by ICI’s remaining business partners. Consequently, consumers were forced to pay the prices fixed by the participants of the agreement, which would not be the case in the state of undisturbed competition. Paints and varnishes offered by ICI are one of the most popular ones on the market.

Participating in a collusion whose aim or effect is a restriction of competition carries severe fines reaching up to 10% of the company’s previous year’s revenue. An enterprise can obtain a lower fine or avoid it altogether, if they start cooperating with the antitrust office, inter alia, by supplying evidence of the existence of the cartel. This is made possible by the leniency programme operating in the Polish legal system.

During the proceeding, Castorama submitted a leniency application. However, in the opinion of the President of UOKiK, the company did not admit concluding a competition-restricting agreement (only making some of the arrangements constituting part of the collusion), which is one of the basic conditions for being granted immunity from or reduction of the fine. Moreover, Castorama did not quit the unlawful agreement. Therefore, the company did not fulfil the basic requirements of applying for the leniency programme. Despite that, on account of the specificity of the matter, the President of UOKiK used his discretion and reduced the amount of fine imposed on the company.

Castorama was fined with PLN 36.685.720 and ICI - PLN 9.072.690. Fines of this amount are to fulfil both preventative and repressive function, as practices of this kind are one of the most serious infringements of the antitrust law.

The decision is not final. The enterprises can lodge an appeal to the Court of Competition and Consumer Protection.

This is not the Office’s first proceeding concerning a collusion on the paints and varnishes market. In 2006 a fine of PLN 110 million was imposed on Polifarb Cieszyn Wrocław and the owners of seven DIY stores for joint fixing of prices of their products. Moreover, presently the President of the Office is conducting several antimonopoly proceedings concerning the market. The following enterprises, among others, are suspected of concluding unlawful agreements: Akzo Nobel Coatings with Castorama, Leroy Merlin, OBI, Praktiker and Przedsiębiorstwo Handlowe Chemia, as well as Tikkurila with Castorama and Praktiker.

Additional information:
Małgorzata Cieloch, Spokesperson for UOKiK
Pl. Powstańców Warszawy 1, 00-950 Warszawa
Tel. (+48 22) 827 28 92, 55 60 106, 55 60 430
faks (+48 22) 826 11 86
E-mail [SCODE]bWNpZWxvY2hAdW9raWsuZ292LnBs[ECODE]