Akzo Nobel, producer of paints and varnishes, had been fixing prices of its products with home improvement shops: Castorama, Leroy Merlin, Obi and Praktiker, for several years. The participants of the collusion were fined with a total value of nearly PLN 54 million. Detecting it was possible thanks to the information sent by two participants of this agreement

Fine for participation in collusion amounts to 10% of the undertaking's revenue obtained in the year preceding the decision. One of the methods of avoiding financial sanctions is the participation in the leniency programme. The first enterprise to provide evidence of collusion may even expect to be granted immunity from fine

Prohibited agreements of undertakings regarding prices of goods are particularly harmful violations of competition. They are also extremely difficult to detect and prove due to their secret nature. Fine for participation in collusion amounts to 10% of the undertaking's revenue obtained in the year preceding the decision. One of the methods of avoiding financial sanctions is the participation in the leniency programme. The first enterprise to provide evidence of collusion may even expect to be granted immunity from fine. The other participants of the collusion can also benefit from the cooperation with UOKiK – the President of the Office is entitled to reduce their financial sanctions if they provide significant evidence contributing to the decision. So far, 43 leniency applications  have been submitted to UOKiK (including 15 summary applications submitted in the case of the European Commission notification of the participation in an illegal agreement covering the territory of at least three EU Member States).

The market of sales of paints and varnishes is one of the sectors in which price collusions are most common.The latest decision of the President of the Office of Competition and Consumer Protection concerned the agreement between a producer – Akzo Nobel (former Nobiles) and four home improvement shops – Castorama, Leroy Merlin, OBI and Praktiker. Proceedings in this respect were initiated in 2006. It was revealed that the undertakings had fixed the minimum resale prices of paints and varnishes (e.g. Sadolin Extra, Cztery Pory, Klasycznie Biała and Impregnat Drewnoochronny). The collusion between Akzo Nobel and Castorama had lasted at least since 2003, and between Akzo Nobel and other undertakings – since 2004 till the end of 2006. Employees of the companies’ head offices contacted with each other mainly via email. Electronic correspondence collected by the Office provides evidence both for the collusion (Please enter the minimum selling prices of certain Nobilem products into the system; Please comply with the minimum level of prices) and for the awareness of breaking the law by its participants (As you know suggesting or demanding to maintain fixed prices is illegal. Such practice is defined by law as price collusion).

President of UOKiK decided to grant the immunity from fine to Castorama. The second undertaking to submit the leniency application was Akzo Nobel. Information received from the producer of paints and varnishes facilitated to brake the cartel and, therefore, the fine imposed on the company was reduced by 50% of the initially fixed one and amounted to PLN 10 336 188. The remaining participants of the collusion were fined by the President of UOKiK with penalties amounting to: Leroy Merlin – PLN 28 428 898, Praktiker – PLN 13 031 097, Obi – PLN 2 170 528

According to the information obtained by UOKiK, Akzo Nobel was the initiator and coordinator of the agreement. The company, inter alia, received and conveyed information about the current resale prices applied in particular chain stores. Moreover, the undertaking introduced the incentive system aimed at keeping their products in shops – for example, it provided discounts to shops that incurred losses due to decrease of prices in other chain stores, and threatened shops in the case of significant deviation of minimum prices (Again, please increase the price in your system. If you do not react quickly, the competition will bring its previous price back and then we will definitely not increase your profit margin for Sadolin this year). The remaining participants of the collusion treated Akzo Nobel as “the guard of the agreement” and expected the company to decrease prices set by the competition.

Thanks to the illegal agreement, the chain stores managed to negotiate satisfactory profit margin and to avoid price war between each other – some of the shops apply trade policy of price matching if the consumer finds the cheaper product in another chain shop. Akzo Nobel could be sure that its products were going to be sold in shops of the other cartel participants. Moreover, application of high prices in the shops guaranteed sale of paints and varnishes in smaller shops. Consumers also experienced the results of the collusion since they could not buy Nobiles and Akzo Nobel products at prices lower than fixed by the participants of the agreement.

Two enterprises submitted applications for immunity from fine during the proceedings. Castorama was the first one to do this. The company provided information on the collusion, previously unknown by the Office, that contributed to the issuance of the decision. Moreover, the applicant was not the initiator of the agreement, did not make other companies participate in it and ceased the illegal practices. Therefore, the President of UOKiK decided to grant the immunity from fine to Castorama. The second undertaking to submit the leniency application was Akzo Nobel. Information received from the producer of paints and varnishes facilitated to brake the cartel and, therefore, the fine imposed on the company was reduced by 50% of the initially fixed one and amounted to PLN 10 336 188. The remaining participants of the collusion were fined by the President of UOKiK with penalties amounting to: Leroy Merlin – PLN 28 428 898, Praktiker – PLN 13 031 097, Obi – PLN 2 170 528.

The decision is not final. The undertakings may appeal to the Court of Competition and Consumer Protection.

It is worth mentioning that one more enterprise was suspected of the participation in the cartel. However, proceedings did not reveal that Przedsiębiorstwo Handlowe Chemia broke the law.

Immunity from fine granted to Castorama and its reduction in the case of Akzo Nobel prove that it is worth to acknowledge the participation in collusion and to cooperate with the antitrust authority. The Office tries to remind of it during its numerous informational and educational actions. The third edition of such a campaign began on 10 January. The “Leniency Programme” spot is broadcast on the radio and television again. Its character – Staszek – persuades undertakings to acknowledge the participation in collusion voluntarily. The spot may be seen and heard on: RMF FM, Radio ZET, Polish Radio Channel 1 and Channel 3, TOK FM, ROXY FM, Radio Złote Przeboje, Blue FM, PiK, Radio Olsztyn, Radio Opole, Polish Radio Wrocław and Onet.pl.

Undertaking who would like to benefit from the leniency programme may submit a formal application in person at the seat of the Office of Competition and Consumer Protection in Warsaw, to the employee of UOKiK for official record, by mail, faks or email: [SCODE]bGVuaWVuY3lAdW9raWsuZ292LnBs[ECODE]. Answers to all questions regarding the programme, also anonymous, are provided by UOKiK lawyers under the telephone number: (+48 22) 55 60 555.

Additional information for the media:
Małgorzata Cieloch, Spokesperson for UOKiK
Department of International Relations and Communication
Pl. Powstańców Warszawy 1, 00-950 Warsaw
Tel. (+48 22) 827 28 92, 55 60 106, 55 60 430
faks (+48 22)  826 11 86
E-mail: [SCODE]bWFsZ29yemF0YS5jaWVsb2NoQHVva2lrLmdvdi5wbA==[ECODE]