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Commission imposes further fine for canned food cartel: infringers didn’t leave ‘mushroom’ for competition!

25 April 2016

On 6 April 2016, the Commission announced that it has issued a fine penalising a further participant in the market-sharing cartel it uncovered in the market for canned mushrooms, having settled with the other perpetrators through a decision first issued in June 2014. Riberebro of Spain decided not to settle with the Commission at that time and instead awaited a Statement of Objections (“SO”) (a list of those serious competition law infringements which the Commission suspects has been committed). Having been issued with an SO in May 2015, it has ultimately received a final fine of €5.194m, albeit reduced by 50% from what it would otherwise have been under the Commission’s Leniency regime.

“Non-aggression” pact leads to illegal practices

The Commission’s investigation into the market for mushrooms sold in jars and cans commenced in February 2012 with dawn raids at the premises of four manufacturers of canned mushrooms, which uncovered illicit practices between 1 September 2010 to 22 December 2011, including exchanges of confidential information in relation to tenders, setting of minimum prices, agreement of volume targets and allocation of customers between producers.  These practices were found to have derived from a so-called ‘non-aggression’ pact, which also incorporated a compensation scheme between producers for transferring customers. 

Three of the producers, Bonduelle, Lutece and Prochamp, agreed in June 2014 to accept fines with a 10% reduction to reflect their acknowledgment of the facts underpinning the infringements and their engagement with the Commission’s investigation and settlement procedure (subject to further reductions for cooperation and provision of evidence of the cartel, under the Commission’s Leniency Notice).

In total, Prochamp and Bonduelle accepted fines of €32.225 bn, with Lutece receiving full immunity from fines for having ‘blown the whistle’ on the cartel and having cooperated in full with the Commission’s investigations (it would otherwise have been fined €20.7 million).  Prochamp, meaning, paid a fine of €2.02 m, which included reductions of 10% for settlement and a further 30% for cooperation under the Commission’s Leniency Notice.  Bonduelle received the largest fine of over €30m, with a reduction of only 10% under the Commission’s Settlement Notice.

Riberebro refuses to settle – but is ultimately fined

Riberebro failed to reach a settlement with the Commission and, as such, awaited a full SO under the Commission’s standard cartel enforcement procedure.  On 28 May 2015, the Commission issued Riberebro with a full SO alleging the various infringements of the prohibition on anti-competitive agreements under Article 101 of the Treaty on the Functioning of the EU, having participated in the non-aggression practices within the industry. 

The Commission concluded in its SO that the cartel participants had acted with the concerted intention of stabilising their respective shares of the market in the EU and averting any decrease in prices.

Riberebro has now, subsequently, had imposed upon it a fine reflecting the value of its sales of cans and jars of the mushrooms throughout the EEA during the infringement period, the serious nature of the infringement and the geographic spread and duration of its involvement therein (the appropriate level of deterrence and the company’s ability to pay were other factors which were taken into consideration in determining the level of the penalty).

Applying a reduction of 50% under the Commission’s Leniency Notice, for Ribererbro’s having cooperated with and assisted the Commission’s investigation, a fine of €5.194m has now been handed down.

Continuing drive to enforcement by the Commission – so, comply and cooperate!

The fines imposed on the canned mushroom cartelists, and in particular the latest penalty against Riberebro under its non-settlement procedure, demonstrate the Commission’s current drive to uncover and penalise cartel activities in a variety of sectors.  The food industry is among those being especially targeted given the propensity for detriment to consumers from reduced choice and artificially inflated prices, with Competition policy chief, Commissioner Margrethe Vestager, commenting on release of the fine to Riberebro that:

Access to food at competitive prices is essential for European consumers.  The cartel for canned mushrooms affected sales to retailers throughout Europe.  Today’s decision once again shows the Commission’s determination to sanction cartels and impose fines on all cartel participants”.

This case certainly highlights the need to take Competition law compliance extremely seriously – there is no substitute for comprehensive training, compliance programmes and advice from experts.  Not only can pro-active implementation of a compliance programme reduce the risk of an infringement taking place in the first place, putting one in place with an earnest drive to raise awareness and compliance among staff and executives can also secure substantial reductions to potential fines for any existing breaches.

It is also important to note that Riberebro’s fine was reduced by half for cooperation with the Commission and that Lutece received full immunity.  Under its Leniency and Immunity regimes, the Commission ‘rewards’ cartel participants who admit involvement and either ‘blow the whistle’ or, at least, assist the Commission in enforcing the law against the other members of the cartel.  Such steps can save a company involved in an anti-competitive practice millions of Euros. 

To enquire about updating and enhancing your compliance programme, please contact the Charles Russell Speechlys EU & Competition team.

This article was written by Rory Ashmore. For more information please contact Rory on +44 (0)20 7427 1031 or at rory.ashmore@crsblaw.com