Pulp and Paper Canada

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Anti-competition investigations run globe wide


May 25, 2004
By Pulp & Paper Canada

In a shakedown designed to combat anti-trust practices within the industry, raids have rattled major papermakers an…

In a shakedown designed to combat anti-trust practices within the industry, raids have rattled major papermakers and global forestry leaders.

Supposition of price-fixing and market manipulation warranted the investigation of several dominant industry players including UPM Kymmene, Norkse Skog and Stora Enso. Carried out by either local or European competition authorities, the purpose of the inspections was to determine the existence of evidence of cartel agreements and other agreements related to price, commercial terms and allocation of customer fixing.

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The foray was not exclusive to Europe. North American forest products company International Paper Co. confirmed it has been contacted by U.S. officials in relation to the investigations. The U.S. Justice Department has affirmed it is in the process of investigating potential anti-competitive practices in the magazine paper market. The European office of South African papermaker Sappi was also raided.

Some of the investigations were precipitated by UPM Kymmene, when the company called the attention of local authorities to price fixing activities in the raw wood procurement market. The first company to play whistleblower can be granted immunity, whereas companies that cooperate with the commission are granted a certain amount of clemency.

Although there is no official timeline for the commission to have its investigation completed, the initial probe has already taken a toll on those implicated. Shares in all Nordic firms involved have fallen.

Under European competition law, cartel agreements and price fixing are deemed to be amongst the most severe breaches of European Union competition rules.

The investigation is likely to hone in on activities that took place as far back as the 80’s and not on the occurrences of more recent years. A weak market situation characteristic of the past several years has rendered the existence of current cartel agreements improbable.


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