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EU can impose fine of up to 1% of annual worldwide turnover

Ahlstrom and Munksjö refute EU Commission claims

By Jenny Eagle+

28-Feb-2014
Last updated on 28-Feb-2014 at 11:44 GMT

Munksjö produces speciality papers.
Munksjö produces speciality papers.

Ahlstrom and Munksjö have received a Statement of Objections from the European Commission for providing misleading information in a merger case.

The two companies, which produce speciality papers, notified the Commission of plans to combine their activities in the production of abrasive paper backings in October 2012, but, if the information they gave in respect to the market is incorrect, they could face a fine of up to 1% turnover.

Subject to appeal

The warning was sent to Ahlstrom Corporation, Munksjö Oyj, both of Finland, and Munksjö AB of Sweden.

Any final decision by the European Commission is subject to appeal to the European Courts.

In a statement the European Commission said: “The Commission takes the preliminary view, that the parties provided misleading information with regard to the market for abrasive paper backings.

Such behaviour, if established, would be in breach of the companies' obligation to include their true best estimates of the markets in question in the notification and could result in a fine of up to 1% of turnover. The sending of a Statement of Objections does not prejudge the final outcome of the investigation.”

Misunderstandings

However, Liisa Nyyssönen, VP, communications, Ahlstrom Corporation, said the companies disagree with the Statement of Objection.

Ahlstrom Corporation and Munksjö Oyj disagree with the preliminary position expressed by the European Commission,” she said.

The companies take this matter seriously and will respond to the Statement of Objections in due course with a view to clearing any misunderstandings.

A Statement of Objections is a document where the European Commission sets out its preliminary view in relation to a possible infringement of EU competition rules and allows its addressees to present arguments in response. Consequently, a Statement of Objections is a preparatory document that does not prejudge the European Commission's final decision.”

The details of the transaction mean the label and processing business of Ahlstrom Corporation and Munksjö AB were transferred to a company ('NewCo'), which was later renamed Munksjö Oyj.

At the time of the notification, Ahlstrom and Munksjö AB were both producers of heavy weight abrasive paper backings, which are carriers for abrasive products such as sandpaper, sanding discs and sanding belts.

Significantly lower sales

In January 2013, the companies supplied internal documents, which estimate the size of the markets for abrasive paper backings and the heavy-weight sub-segment, both with regard to sales in the European Economic Area (EEA) and on a worldwide level, to be significantly lower and, consequently, their own market share significantly higher than what they had stated in the notification.

The provision of misleading information could conceal a competition problem and lead to the clearance of transactions, which are harmful for effective competition.

The Commission opened an investigation into the proposed creation of NewCo in December 2012.

The market investigation confirmed the transaction would have brought together the only two manufacturers of heavy weight abrasive paper backings in the EEA and the two leading players in the global market with a market share of over 80%.

It approved the transaction in May, 2013, conditional upon the divestment of Ahlstrom's abrasive paper backings business in Osnabrück, Germany.

The ongoing procedure against Munksjö and Ahlstrom for providing misleading information in the notification has no impact on the Commission's May 2013 decision, since the Commission did not base its decision on this incorrect information.

EU Commission

A Statement of Objections is a formal step in an investigation, by which the Commission informs the companies concerned in writing of the objections raised against them. The companies can then examine the documents in the Commission’s file, reply in writing and request an oral hearing to present their comments on the case to representatives of the Commission and the national competition authorities.

There is no legal deadline to complete the inquiries. Their duration depends on a number of factors, including the complexity of each case, the extent to which the companies concerned co-operate with the Commission and the exercise of the rights of defence.

The notifying parties' obligation to provide data, which is - to the best of their knowledge and belief- true, correct and complete, is laid down in Article 14 (1) (a) of the EU Merger Regulation and in Article 4(1) of the Implementing Regulation .

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