Leading European tyremakers investigated as part of price-fixing investigation
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Unannounced inspections, investigations, visits, raids. Whatever you call them, having the European Commission come knocking uninvited is not how any tyre manufacturer wants to start 2024. Nevertheless, that is exactly what happened at the tail-end of January across “several member states” within the European Union.
The European Commission reports that it is carrying out unannounced inspections at the premises of tyre makers “in several “member states”. The reason? “The commission has concerns that the inspected companies may have violated EU antitrust rules that prohibit cartels and restrictive business practices”, according to an official statement. Violation of antitrust rules can also be translated using terms such as cartel behaviour or – even more pejoratively – price fixing. Indeed, the EC specified that it is “concerned that price coordination took place amongst the inspected companies, including via public communications.”
The products at the centre of anti-cartel case are “new replacement tyres for passenger cars, vans, trucks and busses sold in the European Economic Area”.
The suggestion that companies could have involved themselves in “price coordination” via “public communications” particularly raised eyebrows within the Tyres & Accessories editorial team. Past experience tells us that senior executives have often been understandably wary of regular, large-scale, non-minuted meetings owing to the possibility that such allegations could be made. However, to our knowledge, this is the first time that tyre companies have been accused of colluding on price “via public communications”. At this point, I need to mention the reality that the rise of the Internet means that tyre information – including pricing – has never been more accessible. In addition, that same reality means that anyone with a laptop can research or, even more pertinently, scrape tyre pricing off the Internet. Does that mean that the EC is trying to stop tyre companies from surfing the web? Should tyre companies avert their eyes from the Internet lest they see the price of a competing product? Surely, such ideas verge on thought control. Even if they weren’t, surely such an approach is itself anticompetitive?
So far, Nokian Tyres, Continental, Goodyear, Pirelli, Bridgestone and Michelin have all confirmed that they have received an unannounced inspection. As you would expect, every one of them has responded professionally and offered measured responses owing to the fact that they are subject to ongoing investigation.
On this point, Nokian Tyres deserves credit for being the fastest and most proactive in its communications relating to the situation. But ultimately, the messaging put out by Nokian is somewhat emblematic of the other tyremaker statements. In short, Nokian Tyres representatives declined to comment further on the “ongoing investigation” but did state “Nokian Tyres is fully co-operating with the authorities”, saying: “Nokian Tyres does not have information on the outcome of the inspection, and it cannot comment on the ongoing investigation.”
As if to emphasise the seriousness of the investigation, the EC further reported that officials were accompanied by their counterparts from the relevant national competition authorities of the member states where the inspections were carried out. But at the same time, they wanted to show that they are giving everyone involved a fair hearing:
“Unannounced inspections are a preliminary investigatory step into suspected anticompetitive practices. The fact that the commission carries out such inspections does not mean that the companies are guilty of anti-competitive behaviour, nor does it prejudge the outcome of the investigation itself.”
There is no legal deadline to complete inquiries into anticompetitive conduct. Their duration depends on a number of factors, including: “the complexity of each case, the extent to which the undertakings concerned co-operate with the commission and the exercise of the rights of defence.”
That last comment regarding “the extent to which…[companies] concerned co-operate” is particularly noteworthy. According to the EC, companies that have been involved in a secret cartel may be granted immunity from fines or significant reductions in fines in return for reporting the conduct and cooperating with the commission throughout its investigation, under EC leniency rules. Similarly, individuals can benefit from the leniency rules. In other words, protections are in place for those that blow the whistle. And that raises the question: did an individual or corporate body blow the whistle in this case? And, irrespective of how the subject was raised, now an investigation is underway, will more individual or corporate whistleblowers come forward? Judging by the tone of the final words of the EC statement announcing the investigation, the Commission would certainly encourage that.
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