• UOKiK has quashed an arrangement between manufacturers of wood-based panels used to produce furniture. Cartelists were fixing prices and exchanging confidential information over the period of nearly four years.
• The Authority has imposed fines exceeding, in total, PLN 135 million.
• One of the companies has avoided the financial penalty after it decided to cooperate with UOKiK under the leniency program.

Illegal agreements constitute a competition-limiting practice that exerts the greatest negative impact on the economy. They result in increased prices of products and services. Due to their confidential nature, such agreements are also, very difficult to detect, as typically no direct evidence of the prohibited forms of cooperation, such as written contracts or correspondence, exists.

Such was the case with arrangements between manufacturers of particle- and fiberboards used, inter alia, to produce furniture. The scheme was in place between early 2008 and September 2011 and was established by five entrepreneurs belonging to three capital groups. The companies involved were: Kronospan Szczecinek, Kronospan Mielec, Pfleiderer Group, Pfleiderer Wieruszów and Swiss Krono.

The evidence required to initiate the proceedings was obtained by the Authority during an dawn raid at the premises the entrepreneurs. Details concerning the illicit agreement were also supplied by Swiss Krono. The company took advantage of the leniency program that encourages entrepreneurs to cooperate with the Authority, in exchange for immunity or reduction of fines.

- We have established that entrepreneurs were fixing prices, via oral communication, over the period of nearly four years. They also exchanged sensitive information, e.g. about planned price increases and sales volumes. Such activities may result in increased prices being paid by their business partners. The furniture industry generates approximately 2% of Polish GDP. Hence, the illicit agreement exerted a significant negative impact on the country’s economy – says Marek Niechciał, the President of the UOKiK.

 - The outcomes of the agreement had the potential to exert indirect harm on consumers, as higher costs of particle- and fiberboards could have affected the prices that end-users pay for furniture – adds Niechciał.

Entrepreneurs were making the necessary arrangements during face-to-face meetings or via phone conversations. The contacts were of the bilateral or multilateral nature. CEOs, board members and sales directors of the companies held meetings, in locations such as corporate headquarters, trade shows or airports. On some occasions, that a parties to the agreement that failed to comply with the prices were coerced by other members of the scheme into implementing them. The agreement enabled the entrepreneurs to eliminate the uncertainty as to the behavior of their competitors. This allowed them to lower the level of rivalry and to boost their bargaining position in relation to the buyers.

The President of UOKiK imposed, fines totaling over PLN 135 million on the participants of the cartel (135 761 340, 25 PLN)*. Swiss Krono is the only entity that has avoided any fines, as it decided to take advantage of the leniency program and supplied information that was used to prove the existence of the agreement. The leniency program resembles the institution of a crown witness that exists in the penal code. A member to the agreement who is the first to supply the Authority with evidence proving its existence, may count on the financial penalty being waived in full. Similar benefits can be granted to the members of management who may be personally liable for participating in the agreement. To this date in 2017, we’ve received 5 applications – says Marek Niechciał, the President of the UOKiK.

The investigation concerning this particular case was also conducted pursuant to community regulations, and the draft decision was consulted with the European Commission. It was the case since the evidence gathered has proved that the practices relied upon by manufacturers of wood-based panels could have impacted trade between EU Member States.

The decision is not final, it is subject to appeal.

Remember - illicit agreements between entrepreneurs harm you as well. If you are aware of any such practices, please inform UOKiK. In April this year, the authority launched
a program under which relevant information may be provided by anonymous whistleblowers. Contact UOKiK at 22 55 60 500, or by e-mail sygnalista@uokik.gov.pl. Additional information about the whistleblower program may be found on website at konkurencja.uokik.gov.pl. 

Additional information for the media:

UOKiK Press Office
pl. Powstańców Warszawy 1, 00-950 Warsaw
Phone: 22 55 60 430
E-mail: biuroprasowe@uokik.gov.pl

Twitter: @UOKiKgovPL

*Punishments inflicted on the individual parts to the agreement:

Kronospan Szczecinek – 60 690 248,87 PLN,

Kronospan Mielec – 39 308 643,05 PLN,

Pfleiderer Wieruszów – 19 804 706,50 PLN,

Pfleiderer Group – 15 957 741,83 PLN.