The European Commission has imposed an unprecedented 1.38 billion Euro combined fine on four car glass manufacturers found guilty of forging a cartel designed to keep prices artificially high. An investigation concluded that managers of Asahi of Japan, Britain’s Pilkington, Saint-Gobain of France and Belgium’s Soliver had taken part in a series of illegal talks in a number of European airports and hotels between 1998 and 2003.

The meetings were used to fix prices and market share and to allocate customers to each other. These companies together control 90 percent of the European’s two billion Euro market for glass components used in cars. The EU executive increased the fine on Saint-Gobain by 60 percent to 896 million Euro after it was found to be a repeat offender. Asahi, by contrast, benefited from a 50 percent reduction for acting as a whistle-blower. The fines are the highest ever imposed by the commission in such cartel cases.

“These companies cheated the car industry and car buyers for five years in a market worth two billion Euro in the last year of the cartel,” said European Competition Commissioner Neelie Kroes. “Management and shareholders of companies that damage consumers and European industry by running cartels must learn their lessons the hard way - if you cheat, you will get a heavy fine,” the commissioner said. Saint-Gobain, which was handed the biggest cartel fine ever imposed by Brussels on a single company, said it would appeal the decision to the European courts in Luxembourg.

It was penalised in 1984 and 1988 over cartels in the flat-glass market in Italy and Benelux. The company’s main complaint was directed at the penalty’s “disproportionate” size, noting that the 896 million Euro fine was equivalent to 95 percent of the annual turnover of its Original Equipment Manufacturer business and to “dozens of years” of net profit. The proceeds of such fines are paid into the EU budget. But Kroes insisted the fine fell “well short” of the 10 percent cap of total turnover she was allowed to impose, with Saint- Gobain’s annual sales running at 43 billion Euro.

The scale of the fine is designed to act as a deterrent and Pilkington’s penalty was set at 10 percent of its 3.7 billion in revenues. Pilkington, owned by Japan’s Nippon Sheet Glass, must pay 370 million Euro for its part in the price-fixing and marketsharing cartel that was in operation between early 1998 and early 2003. Senior managers from the companies in the cartel held secret meetings in airports and hotels in Brussels, Frankfurt and Paris to rig the market for windscreens, sidelights, rear windows and sunroofs in new European cars, officials said. Kroes said that the EC had imposed such high fines because “it cannot and will not tolerate such illegal behaviour”.