French Competition Authority Fines Wallpaper Producers for Anticompetitive Information Exchange

Following a request for leniency from seven wallpaper producers for engaging in anticompetitive conduct, the French Competition Authority (FCA) recently sanctioned them in the amount of 5.27 million euros (US$6.6 million).

The anticompetitive information exchange took place between wallpaper suppliers when they were asked by a wholesaler to create a common wallpaper catalog, according to the FCA. The competing suppliers met several times, either formally or via telephone conferences, to discuss commercially sensitive information. The type of information disclosed not only concerned commercial terms of the catalog, but also future market behavior such as foreseeable tariff trends and prospective data to fix prices. The FCA regarded these practices as restrictions of competition by object, but noted that it was occasional and unsophisticated, which had a mitigating effect on the outcome.

The legality of any arrangement depends not only on the nature of the information exchanged but also on the context in which it is exchanged, notably the market characteristics, the FCA stated. Thus, the agency held that the extent of information sharing, economic features of the wallpaper sector and structural consequences of the anticompetitive behavior caused a certain, but limited, anti-competitive harm to the market.

Accordingly, the FCA determined the base fine to be 10 percent of the sales value, which amounts to 16.7 million euros (US$19.3 million). Various elements were taken into consideration by the FCA to reduce the fine, including: 1) participation of the undertakings in some or all of the anti-competitive practices; 2) the fact that some undertakings were only selling a single product; 3) the ability to pay the fine; and 4) the rapidly declining wallpaper market. Thus, the total amount of the fine was reduced to 5.27 million euros (US$6.6 million).