SCA and CMPC accused of price collusion in Chile

Monday, Nov 09, 2015

Chilean authorities are investigating a major case of collusion in Chile. SCA and CMPC are accused of having fixed prices in the tissue sector for at least ten years.

On Oct. 27, the National Economic Prosecutor's Office (FNE) filed a complaint before the Competition Tribunal (TDLC) against CMPC Tissue and SCA Chile for allocating market quotas among them and fixing prices in the tissue paper products market.

In the complaint, the FNE claims that CMPC and SCA reached an agreement that allowed them to sustain a long lasting cartel from 2000 until at least December 2011 affecting the sale of toilet paper, paper towels, napkins and facial tissues to supermarkets, pharmacies and wholesalers in Chile.

The defendants account for nearly 90% of the Chilean tissue paper market, while their yearly sales amount to around USD $400 million. CMPC's brands involved in the cartel are Confort, Elite, Nova, Noble and Orquidea, while SCA's main brands include Favorita and Magiklin. The firms also manufacture the main supermarkets chains' private labels.

During the course of the investigation, which started ex-officio in December 2014, both CMPC and SCA applied for leniency. The companies supplied statements from the main executives involved in the conduct as well as relevant data regarding the structure and operative of the cartel.

After verifying the fulfilment of legal requirements, the FNE requested the TDLC full fine exemption to the first applicant — CMPC — and a fine of around USD $15.5 million to SCA. This amount represents a reduction from the legal cap since SCA´s application filed on October 7th came in second.

During the course of the investigation, on September 25th 2015, the FNE conducted a dawn raid at SCA's headquarters, collecting valuable evidence for the case.

The investigation also unveiled a series of mechanisms designed to hide the collusive conduct: executives exchanged information using physical copies of documents, created Hotmail and Gmail email accounts under false identities to communicate, used prepaid mobile phones, and even admitted to having destroyed their laptops.

This is one of the largest cartels uncovered so far in Chile, according to the FNE. The severity of the infringements is aggravated due to the duration of the cartel of over 10 years, the importance to consumers of the products involved, and the almost null existence of substitute products.

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