Sunday 18 August 2019

Smurfit Kappa to 'vigorously' appeal €124m Italian fine

Photo: Bloomberg
Photo: Bloomberg
Smurfit Kappa chief executive Tony Smurfit. Photo: Jason Clarke
John Mulligan

John Mulligan

IRISH packaging giant Smurfit Kappa Group (SKG) will "vigorously appeal" a decision by the Italian Competition Authority (ICA) to hit its subsidiary there with a €124m fine, following a huge cartel probe involving about 50 companies.

The watchdog launched a probe in 2017 following a complaint and has found that the firms did engage in anti-competitive practices in Italy.

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"SKG is very disappointed with the decision of the ICA on many levels and will vigorously appeal this decision on both administrative and substantive grounds," said the packaging group in a statement.

The company, whose chief executive is Tony Smurfit, warned the appeals process will take years.

It added: "SKG is committed to the highest standards of conduct in its business and will not tolerate any actions that are inconsistent with its values."

The group, which said it cooperated fully with the investigation, will shoulder the €124m fine as an exceptional charge in its current financial year. At the time the probe was launched, the ICA said it had initiated the investigation following complaints that two alleged agreements had been made, designed to restrict competition in the corrugated cardboard and related packaging sector in the country.

In 2017, the authority said the value of the European corrugated cardboard packaging sector was about €20bn.

Italy is the second-largest producer in Europe after Germany, while Smurfit Kappa is the sector's biggest player in Europe. It operates from about 25 facilities in Italy.

"The investigated allegation concerns two independent agreements between the major Italian manufacturers of corrugated cardboard and corrugated cardboard packaging, aimed at coordinating the trading conditions in the corrugated cardboard and packaging sales markets, with particular reference to the uniform determination of selling prices and discounts, as well as the allocation of customers," said the competition authority in 2017.

"These agreements allegedly have similar characteristics in both markets and are systematically monitored," it added.

The competition watchdog had raided Italian offices of a raft of companies in the sector, including Smurfit Kappa's.

The authority claimed that companies including Smurfit Kappa colluded with rivals to coordinate plans for the sale of a number of products.

It alleged that meetings between the businesses took place between 2015 and 2016, but that the anti-competitive practices stretched back as far as 2012.

Smurfit Kappa released strong first-half results last week, with its earnings rising 17pc to €847m and revenue up 4pc at €4.6bn.

Irish Independent

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