Thursday , February 25 2021

Fines of 25 million euros for Holzindustrie Schweighofer, Kronospan and Egger. Egger’s reaction

The controversial Austrian company Holzindustrie Schweighofer, the largest wood processor in the country, has been fined for mapping the wood market. It is the biggest sanction ever received.

Those from Kronospan Trading also received a sanction that approached 10 million euros, and the Egger Group is in third place with approximately 5 million euros.

This is after the 2016 Competition Council launched an investigation into “underground agreements in the timber market”. Thus, he eventually sanctioned 33 important companies by finding that they violated the legislation between 2011 and 2016.

The cumulated sanctions amount to approximately 130 million lei, or 26.6 million euros.

The companies are accused of: “alleged cartelization of bids and division of spheres of influence, lots of wood or sources of supply; they would trade in commercially sensitive information on raw material needs, timber procurement, organizational charts of institutions; this would neutralize local competition with reduced market power, ”according to information obtained from the Rise Project.

Just over a third of the companies surveyed, especially 13, admitted their facts. “The title is Holzindustrie Schweighofer: its officials have recognized involvement in illegal schemes,” RISE said. The other two major sanctions, Kronoşpan and Egger, are two other Viennese holding companies operating in Romania. The list of companies guilty of committing illegalities in the wood market also includes important suppliers of the Schwighofer Corporation: Alredia, Explosiv Group, Silva Logistics, Silvania International, Forest Land.

While Holzindustrie Schweighofer manager Dan Banacu declined to comment on “ongoing investigations” and Kronospan was silent, Egger representatives told the Rise Project that they agreed to pay the fine without reservation because “certain employees (…) did not compete.” behaved exactly correctly “, and even if they were not the initiators,” they did not stop the practices in question “.

“Competition Council inspectors also explained to RISE how to proceed:” By dividing plots and wood sources, depending on interest, the agreements have severely restricted competition, from a market demand perspective, by changing the tender procedure. ” Thus, the elimination of competition was aimed at “allocating wood at the lowest possible price”.

EGGER has decided to cooperate fully with the Competition Council

“We have been cooperating in this process from the beginning and we have provided the competition authority with all the necessary information during the investigation,” says Alina Chifan, Commercial Director at EGGER Romania.

“After the investigation, it was found that certain responsible employees of the company did not behave correctly from the point of view of the competition. Although these employees did not themselves initiate a breach of the competition rules, they did not stop the practice in question. That is why we have unreservedly agreed to pay this fine. “

Taking into account the active participation of EGGER Romania in clarifying the situation, The Competition Council took into account mitigating circumstances in order to reduce the level of fines.

The fact that EGGER has a nationally (and globally) recognized reputation as a company operating in accordance with applicable laws and regulations and that violations of competition rules have been identified as an absolute exception has made a difference – a positive difference, “says Alina Chifan. protection of competition, the fine is worth 22.6 million lei.

According to the Competition Act, the starting point for calculating the fine is the company’s most recent total turnover. The small volume of acquisitions that were the subject of the infringement accused of EGGER Romania also had a mitigating effect. In addition, the Competition Council considers it positive that the company has in the meantime implemented its own program to comply with competition rules, organize training, comply with relevant laws, not only for its employees but also for suppliers and other trading partners.

Since 2008, the EGGER Group has owned a factory in Rădăuţi, Romania, Suceava County. The factory has over 850 employees. Rădăuţi produces raw and melamine plywood for the furniture industry, as well as OSB for the wood construction industry and retail. EGGER has invested around € 500 million in the development of a strategic production unit in Rădăuţi to become a fully integrated production site equipped with state-of-the-art technology.

More details on the Austrian business model and Rise project investigations on this topic can be found HERE.

The Austrians opened their first wood processing plant in Sebeş in 2003, in the presence of then-president Ion Iliescu, who a year later promoted the company’s owner, Gerald Schweighofer, to knighthood, giving him the National Order of Merit.

At the end of 2019, the company changed its name to HS Timber Production.

Last year, a group of parliamentarians (PSD and PNL) tried to remove an antitrust article from the Forestry Act, but failed.

The news of the fines imposed by the Competition Council attacked social media, and comments did not wait long. Romanians say the fine is “insignificant, compared to the profits made by cutting down forests in Romania and the real value of hundreds of millions of euros a year of illegally felled trees”.

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