Volume 11, Issue 1 - January/February 2009

AGR Reports
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COMPANY NEWS
EU Fines Auto Glass Manufacturers

THE EUROPEAN UNION (EU) has imposed fines, totaling $1.7 billion (U.S. dollars) (1.4 billion Euros), on Asahi, Pilkington, Saint-Gobain and Soliver for “illegal market sharing and exchange of commercially sensitive information regarding deliveries of auto glass in the European Economic Area (EEA).”

According to a statement from the commission, between early 1998 and early 2003 these companies allegedly “discussed target prices, market sharing and customer allocation in a series of meetings and other illicit contacts.”

Belgium-based Soliver also took part in some of these discussions, according to the statement. 

“These four companies controlled about 90 percent of the glass used in the EEA in new cars and for original branded replacement glass for cars at that time, a market worth about $2.5 billion U.S. dollars in the last full year of the infringement,” writes the EU.

The EU increased the fines to St. Gobain by 60 percent because it was a repeat offender, according to the statement, and Asahi, which provided additional information to help expose the infringement, saw its fine reduced by 50 percent under the Leniency Notice. The EU reports that these are the highest cartel fines it has ever imposed, both for an individual company ($1.1 billion U.S. dollars on Saint Gobain) and for a cartel as a whole.

“These companies cheated the car industry and car buyers for five years in a market worth two billion euros in the last year of the cartel,” says competition commissioner Neelie Kroes. “The overall fines are high because of the large market, the seriousness of the case, and Saint-Gobain’s earlier offences. The Commission has imposed such high fines because it cannot and will not tolerate such illegal behavior. 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.”

According to the report, Asahi, Pilkington, Saint-Gobain and Soliver are alleged to have had regular discussions “with a view to allocating between themselves car glass supplies to car manufacturers in response to their tenders and to keeping the market shares of each individual car glass supplier as stable as possible at the European level.” 

The evidence uncovered by the EU is said to have revealed several meetings at airports and hotels in different European cities (for example in Frankfurt, Paris and at Charles de Gaulle (Paris) and Zaventem (Brussels) airport hotels) during which Asahi, Pilkington, Saint-Gobain and Soliver allegedly discussed the allocation of car glass to be supplied for upcoming car models to be produced and renegotiations of on-going contracts, and exchanged commercially lucrative and confidential information, according to the press release issued by the EU.

The fines in the case are based on the “2006 Guidelines on Fines,” under which the fines reflect the overall economic significance of the infringement as well as the share of each company involved. In setting the fines, the EU took into account the respective affected sales of the companies involved as well as the combined market share and the geographical scope of the cartel agreements. 

The EU started this investigation on its own initiative on the basis of reliable information provided by an anonymous informant, officials report. The information prompted the EU to carry out surprise inspections in 2005 at several sites of auto glass manufacturers in Europe. 

Pittsburgh Glass Works Re-Structures, Closes Several Plants

Pittsburgh Glass Works (PGW) announced in early December that it is “realigning its manufacturing footprint and making reductions in its salaried workforce.” As part of this initiative, at press time the company planned to close its glass fabrication facility in Oshawa, Ontario, Canada, in the first quarter of 2009. In addition, the company will reduce its salaried workforce by more than 150 people in response to lower demand anticipated in 2009, and plans to close two satellite assembly plants in Newark, Del., and Cambridge, Ontario, will be closed later in 2009. 

“This realignment will enable us to adapt to the changing demands of the industry,” says Jim Wiggins, PGW president and chief executive officer. “The changes are part of PGW’s transformation of its manufacturing footprint and will help to improve our focus on our remaining facilities.” 

Wiggins says that an additional two plant shutdowns will be needed as well.


Sale of Cindy Rowe to Belron US Closes

The sale of the Cindy Rowe Auto Glass to Belron US closed on December 31, according to Belron US spokesperson Jenny Cain.

“The deal has been completed and Belron US has acquired substantially all the assets of Cindy Rowe Auto Glass,” Cain said.

The terms of the sale were not disclosed.

Belron US had announced in August that it had signed a letter of intent to purchase substantially all of the assets of the Harrisburg, Pa.-based chain, and since August, the company has maintained that the deal was expected to close by end of year.

Cindy Rowe Auto Glass was founded in 1980 as C. Rowe’s Windshield Repair by its namesake, Cindy Rowe-Taylor. Rowe, who was and remains a registered nurse, had decided she wanted to go into business for herself and began performing repairs out of her Chevrolet Vega. In 1987, she purchased an existing auto glass replacement business in Harrisburg, Pa., and integrated it into her existing windshield repair business. Today, the business has 12 locations scattered throughout Pennsylvania and Maryland.

AGRR
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