Smurfit rival DS Smith wins immunity in €287m Italian price-fixing case

Irish-founded company says it will ‘vigorously’ appeal competition authority decision

Smurfit Kappa, led by chief executive Tony Smurfit, said it was fined €124 million following AGCM investigation. Photograph: Brenda Fitzsimons

Smurfit Kappa, led by chief executive Tony Smurfit, said it was fined €124 million following AGCM investigation. Photograph: Brenda Fitzsimons

 

One of Smurfit Kappa’s main rivals, DS Smith, secured immunity in an Italian cartel investigation for providing information that led to €287 million of fines being imposed on companies in the paper packaging industry, including the Irish-based cardboard box maker.

The Italian Competition Authority (AGCM) issued a statement on Tuesday detailing the main findings of a more than two-year investigation into alleged price-fixing and other anti-competitive practices in the industry.

Smurfit Kappa came out on Monday ahead of the Italian authority’s announcement, saying it had been fined €124 million but would “vigorously appeal the decision on both administrative and substantive grounds”.

The AGCM said that DS Smith, which, like Smurfit Kappa, is one of the leading vertically integrated corrugated containerboard manufacturers in Italy, had avoided fines of more than €140 million after submitting a request for leniency in an investigation that also found against industry body the Italian Cardboard Manufacturers Group.

Leniency policy

Competition authorities globally typically have a leniency policy where companies that provide information about a cartel in which they participated might receive full or partial immunity from penalties.

The Italian paper packaging industry investigation involved two strands. The AGCM said that a number of companies involved in producing and marketing corrugated cardboard sheets, including Smurfit Kappa Italia, DS Smith, Pro-Gest and Innova Group, as well as the trade association, put together a “unique and complex agreement” between 2004 and 2017 to define sales prices and periods of production halts in plants.

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

Separately, many of the same companies and the industry body were involved another complex agreement between 2005 and 2017 covering market shares, sales prices and other commercial terms in the corrugated cardboard packaging market, according to the AGCM.

Reduced penalties

DS Smith secured immunity from fines in both strands of the investigation, while three other groups, Ondulati Nordest, Pro-Gest subsidiaries and Scatolificio Idealkart, secured reduced penalties.

“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 Irish company, which is led by chief executive Tony Smurfit, said on Tuesday. It added that it will book the fine as an exceptional charge in this year’s results, pending the outcome of an appeal.