A SUBSIDIARY of one of the country’s biggest car dealerships and its two former directors will be sentenced in June for their role in a price-fixing cartel.
The company was a member of the Citroen Dealers’ Association (CDA) which forbids members from going below certain prices when selling cars and accessories.
They also imposed fines on members who were discovered trying to undercut each other.
Gowan Motors Parkgate Ltd, Parkgate Street, Dublin, pleaded guilty at Dublin Circuit Criminal Court to entering an agreement with others undertaking to attempt to prevent, restrict or distort competition in the motor vehicle trade by directly or indirectly fixing the selling prices of Citroen vehicles between July 1996 and May 2002 in Leinster.
The company directors, Brian Smyth (51), of Castlelands, Balbriggan, and Michael Patrick Gibbs (50), of Upper Carrickhill Road, Portmarnock, also pleaded guilty to authorising or consenting to the same offence.
Thomas Fitzpatrick of the Competition Authority gave evidence that the Citroen Dealers’ Association, set up in 1995, engaged in fixing the prices of new and used cars, delivery charges, export costs, labour costs, accessories and spare parts.
Mr Fitzpatrick told prosecuting counsel, Paul Anthony McDermott SC, that the Competition Authority conducted an investigation into the CDA based on information from one of its members. The informant provided them with 168 documents including the minutes of many of the association’s meetings. In return he was granted limited immunity from prosecution.
According to the documents, the association would meet on a monthly or bimonthly basis.
Mr Fitzpatrick said Citroen would recommend to dealers a retail price for its cars but this was only a suggestion. At the meetings, the CDA members agreed not to undercut each other.
A secretary would then distribute a list of prices to the members. This list became known as “the card” and the fixed prices were know as “the card prices”.
The CDA also employed two secret shopper agencies to travel to member dealerships and try to buy a car for the lowest possible price. This agency would then report back to the association and tell them if any members were going below “the card price”.
If a dealer had tried to sell a car for under the agreed price the CDA would impose a fine. There was also an agreement that if a member tried to undercut another dealer he would have to pay over the profit he made from the sale. Mr Fitzpatrick said the evidence on this aspect was “sketchy”.
Gown Motors Parkgate was represented at the inaugural meeting of the CDA on April 20th, 1995, and either Gibbs or Smyth were present at over 80 per cent of the group’s meetings over the following eight years. Neither man held any office in the association but it was Smyth’s role to compile and distribute price lists for Citroen accessories. Gibbs was nominated to serve on the dealer council but refused.
At one of the meetings, Gibbs is recorded as reminding dealers “to be vigilant with regard to consumer affairs personal [sic] and operation of a cartel”. He advised dealers to “personalise” their price lists so as to avoid suspicion.
In another meeting there is a reference to Gibbs approaching a dealer of a different make of car and asking them to keep their prices in line with the CDA. At the same meeting there is also talk of setting up an ongoing price reporting service.
Mr Fitzpatrick said the turnover for Gowan Motors Parkgate in 2007 was just over €15 million. He said Gibbs earned €122,000 in the same year while Smyth earned €168,000. Defence counsel, Shane Murphy SC, said his clients were never shareholders in the company and retained the status of employees. He said they were both married with children and wanted to apologise to the court and competition authority.
Both men resigned from their positions as directors of several subsidiaries of Gowan Motors last week in anticipation of sentencing.
Several other dealerships have been convicted as part of the same investigation, including PG Duffy Ltd, Bursey Peppard Ltd and Ravenslodge Trading Ltd. All were fined between €20,000 and €50,000 while their directors were given suspended sentences.
Mr Murphy asked Judge Katherine Delahunt to distinguish between his clients and the other companies when sentencing because Gibbs and Smyth had a smaller level of involvement. The judge said she needed time to read documentation and finalise a sentence. She remanded the men on bail until June.