GPG’s Coats stuck with $200 million fine
"You can bet that Coats Group is going to be a thorn in the side of GPG."Featured comment
Guinness Peat Group subsidiary Coats Group has lost its appeal against a €110 million fine for price fixing more than a decade ago.
Coats – now 100% owned by GPG – must pay the fine plus accrued interest, which amounts to €28 million.
The total bill is about €138 million, or $215 million at today's exchange rates.
Coats has maintained a provision of €45 million against the possible cost of this fine, leaving an additional €93 million to be provided and accounted for in Coats half year figures to 30 June 2012. The company said €65 million will be treated as an exceptional item within operating profit and €28 million will be treated as an exceptional interest cost.
The European Commission imposed the fine in 2007 for "an alleged market-sharing agreement" between Coats and William Prym GmbH & Co. between January 1977 and July 1998.
The businesses were found to have been co-ordinating price increases, fixing minimum prices, allocating customers, sharing markets and exchanging other commercially important and confidential information relating to the zips, snaps and rivets market.
The European General Court delivered its judgment overnight, dismissing Coats' appeal on all counts and upholding the €110m fine in its decision of September 19, 2007.
“Coats is extremely disappointed with the Court's decision and its legal counsel are considering whether there are any grounds for further appeal to the European Court of Justice,” GPG said in a statement on the London Stock Exchange.
“Coats maintains that the European Commission's allegations of a market sharing agreement in the European haberdashery market in the period from 1977 to 1998 are unfounded.”
GPG acquired full ownership of Coats in 2004, so the alleged collusion occurred long before Sir Ron Brierely’s company got involved.
Coats is the world’s largest supplier of industrial thread and consumer crafts and the world’s second largest zip maker. The British companyis by far GPG's largest investment, comprising nearly a third of its balance sheet.
GPG is in the process of winding up and selling its investment portfolio, with the exception of Coats, which it intends keeping unless a suitable offer is received.