Italy's antitrust body fines Tetra Pak €95m for involvement with Italpak

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Italy's antitrust authority says that it has fined packaging giant
Tetra Pak €95 million for not respecting a ban it had imposed in
Aug 1993, which barred Tetra Pak from acquiring Italpack.

The ban was imposed, according to the authority, because the acquisition would have strengthened Tetra Pak's dominant position on markets for packaging for liquid and semi-liquid food products.

"In the investigation launched in April 2004, notwithstanding Italpack's formal acquisition by Eaglepack Italia in 1995, the Tetra Pak group has de facto managed Italpack as if it was dealing with a company belonging to the same group,"​ it said.

"This de facto control is shown via a series of elements, including long-term contracts, substantially exclusive commercial agreements with Tetra Pak, and influencing the choice of management of Italpack."

The authority said that the fine was levied on Tetra Pak International because it manages the group's European operations.

However, Tetra Pak has said that it will appeal the Italian anti-trust authority's ruling, as it believes that there has been no breach of the prohibition decision.

"The IAA alleges that Tetra Pak has exercised control over Italpack through a supply relationship,"​ said Tetra Pak's senior communications vice president Jörgen Haglind in a statement.

"However, the supply agreement was of a non-exclusive nature and annually renewable for both parties: therefore the agreement could not constitute control of Italpack."

Haglind also claims that Tetra Pak had already established a supply agreement with Italpack before the 1993 decision. This was at arms length and with normal commercial terms and conditions.

"The supply relationship did not include any of the characteristics of the so called "de facto control", as defined by the IAA,"​ said Haglind.

The crux of Tetra Pak's argument therefore is that the co-operation between Tetra Pak and Italpack has been no different from what is usual between a company and its supplier. "We are confident that we are compliant with the 1993 decision,"​ said Haglind.

Tetra Pak​ terminated the supply agreement with Italpack in 2003.

This is not the first time that Tetra Pak has questioned official rulings regarding its business practices. Last month, Tetra Laval, the group to which Tetra Pak belongs to, announced that it would appeal the European Commission's decision to impose a €90,000 fine for an alleged failure to provide information in the long running investigation of its acquisition of Sidel.

"The Commission's decision raises important issues of principle with regard to parties' obligations under EU merger control rules,"​ said Haglind.

"Hence, we find it necessary to appeal this decision to the Court of First Instance."

The decision relates to the initial notification of Tetra Laval's acquisition of Sidel, the French manufacturer of machines for producing PET bottles. The acquisition was the subject of two Commission decisions, the detailed scrutiny of the European Court of First Instance and was approved by the EU Commission on 13 January 2003.

The European Commission said that it has fined Tetra Laval for providing what it called incorrect or misleading information relating to the existence of its Tetra Fast technology when it requested regulatory approval for its acquisition of French company Sidel.

"The Tetra Fast technology, which is at the heart of today's decision, is still in its development phase and the Commission has shown a manifest misunderstanding of both its features and potential. We do not believe the Commission has any grounds to impose a fine on Tetra Laval,"​ said Haglind.

Tetra Fast is a project developed by Tetra Pak which attempts to use combustion technology to form PET bottles rather than the traditional compressed air technology. Tetra Fast has yet to prove its commercial viability.

Operating activities within Tetra Laval are organised in three autonomous industry groups: Tetra Pak, DeLaval and Sidel. The three industry groups are focused on systems for production and distribution of food.

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