Rexam facing price fixing charges in Russia
The Federal Antimonopoly Service (FAS Russia) announced that it has launched proceedings against “a group of persons” including Rexam Beverage Can Naro-Fominski Ltd, Rexam Beverage Can Vsevolozhsk Ltd and Rexam Beverage Can Dmitrov for "abusing its dominant market position" under Part 1 Article 10 of the Law on Protection of Competition.
A Rexam spokesperson told FoodProductionDaily.com that the company would not be issuing any comment until it had made the appropriate submission to the European Union.
Investigation
The FAS said the Russian subsidiaries of the UK-based company were the only aluminium can producers in the Russian Federation.
The body said it had found evidence of price fixing after analysing the economic performance and “ex-works processes” of Rexam Beverage Can Naro-Fominsk Ltd., Rexam Beverage Can Vsevolozhsk Ltd. and Rexam Beverage Can Dmitrov Ltd during the first six months of 2009.
“The findings showed that enterprises fixed different prices for the same type of products supplied to different customers which was not pro rata to the amount of ordered products,” said FAS Russia in a statement.
The antimonopoly body specified the alleged price fixing activities involved cans sold in to the beer market and these may have affected not only the price of the containers but also the end price of the beverage.
“Fixing different prices for the goods with the same costs, sold to different consumers of beer products could have resulted in increasing costs of not only the price of package but also the price of beer products and ultimately creating discriminatory conditions for consumers on domestic market,” it added.
Dominant market position
Rexam took over Russian outfit Rostar in January 2008, following approval from the FAS. The body said the purchase had given the UK company a dominant position in the Russian aluminium can industry with a market share topping 90 per cent.
The FAS had attached a number of conditions to the purchase to protect Russian consumers – including an obligation to limit annual price increases for cans and lids to no more than 15 per cent. The company also had a duty to satisfy market needs for cans and lids provided there was adequate production capacity.”
In August, Rexam announced plans to close its Dmitrov plant in a bid to “address the continued weakness in the Russian beverage can market”, reducing its annual can capacity in Russia by 1.3bn. But the company stressed the move, which would save it £6m in 2010, would have no impact on its ability to meet customer requirements.
Speaking at the time, Leslie Van de Walle, Rexam's CEO said: "Despite poor volumes in Russia, the Rostar acquisition is delivering good returns on our investment, and long term growth prospects remain very attractive."
