Transcription

• Narrator

  This podcast is brought to you by the French Competition Authority, France's independent watchdog in charge of tackling anti-competitive practices. This podcast was originally produced in French. You're listening to an English translation by the French Competition Authority. Voiced by professional actors. All names are unchanged.

• journalist

  I’m Isabelle Souquet, a journalist, and you’re listening to Cartels & Co., a series diving into the French Competition Authority’s investigations. Second investigation: the floor covering cartel. Episode 3 – In the Hands of Justice France’s three main flooring manufacturers – Tarkett, Forbo and Gerflor – were all part of a secret, illegal deal. Not only were they coordinating their commercial strategies, but they’d also agreed not to communicate on their products’ environmental characteristics. The system had been running smoothly for years, until the French Competition Authority stepped in. After simultaneous raids at Tarkett, Gerflor and Forbo on 28 March 2013, the three flooring manufacturers realised they were in the French Competition Authority’s sights and were now under investigation. They had to act fast. Forbo was the first to request leniency, quickly followed by Tarkett. I met Laure Gauthier, who was a case officer at the French Competition Authority at the time. She investigated the floor covering case.

• Laure Gauthier

  Once we’ve gone through the leniency applications, we’ve got a solid pile of evidence – enough to summon the companies’ executives to the Authority for a hearing. We confront them with the documents we’ve seized, get their reactions and see what they’ve got to say. People react in all sorts of ways – that’s the human side of an investigation. Some admit the practices straight away, or at least accept the facts. Others try to provide an alternative explanation at every turn. In the floor covering case, we had so much concrete evidence, so much proof of the illegal practices, that it would’ve been almost impossible for the executives to claim they hadn’t attended the meetings or hadn’t discussed prices or volumes when they weren’t supposed to.

• journalist

  Some company executives try to bluff or even pass off some of the blame.

• Laure Gauthier

  Some can be very convincing, that’s true – pretending they don’t understand, or claiming it’s the first time they’ve heard about the alleged practices. But when we challenge them, when we lay the evidence right in front of them, showing that – of course – they knew exactly what had been going on, little by little, they admit the truth. Some, though, have a real talent for concealment. Sometimes we have to press hard. We have to be just as convincing ourselves and really know the case inside out. That’s how we get the company executives to come clean. And that’s the whole point of the hearings: to get the truth out in the open.

• journalist

  Once the initial investigation phase ends, the French Competition Authority formally notifies the objections – that’s what we call the “charges” in competition law – to the companies. The statement of objections sets out all the evidence gathered during the investigation and explains the infringements and their seriousness. At this stage, the companies have a choice. They can fight the charges, or they can settle. In the floor covering case, all three companies chose to settle.

• Laure Gauthier

  Given how strong the case was, I imagine the companies’ lawyers advised them to settle. They’d probably have wasted a lot of time otherwise, trying to defend themselves against such overwhelming evidence. The sensible choice was to settle, and that’s what they all eventually did. But the fines they negotiated with the Competition Authority were particularly high, reflecting just how serious the practices were.

• journalist

  Gerflor, Tarkett and Forbo were hit with massive fines – enough to make national headlines.

• archive

  Swiss flooring group Forbo has been fined €75 million by the French Competition Authority for colluding with its two main French competitors on prices for 25 years.

• journalist

  In total, the companies were fined €302 million: 165 million for French leader Tarkett, 75 million for Forbo and 62 million for Gerflor. Their professional trade association, which had played an active role in their non-competition pact, was fined €300,000.

• archive

  In France, more than 300 hospitals have decided to take legal action against the companies that supply the linoleum used for their floors and walls. The 8 o’clock news has the story…

• journalist

  After the massive fines, public bodies that felt financially wronged decided to seek compensation.

• archive

  They colluded on prices to divide up the market, which is totally illegal.

• journalist

  Hospitals laid kilometres of linoleum – in some cases, replaced after 10 years – at inflated prices. Sarah Subrémon is a lawyer specialising in competition law. She’s represented several organisations that have sought compensation from the linoleum manufacturers.

• S. Subrémon

  The floor covering cartel lasted 23 years, from 1990 to 2013. That’s a long time for a cartel. Take hospitals, they’re the most obvious example. When a hospital is built, it needs flooring. But that flooring also needs to be replaced every 10 years. So during the time the cartel was active, every hospital in France would’ve replaced their flooring at least once. So as you can see, public institutions were hit hard. But private entities weren’t spared either.

• B. Gallet

  At Paul Guiraud Hospital, the largest…

• journalist

  Bruno Gallet is Head of Finance at Paul Guiraud Hospital in Villejuif, just south of Paris. He estimates the financial damage to his hospital at nearly €2 million.

• B. Gallet

  …we laid around 1.7 million square metres of flooring during that time. The overcharging came to about 30% of everything we paid. That’s a huge financial hit. And remember, because it’s a public hospital, we’re talking about public money here. So together with other hospitals, we decided to take action. We’ve hired lawyers and launched joint legal proceedings to seek compensation for the damages we’ve suffered.

• journalist

  Beyond the financial losses, the hospital is seeking compensation for moral damage as well.

• B. Gallet

  Our reputation has taken a hit, both as a public institution and as a hospital. We’ve raised the matter with the courts, so it’s in their hands now. We’ll see what happens.

• journalist

  Bruno Gallet hopes the courts will recognise the link between the damage suffered by Paul Guiraud Hospital and the cartel between Gerflor, Tarkett and Forbo.

• B. Gallet

  If the cartel is found liable and fined, then we’d receive financial compensation. That money would go straight into our hospital budget for the year. Female Voice – Journalist And that wraps up this three-part story about the floor covering cartel. Male voice – Narrator Cartels & Co. is brought to you by the French Competition Authority and produced in English by Peech Studio. To find out more about the French Competition Authority, its work and other cartels dismantled thanks to its investigations, visit our website or follow us on social media.