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Monday / February 26.
HomeminewsLens Price Fixing Scandal

Lens Price Fixing Scandal

Germany’s cartel authority, the Bundeskartellamt, has imposed fines totaling 115 million Euros (AUD$165 million) on five leading manufacturers of ophthalmic lenses in Germany as well as seven company employees and the Central Association of Optometrists (ZVA) for their involvement in cartel agreements.

The companies involved are Rodenstock GmbH, Munich, Carl Zeiss Vision GmbH, Aalen, Essilor GmbH, Freiburg, Rupp+Hubrach Optik GmbH, Bamberg, and Hoya Lens Deutschland GmbH, Müllheim.

The Anticompetitive Agreements
In a media statement following the massive fine, the President of the Bundeskartellamt, Andreas Mundt, said: “The price agreements of the manufacturers of ophthalmic lenses have for years virtually paralysed competition in this market. The companies agreed on a regular basis to raise prices demanded from opticians. In the end the consumers had to pay the bill, because the price increases were passed on to them.”

The Bundeskartellamt’s investigations discovered that the companies maintained two different types of anticompetitive agreements.

The statement claimed: “Since mid-2000 the five manufacturers of ophthalmic lenses had met on a regular basis to coordinate their competitive behaviour. The HERRZ group, whose name corresponds to the first letters of the participating companies’ names, was founded on a mutual wish to maintain, as far as possible, existing market structures. In their meetings, the representatives of the companies agreed on price surcharges, as well as conditions, bonuses and discounts granted to opticians.

“In addition, they regularly informed one another of specific competitive measures, such as upcoming price increases”.

The investigations also disclosed that the German Optometrists’ Association, the ZVA, had organised a pricing structure working group and with the five manufacturers of ophthalmic lenses, agreed on non-binding price recommendations for opticians.

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The HERRZ group, whose name corresponds to the first letters of the participating companies’ names, was founded on a mutual wish to maintain, as far as possible, existing market structures.

The statement read: “The majority of the opticians set their sales prices for ophthalmic lenses on the basis of these non-binding price recommendations. The sales prices also cover the craftsmanship services rendered by the optician and are determined on the basis of calculation formulas. At least during the meetings in 2005, the respective formulas for the calculation of the non-binding price recommendations were revealed and amendments for the subsequent three years agreed”.

The investigation began in mid 2008 following a tip off and led to searches of the premises of the companies concerned and the ZVA in which a great deal of evidence was seized.

According to the anti-trust authority, Rodenstock, Hoya, Carl Zeiss and the ZVA were granted a considerable reduction of their fines for cooperation with investigators.

According to authorities, when calculating a fine, the Bundeskartellamt also took into account the size and economic viability of the company concerned. Where subsidiaries are concerned, their economic viability is estimated in relation to the economic performance of their company group.

It stated that the orders imposing the fines were not yet final and could be appealed against at the Düsseldorf Higher Regional Court.

However, two of the companies concerned and the ZVA have already agreed to have their proceedings terminated by way of a settlement.

The Lens Companies Respond
In the latest news, the five lens manufacturers that have been collectively fined by Germany’s antitrust agency for participating in price fixing scheme have each responded to the agency’s claims.

According to the industry news source VMail, Carl Zeiss Vision said it has cooperated fully from the start of the BKA’s investigation and as a result, the fine imposed on it by the BKA was reduced accordingly. Zeiss added that it may appeal the fine.

Rodenstock told Vmail that it had cooperated fully with the BKA and reached an agreement to pay a reduced fine. Rodenstock asserted that although the five lens suppliers were alleged to have colluded in fixing prices, “the sales prices of complete lenses or spectacles themselves were never included in these understandings.” According to Rodenstock: “Neither end users nor opticians have suffered any losses since 2000. Prices for lenses only increased in keeping with the general inflation rate.” Rodenstock said it has put additional measures in place to rule out the possibility of possible future breaches of competition law, including a compliance program in which external solicitors will train relevant personnel.

Hoya Corp’s German subsidiary, Hoya Lens Deutschland GmbH, told Vmail: “HODG has decided to accept part of the decision, however, it has decided to appeal against some part of the decision because its understanding of the relevant facts and the legal assessment differ considerably from the view of the Federal Cartel Office.” Hoya said it has been fully cooperating with the BKA, and that it will “take this incident seriously and will continue to improve our compliance with laws and regulations.”

Essilor said it is contesting the validity of the BKA’s conclusions as well as the amount of the fine, and plans to lodge an appeal with the Düsseldorf court. The company said it will not pay the fine until a ruling is made by the court.

Essilor said it is “fully committed to the principle of free competition and applies “a zero tolerance approach to anti-competitive practices and expects all members of its organisation to behave in an exemplary manner in this regard.”