CMA reaches settlement in furniture cartel investigation

The Competition and Markets Authority has reached a settlement with two furniture suppliers resulting in fines totalling GBP2.8 million for infringement of the Chapter I prohibition.

Furniture suppliers Thomas Armstrong (Timber) Limited and Hoffman Thornwood Limited have admitted market sharing, price coordination, bid rigging and exchange of commercially sensitive information

The penalties include a 20% reduction for settlement reflecting the companies’ admission of the infringement and their agreement to a streamlined resolution of the case.

The CMA has stated that another furniture manufacturer (BHK (UK) Limited) will avoid fines after confessing to the infringement and provided that it continues to cooperate with the CMA’s leniency policy.

The fines will become payable when the CMA issues a formal infringement decision imposing the fines and setting out the basis for their calculation.  A formal statement of objections is expected to be issued by the end of January 2017.  The issue of a statement of objections after a settlement has been reached is relatively rare.  However, depending on the complexity of the infringements it may be easier to agree a settlement earlier in the process.

The investigation began as a criminal investigation under section 188 of the Enterprise Act 2002.  However, the CMA decided not to pursue a criminal investigation and the case was closed in 2015.  This may be explained in part by concerns that the CMA might have faced challenges in convincing a jury that the dishonesty requirement was met. The infringements predate April 2014 when the requirement to prove dishonesty under section 188 was removed.

The case is indicative of the CMA’s increased readiness to open competition cases where, over the last year, the CMA opened 14 new competition cases.