Competition
During the year, two of Trelleborg’s subsidiaries in France and the US became the subject of investigations by competition authorities in the US, EU, UK, Brazil and Japan.
The two former managers of one of the Group’s French subsidiaries pleaded guilty to cartel offences in the oil hose industry. They have come to an agreement with the US Department of Justice regarding fines and prison sentences and began serving their sentences in January 2008 in the US. The managers concerned were dismissed and no longer work for the Trelleborg Group. In a competition investigation pertaining to fender operations, three Americans have pleaded guilty, including the former president. These three individuals no longer work for the Trelleborg Group.
Trelleborg continues to assist the authorities with their investigations and to take the necessary measures in conjunction with these issues.
Information and assessments announced earlier concerning the possible impact on the Trelleborg Group stand firm. It is still impossible to accurately assess the final financial impact of the authorities’ investigations. However, based mainly on the assessment of Trelleborg’s external legal representatives, it can be assumed that the ongoing investigations may lead to the Group incurring significant costs of a nonrecurring nature in gradual stages during 2008. Currently, all estimations of the possible financial impact involve considerable uncertainty, but the potential combined financial impact could reach amounts that correspond to a predominant proportion of the Group’s pre-tax profits for 2006.
Trelleborg takes a very serious view of competition law infringements and already has a very clear and well-communicated set of rules and regulations regarding compliance with applicable competition legislation. However, as a result of events, the Board of Directors and management also decided on an aggressive strengthening of the existing action program aimed at further increasing knowledge of applicable competition rules and further strengthening the Group’s internal processes and control systems.
Costs for the approved action program were expensed continuously. Costs incurred for the ongoing action program, combined with the accumulated and estimated costs of the investigations in progress, were charged against full-year operating profit in an amount of SEK 86 M. The previously communicated estimation that the total costs would amount to about SEK 100 M remains.
The investigations are expected to be completed during 2008.