European Commission announces decision regarding earlier communicated competition investigation

Today, the European Commission announced a decision in its ongoing, earlier communicated, competition investigation regarding certain types of marine oil hoses. The investigation began in May 2007 and Trelleborg has awaited the decisions of authorities during a longer period.

According to the Commission’s announcement, one of the Trelleborg Group’s French subsidiaries participated in illegal price cooperation for certain types of marine oil hoses. The European Commission has set the fine for the subsidiary at EUR 24.5 M.

Trelleborg has however not yet received the complete decision. Accordingly, we can not yet comment on the measures that will be taken as a result of the decision or whether it will be appealed. Trelleborg awaits receipt of the complete decision. We will provide information on further actions when the complete decision has been received and analyzed.

Trelleborg is also affected by ongoing investigations by e.g. the US Department of Justice into the competitive conditions for certain types of marine oil hoses and certain types of marine fenders. However, the European Commission’s decision is completely independent of that of the US authorities. Trelleborg has continuously assisted the US authorities, and we await their decision on the matter.

Based on the knowledge of the abovementioned decision by the European Commission, Trelleborg is making a downward adjustment of the total cost estimate communicated earlier. In addition to costs of SEK 100 M already charged, our total additional costs related to violations of competition law are expected to amount to approximately SEK 400 M. This amount includes the abovementioned EU fines, fines and expenses in the US and other affected countries, and damages and legal expenses. This assessment is still subject to uncertainties relating to length and outcome of ongoing processes.

(Earlier assessment: 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, that amounted to SEK 1,193 M.)

“It is good that we now have received a decision on this issue,” says Peter Nilsson, President and CEO of the Trelleborg Group. “Clearly, competition violations are completely unacceptable, and we have in an open way assisted the authorities with their investigations. We have also taken significant internal actions to minimize the risk that this could happen again.”