Newsprint price probe launched

Companies at 40 locations in Britain and across Europe have been raided by European Union investigators trying to establish whether a cartel exists following the recent jump in newsprint prices.

The investigation was announced yesterday by the European Commission's competition commissioner, Karel Van Miert. Investigators, mainly from national authorities rather than the Commission, were asked to gather information about alleged price-rigging. Newsprint prices have soared by 20 per cent this year.

The inquiries concern companies in seven EU countries - Britain, Sweden, Finland, France, Austria, Germany and Italy.

Mr Van Miert was secretive about the investigation because, he said, it had only just begun and he did not want to prejudge the matter.

The Commission had received complaints about prices from newspaper publishers, governments and competition authorities across Europe earlier this year. It refused to identify the source of any complaint but indicated there had been widespread disquiet in the newspaper industry.

Leading European producers of newsprint include Stone, International Paper and SCA.

Newsprint prices have soared this year to $600 a tonne, as demand from the Far East and the US led suppliers to shift products away from some steady European customers. A further increase to $675 is expected on Monday.

Newsprint suppliers say the industry is producing at capacity, and several companies have recently announced plans to open new mills in Europe, the US and Latin America. Major players in the industry have posted near- record profits on the back of increasing prices for newsprint, paper, and various packaging materials.

The UK publishing industry has become increasingly vocal about rising prices. News International in particular was hard hit by the newsprint shortage earlier this year, forcing production cuts at its national newspaper titles. Other publishers have also complained.

The effects of the price increases, particularly in Continental Europe, have been tempered by the declining US dollar, but this has not greatly helped British publishers as the pound gained little against the dollar.

If evidence of price-fixing is discovered the Commission has the power to fine the companies concerned and order them to dismantle any such arrangements.

In a separate development, the motor industry was given the go-ahead yesterday to carry on with existing sales and service practices - which make it difficult to bypass national dealer networks and have led to complaints of rigged prices and broken guarantees.

Consumer groups attacked the decision, but the European Commission said the car market required special knowhow and skills to ensure vehicles were properly maintained.

One change ordered by the Commission is that independent repairers will be entitled to technical information from manufacturers.

The Commission has been inundated with complaints - despite the single market in which consumers can theoretically buy goods in whichever country they can find the best terms.