A recent report indicates that two companies in the paper industry worked together for more than a decade in order to control the price of toilet paper in Chile.
This cartel allowed the producers of toilet paper to keep prices high, and it caused serious harm to the country’s financially disadvantaged citizens.
These two companies together control more than 90% of the toilet paper market in Chile. The country’s president Michelle Bachelet said the allegations were “extremely serious”.
In addition to toilet paper, the companies are also being accused of controlling the prices of napkins, paper towels and other paper products.
According to reports, this cartel controlled the prices of such products from 2000 to 2011.
The agency that reviews competition practices in Chile said in a statement, “It’s one of the biggest collusion cases ever uncovered in the country. The companies have combined annual sales of about $400 million.
Perhaps more troubling is that the companies will likely escape from the sandal with very little repercussions. One company involved, CMPC Tissue, will likely avoid a fine since it came out and admitted the practices earlier this year. Also, the other company, SCA Chile, is expected to receive a reduced fine because it admitted its wrongdoings when confronted.
As a result of the scheme, CMPC Tissue has stated that it had fired the general manager of its tissue division. Other company executives have also been let go.
CMPC Tissue said in a statement, “The fact that some of our executives carried out acts that go against free competition is illegal and also deeply affects our way of acting as a company, our corporate policies and our organizational culture.”
Meanwhile, SCA Chile could not be reached for a comment on the matter.
According to regulators, the cartel began when representatives of CMPC Tissue began meeting with PISA, the company that would later be purchased by SCA. They determined that a cartel would be beneficial to both companies.
Other executives from the companies were also involved in a separate scheme involving the use of phony email accounts and prepaid phones.