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Riding With the E.U.’s Cartel Busters

5 minute read
BLAINE GRETEMAN

Busting cartels is sexy. And last week the European Commission issued a very sexy €478 million fine — its second-largest ever. But cartels themselves are decidedly unsexy; this one — consisting of France’s Lafarge, Britain’s BPB, Germany’s Knauf and Belgium’s Gyproc — allegedly fixed prices for … plaster-board. While building materials won’t make hearts race, the Commission’s action was significant, coming a day after it announced the biggest changes to E.U. competition enforcement in 40 years. Under the rules, drafted by Mario Monti, the Commission vows to focus only on the largest cartels while devolving power to national authorities and courts for the smaller fry. But some argue that the changes may create chaos. “They’re trying to set up a federal system without a system of federal courts,” warns Julian Joshua, who led dawn raids in the plasterboard case while he was deputy head of the Commission’s cartel unit. With the Commission divesting some of its authority, companies may not know if deals are legal until they land in national courts — which will suddenly be enforcing E.U. laws. Firms worry they may end up arguing the same case in different jurisdictions, and veteran cartel-busters like Joshua are concerned that some cartels may escape detection altogether. And that’s not sexy at all.

AIDS IN AFRICA
The World’s Grimmest Tax
world aids day, this year on Dec. 1, is meant to mark progress fighting the disease, but a new U.N. report shows instead how far there is to go. Some 5 million people acquired HIV in 2002, the same as in 2001, bringing the total number infected to 42 million. Alan Whiteside, director of Health Economics and HIV/AIDS Research at South Africa’s University of Natal, says the epidemic “can be compared to a 5-8% payroll tax” because aids decreases productivity and raises insurance costs. And that’s just the start. Most African firms with over 10 workers have had at least one infected employee, and by 2010 aids will take a staggering 17% off South Africa’s GDP due to factors like lost working days. There is hope, though. Through the use of less expensive generic drugs and sex education, Brazil has cut its aids death rate 50% since 1996, and the economic benefits now make the program pay for itself. But Brazil looks rich beside many African states, and 96% of those needing drugs in low- and middle-income countries don’t get them.

EUROBLUES
Pain In Spain
Since taking the helm of Spain’s largest company, Telefónica, two years ago, César Alierta (pictured) has had little respite from the past. Unwinding the expansion started by his predecessor, Juan Villalonga, he wrote off a €4.9 billion 3G investment this year. But the 78-year-old company is still headed for its first-ever annual loss. Now prosecutors are seeking to charge him with insider trading, alleging that he and his wife made an improper €1.9-million profit in 1997, selling shares of a tobacco group that Alierta chaired. If the attorney general allows the trial, Alierta would be the first Spanish senior executive to face accusations of insider trading. But Alierta, who denies the charges, is fighting back: he is suing El Mundo, a daily newspaper that published details of the investigation, for libel.

INDICATORS
Doing Their Duty
The U.S. called for elimination of all tariffs on industrial and consumer goods by 2015. But poor countries, which would face the deepest cuts, weren’t keen on the plan.

Expecting A Blue Christmas
British shoppers plan to keep stockings light this Christmas, according to a Mediaedge:cia survey. A 12% drop in confidence has traditional big spenders expecting to buy fewer gifts instead of more. They’re not alone: 25% of Americans think they’ll spend less.

Electric Liberalization Land
Within five years, a Greek family should be allowed to power its home with electricity from a German company — and vice versa — as ministers from all 15 E.U. countries overcame French resistance to create a single European electricity market.

After The Gold Rush
It’s a bad sign for Silicon Valley’s recovery when San Francisco’s famed Golden Gate Bridge goes begging. But as fewer commuters cross the bridge, the public agency that runs it — strapped with a $296 million deficit — has put out collection boxes, seeking contributions beyond the mandated toll.

BOTTOM LINES
“Tourism is the one industry in Britain which never gets its time in the sun.”
DIGBY JONES, Director General of the Confederation of British Industry, accidentally uttering a home truth while criticizing government neglect of tourism

“I stop there occasionally for a hamburger, and that’s about as close as I’ve gotten.”

WARREN BUFFETT, Berkshire Hathaway chairman, quashing rumors that he was buying the Burger King chain

“The last thing you need is a lecture from an American on corporate governance.”
CARLY FIORINA, CEO of Hewlett-Packard, opening a debate on corporate reputation in Britain

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