Subject:
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LEGO®, Carrefour in French Price-Fix Probe
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Newsgroups:
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lugnet.general
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Followup-To:
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lugnet.mediawatch
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Date:
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Sun, 24 Oct 2004 09:36:24 GMT
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Viewed:
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1276 times
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Some more bad news...couple weeks ago before the CEO of LEGO step down.
LEGO®, Carrefour in French Price-Fix Probe
Oct. 8, 2004 FORBES (associated press)
French competition authorities are investigating Danish toy maker LEGO Systems
AS and supermarket retailer Carrefour SA as part of a probe into alleged
price fixing in the French toy market in 2002 and early 2003.
While investigators launch an inquiry that could eventually lead to worst-case
fines of 10 percent of group revenue, the Danish maker of colored plastic
building blocks has already acknowledged breaches of internal company guidelines
and replaced French management.
In a probe that could yet zero in on other retailers and toy makers,
investigators have already raided offices at Paris-based Carrefour, people
familiar with the situation said. Christian Honore, a Carrefour spokesman, said
he couldn’t comment beyond saying the company was aware of the investigation.
Other retailers and toy makers contacted by Dow Jones Newswires said they
weren’t aware of any investigation.
Billund-based LEGO confirmed it’s helping France’s Direction Generale de La
Concurrence with “an examination of the French toy market” after a complaint
first filed in winter 2003. LEGO says it’s the world’s fourth-largest toy maker
by revenue but declines to say how much of a share it has in the French market,
estimated to be worth about 2.5 billion euros, or about $3.1 billion.
In 2003, LEGO had group revenue of 8.43 billion kroner, or roughly $1.4
billion. The company wouldn’t disclose how much of that comes from French
operations.
“Internal inquiries ... have shown that internal guidelines were violated
during 2002 and the first part of 2003,” said Charlotte Simonsen, a LEGO
spokeswoman. She said she couldn’t comment on the content of the investigation,
the conclusions of which LEGO doesn’t expect before the second half of 2006. “I
have no idea if there will be charges,” she said, adding that LEGO is
cooperating fully with the French authorities. She added that while French law
does provide for a “worst-case” fine of 10 percent of overall group revenue, a
fine based on French sales alone was a more plausible outcome. The spokeswoman
said a new head of French operations has been appointed but declined to comment
on the fate of his predecessor.
The probe comes at an awkward moment for both companies. Privately-held LEGO
is seeking to swing back into the black this year after plummeting sales led to
a loss of 1.07 billion kroner ($177 million) in 2003, its worst ever.
Meanwhile, Carrefour seems firmly stuck under a cloud, with questions being
asked over the future of chief executive Daniel Bernard as investors brace for a
poor third-quarter revenue report Oct. 12. Markets are also expecting a profit
warning as the retailer struggles to regain lost market share. Carrefour had
revenue of 78.99 billion euros, or roughly $97 billion, in 2003. Of that, about
a quarter came from its French hypermarkets and only a small proportion from the
sales of toys in France.
-end of report-
www.forbes.com/business/feeds/ap/2004/10/08/ap1583848.html
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