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Chilean toilet paper collusion scheme reaped up to $460 mln -regulator
December 7, 2016 / 3:34 PM / a year ago

Chilean toilet paper collusion scheme reaped up to $460 mln -regulator

SANTIAGO, Dec 7 (Reuters) - A collusion scheme between Chilean paper manufacturer CMPC and a division of Sweden’s SCA in Chile’s tissue and toilet paper market generated benefits for the companies of up to $460 million, a study by the nation’s competition regulator said.

The government is drafting a compensation plan in which the two companies will be required to reimburse Chileans.

In October 2015, Chile’s FNE regulator said CMPC and SCA subsidiary PISA had colluded for at least a decade to control nearly 90 percent of the Chilean tissue and toilet paper market, inflating prices.

At the time, the regulator asked Chile’s anti-monopoly court to fine SCA $15.5 million, while CMPC was not to be fined because it admitted anti-competitive practices previously.

Lawmakers, however, demanded that the companies agree to an additional compensation scheme for consumers, the details of which are still unknown.

They have also upped fines for future collusion cases, and made collusion a criminal matter involving jail time for individuals.

The FNE study on Tuesday asserted that CMPC reaped between $198 million and $398 million from the collusion, while SCA gained between $33.6 million and $92.5 million.

“Both estimates are considered conservative as they deal exclusively with the market for toilet paper in supermarkets, without taking into account the other products in the paper market where the deal was in effect and without considering sales through other channels,” the study said.

A CMPC spokesperson had no immediate comment alrhough CMPC chief legal officer Rafael Cox told local newspaper El Mercurio that it was unlikely total revenue reaped from the collusion scheme could have exceeded total profit during the years in question, which was $192 million.

SCA did not immediately respond to a request for comment.

In its last earnings report in November, CMPC said it still could not estimate the size or the structure of the consumer compensation plan. (Reporting by Felipe Iturrieta and Gram Slattery; Editing by Bill Trott)

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