It's a sad fact that the KBB industry only ever seems to hit the national headlines when it's caught up in something dodgy.

How many episodes of Rogue Traders or Watchdog have dealt with cowboy fitters or poor customer service from high street chains? It even happens when it's not this industry's fault - the amount greedy MPs spent on kitchen and bathrooms led the expenses scandal.

But last month, the reputation of the bathroom industry stepped a long way from cowboy plumbers and cracked cisterns with the conclusion of a lengthy investigation by the European Commission into alleged price fixing.

The Commission announced fines for 17 bathroom manufacturers totalling over €622 million (£511m) for a price-fixing cartel that covered six countries over a period of 12 years.Companies including Grohe, Ideal Standard, Duravit, Roca, Sanitec and Villeroy and Boch were hit with individual fines for "coordinating" the sales price for bathroom products in Germany, Austria, Italy, Belgium and France between 1992 and 2004. 

The UK, we would stress, wasn't involved.

Deal or no deal

The investigation revealed deals struck during hundreds of meetings of 13 national trade associations in the affected countries as well as one-on-one contacts. The deals allegedly included fixing price increases, minimum pricing, rebates, and exchanging sensitive business information.

The cartel also coordinated price increases following specific events, such as jumps in raw material costs.The fines were set as a percentage of turnover and Ideal Standard was slapped with by far the biggest bill - €326m. However, the current company, Ideal Standard International, is not liable for the fine; instead that will be down to its owner at the time, the American Standard Group, now called WABCO.

"The investigation started in 2004," Ideal Standard International said in a statement. "It happened a long time ago and we took, and take, this issue very seriously. Management stopped it as soon as they became aware of it. Ideal Standard International and its new management team maintain a strict code of conduct and fully comply with competition law as in every country where the company is active. We run mandatory training to deter anti-competitive conduct of any kind."

Ideal Standard's fine was actually reduced by 30%, as was Grohe's, after it cooperated fully with the investigation.Masco, the parent company of brands such as Hansgrohe, Bristan and Huppe, escaped a fine completely with full immunity, as it was the first to blow the whistle on the cartel to the Commission. 

"In 2004, as a result of its legal and ethical compliance programme, [Masco] discovered and stopped certain subsidiaries from participating in anti-competitive business practices in the bathroom faucet and shower enclosure industries in certain countries in Europe," a Masco statement said. "Immediate steps were taken to report the infringement to the appropriate authorities and Masco and its subsidiaries cooperated fully throughout the investigation. As a result Masco was given complete immunity. A strict zero-tolerance policy is in place through Masco for any anti-competitive behaviour."

Despite its 30% reduction, Grohe has already said that its €55m fine will have a negative impact on the company's future: "While Grohe has made provisions, the size of the fine will likely negatively impact anticipated investment decisions," its statement said. "We are currently studying the decision in detail and reviewing our options, including our right to appeal."

Sanitec, parent company of Twyford in the UK and brands such as Keramag in Europe, has also said it is looking at an appeal following its €58m fine: "Sanitec is currently considering its response to the European Commission's decision, including a possible appeal of the decision to the General Court of the European Union... Sanitec takes compliance very seriously. Sanitec complies with relevant laws, including competition rules, in every jurisdiction in which it operates."

Other companies named and fined are not quite as willing to accept the report's verdicts and are much more damning in their own assessment of how the investigation was carried out and how it reached its conclusions.

Villeroy and Boch, which has been slapped with the second biggest fine after Ideal Standard - €71m - doesn't pull any punches. "In our view, the argument made by the European Commission with regard to the bathroom ceramics market is absolutely incomprehensible," says chief executive Frank Göring. 

"The Commission has mixed up two sectors: the bathroom taps and the bathroom ceramics sectors. In bathroom ceramics, only cursory investigations have taken place and, as a result, the decision borders on arbitrariness from our perspective."

Villeroy and Boch now says it is taking legal action and that as far as it is concerned the alleged price coordination never took place and competition was not affected.

Duravit chief executive Franz Kook, whose company faces a €29m fine, is also indignant: "We do not understand the ruling and will also not accept it. We have said at every stage that we consider the reproaches against Duravit to be unjustified... We will oppose the ruling."

Roca is also lodging an appeal and "completely rejects the charge made against it" and considers the fine of €39m "disproportionate".

However, while the appeals may drag out this long-winded affair even further, Joaquin Almunia (pictured above), vice-president of the European Commission responsible for competition policy, was damning in his assessment when he announced the fines. 

"Given the size and duration of the cartel, the Commission has imposed a total fine of €622m," he said. "This cartel will have harmed many businesses - large and small. It will have harmed consumers. There will be few of the 240 million people in the six countries covered by this cartel who will not have been affected."I can think of no recent case that better illustrates the need for strong competition enforcement, in particular during an economic crisis."

The duration and number of companies involved were reduced as the investigation went on. The Commission was originally working on the premise that the cartel began as far back as 1985, but evidence presented by the companies involved moved it forward to 1992. Similarly, at the start of the inquiry, 19 companies were implicated, but two demonstrated that the evidence did not prove their participation.

Money worries

The size of the fines also gives a worrying insight into the financial situation of some of Europe's biggest bathroom manufacturers. While the Commission is keen to 'set fines at a level that acts as a real deterrent', it is also willing to take financial difficulties into account.

In this case, along with the 100% reduction for Masco and the 30% each for the cooperation of Ideal Standard and Grohe, Almunia revealed that the fines of three companies were reduced by 50% because of their precarious finances. Another two received a reduction of 25% for the same reason. 

Ten of the 17 companies claimed they would be unable to pay the fines, but the Commission found this justified in only half of the cases and reduced their fines to a level they could actually pay.

Almunia did not detail which companies had received leniency: "You will understand that the companies would not like me to reveal their names."

"What we assess is whether the fine we are planning to impose would cause, as it is alleged, the bankruptcy of the company," he said. "Of course, for this to happen the company would need to be in a very bad shape already and the fine would push it over the cliff."

This investigation has been rolling on for years and while it has now come to some conclusions, the process starts all over again as all the companies involved consider possible appeals. The full breakdown of the evidence that led the Commission to these headline fines is not yet available, but when it is there'll be a lot of corporate lawyers rubbing their hands and eyeing up that new Ferrari.

Your bill, sir...

Here are the 17 companies named and shamed in the EU Commission price-fixing investigation and their fines...

Artweger (Austria) €2,787,015

Cisal (Italy) €1,196,269

Dornbracht (Germany) €12,517,671 

Duravit (Germany) €29,266,325

Duscholux (Germany) €1,659,681 

Grohe (Germany) €54,825,260 (30% reduction) 

Hansa (Germany) €14,758,220 

Ideal Standard (US) €326,091,196 (30% reduction) 

Kludi (Germany) €5,515,445 

Mamoli (Italy) €1,041,531 

Masco (US)   €0 (100% reduction) 

RAF (Italy) €253,600 

Roca (Spain) €38,700,000 

Sanitec (Finland) €57,690,000

Teorama (Italy) €421,569 

V&B (Germany) €71,531,000

Zucchetti (Italy) €3,996,000