AFCA investigation into wood pellets market
Since early February 2022, the AFCA has received 94 complaints relating to alleged anti-competitive conduct. The complaints not only related to the massive price increases, but also to issues such as the increasing difficulty of obtaining wood pellets at all, with wood pellet dealers mainly selling to their regular customers and to other customers only in exceptional cases. In addition, many dealers would only offer excessively long delivery periods, justifying the delay on the grounds of supply, capacity and storage bottlenecks, and then only sell at the current daily price at the time of delivery.
Many complainants suspected underlying arrangements among the companies. The Austrian Chamber of Labour (AK) also submitted data, which it had gathered while observing and surveying the sales prices of pellets in some of Austria’s federal provinces during the past few years, and forwarded nine anonymised consumer complaints to the AFCA.
The suspected issues related in particular to:
- Price fixing among competitors, partly with the involvement of or coordination by an interest group
- Artificial reduction of supply by coordinated withholding of goods (stockpiling).
Dawn raids
On 18 October 2022, and following decisions by the Cartel Court, the AFCA conducted dawn raids at several companies and one association in Vienna, Carinthia and Tyrol (see press release of 20 October 2022). The AFCA may carry out a dawn raid on the Cartel Court’s order only if an initial suspicion is justified. This is the case where specific facts lead to the justifiable and comprehensible conclusion that competition rules have been breached.
One group of companies appealed against the search warrant. The Supreme Cartel Court dismissed the appeal and confirmed that the suspicion had been justified (see press release of 15 February 2023). Due to the appeal being lodged, some of the data was only evaluated after the Supreme Cartel Court’s ruling.
The AFCA impounded not only physical documents but also several terabytes of electronic data at these dawn raids, with some 11,000 datasets identified as potentially relevant being reviewed. Furthermore, the data copies of nine mobile phones were also analysed, as were the reports from whistleblowers (eight) and other complainants. The aim was to substantiate the suspicions expressed. In this context, a number of individuals were also questioned.
Results of AFCA investigations
The AFCA did not find evidence of anti-competitive conduct that would stand up in court. It found that some of the suspected issues such as stockpiling had taken place in individual cases, as also supported by numerous complaints and whistleblower reports. However, no evidence was found of any related (price) coordination, either by the association or among the companies. Likewise, any illegal exchange of sensitive information could not be substantiated.
The AFCA has therefore discontinued its proceedings against the companies and the ProPellets association. It may initiate new investigations if new suspicions arise, and it will continue to observe the wood pellets market.
Measures to strengthen competition – self-commitment by ProPellets association
The primary aim is to ensure efficient competition. To this end, the ProPellets association has prepared a fairness package of compliance measures, also drawing on the AFCA’s expertise.
The ProPellets association has been cooperating with the AFCA and made a self-commitment with the aim of raising awareness of compliance with cartel law amongst its members. The association has 85 members.
ProPellets’ commitments include:
- Holding its general meeting with the involvement of cartel law experts
- Organising a cartel law training session for association members
- Underlining the importance of compliance with cartel law during association meetings – at least once every year up until 2026
- Regular, annual reporting on all implemented and intended compliance measures to the AFCA up to and including 2026.
Case Report wood pellets market (German Version)
Self-commitment by ProPellets association (German Version)