Car price-fixing cartel fined

A subsidiary of one of the country’s biggest car dealerships and its two former directors have been fined €30,000 each for their role in a price-fixing cartel involving Citroen car dealers in Leinster.

The directors, Brian Smyth (aged 51), of Castlelands, Balbriggan, and Michael Patrick Gibbs (aged 50), of Upper Carrickhill Road, Portmarnock, were also given a six-month suspended sentence from Judge Katherine Delahunt at Dublin Circuit Criminal Court.

Gowan Motors Parkgate Ltd , Parkgate Street, Dublin was a member of the Citroen Dealers Association which forbade members from going below certain prices when selling cars and accessories and imposed fines on members discovered trying to undercut each other.

The company pleaded guilty to entering an agreement with others undertaking to attempt to prevent, restrict or distort competition in the motor vehicle trade by directly or indirectly fixing the selling prices of Citroen vehicles between July 1996 and May 2002 within Leinster.

Smyth and Gibbs also pleaded guilty to authorising or consenting to the same offence.

Judge Delahunt noted that the court had jurisdiction to impose fines up to €3.8m and sentences of two years but said "having been guided by recent High Court decisions in similar cases", she did not think a prison sentence would be appropriate.

She said she had also taken into account evidence from Gowan Motor’s accounts, that its turnover in 2007 was just over €15m and that Gibbs’s and Smyth’s salaries were €122,000 and €168,000 respectively in the same year.

Both men resigned from their positions as directors of several subsidiaries of Gowan Motors before the first court hearing in April in anticipation of sentencing for this offence.

Judge Delahunt said she was satisfied that all accused had "actively engaged" in this scheme which she said "cheated customers and distorted the market".

Thomas Fitzpatrick, of The Competition Authority, gave evidence that the Citroen Dealers Association was set up on April 20, 1995 and engaged in fixing the prices of new and used cars, delivery charges, export costs, labour costs, accessories and spare parts.

Mr Fitzpatrick told prosecuting counsel, Mr Paul Anthony McDermott BL, that Citroen would recommend to dealers a retail price for its cars but this was only a suggestion and the CDA members agreed not to undercut each other by going below the recommended retail price.

He said the Authority conducted an investigation into the CDA based on information from one of its members. The informant provided them with 168 documents, including the minutes of many of the Association’s meetings, and in return was granted limited immunity from prosecution.

Mr Fitzpatrick said the documents showed the association would meet on a monthly or bimonthly basis at locations around the country. A secretary would then distribute a list of prices to the members. This list became known as "the card" and the fixed prices were know as "the card prices".

Mr Fitzpatrick said the CDA also employed two secret shopper agencies to travel to member dealerships and try to buy a car for the lowest possible price. This agency would then report back to the association and tell it if any members were going below "the card price."

If a dealer had tried to sell a car for under the agreed price, the CDA would impose a fine. There was also an agreement that if a member tried to undercut another dealer he would have to pay over the profit he made from the sale. However, Mr Fitzpatrick said, the evidence on this aspect was "sketchy."

He said the company was represented at the inaugural meeting of the CDA and either Gibbs or Smyth were present at over 80 % of the group’s meetings over the following eight years.

Neither man held any office in the association but it was Smyth’s role to compile and distribute price lists for Citroen accessories. Gibbs was nominated to serve on the dealer council but refused.

Mr Fitzpatrick said that at one of the meetings, Gibbs was recorded as reminding dealers "to be vigilant with regard to consumer affairs personal and operation of a cartel." He also advised dealers to "personalise" their price lists so as to avoid suspicion.

There was a reference in another meeting to Gibbs approaching a dealer of a different make of car and asking them to keep their prices in line with the CDA. At the same meeting there was also talk of setting up an ongoing price reporting service "to keep everyone on their feet".

Defence counsel, Mr Shane Murphy SC, said Gibbs and Smyth were never shareholders in the company and retained the status of employees. He said they were both married with children and wanted to apologise to the court and the Competition Authority.

Mr Murphy said several other dealerships had been convicted as part of the same investigation, including PG Duffy Ltd, Bursey Peppard Ltd and Ravenslodge Trading Ltd. All were fined between €20,000 and €50,000 while their directors were given suspended sentences.

Mr Murphy asked Judge Delahunt to distinguish between his clients and the other companies when sentencing because Gibbs and Smyth had a smaller level of involvement.