BPI hit by claims of plastic bag cartel

The European Commission yesterday accused 43 makers of plastic bags, including British Polythene Industries, of price-fixing and carving up the market between them.

It emerged that following a two-year investigation, Brussels sent the companies a letter outlining its concerns at the end of last week. The "statement of objections" alleged that a cartel existed to fix prices in the supply for plastic bags for industrial uses.

BPI, Europe's largest producer of plastic films and bags, had one of its factories raided by European Union officials in September 2001, as the Commission began its investigation into alleged price-fixing. The uncertainty has dogged BPI ever since with the group conceding last year that the investigation would effectively put a stop to its growth until 2006.

UPM Kymmene, the Finnish plastics manufacturer, was the first to issue a statement yesterday, confirming it received a letter from the EU and was involved with the investigation.

BPI issued a stock exchange announcement insisting that it would co-operate fully with the Commission, but refused to provide further comment until it had studied the "lengthy" document.

At a results announcement in March last year, the BPI chairman Cameron McLatchie said although the group had made mistakes in the past, it was now fully compliant with EU law.

BPI's shares were down more than 3 per cent at 307.5p by the close yesterday, giving the company a value of £79.6m.

The Commission said that although 43 companies were involved in the investigation, these are owned by a smaller number of larger organisations. It refused to provide names beyond the two groups that issued statements.

In a statement, the Commission said: "The sending of a statement of objections is a step in European Union antitrust investigations and does not prejudge the final result. The companies were given eight weeks to reply in writing, and can also request the holding of an oral hearing."

The bags at issue are used for packaging products such as fertilisers and animal feed.