A European appeals court has upheld a $23 million fine against Group Michelin for unfair practices that it said stifled competition in France.
In the original decision in 2001, the Commission of the European Communities found that Michelin's commercial and pricing policy toward French tire dealers was based on a complex system of discounts, refunds and other financial advantages in the 1990s. Some of the rebates were not calculated or paid until a year after the first purchases, making some dealers unable to estimate the real unit purchase price of Michelin truck and bus tires, the court said. Dealers then, to minimize their risk, took advantage of the terms offered and bought through Michelin, the court said.
``The main objective of the policy was to tie dealers to the company and to maintain the company's market share and consequently to undermine competition in the common market,'' the Court of First Instance said.
Michelin had appealed that decision, denying that the discounts and bonuses were loyalty-inducing. The French tire maker also disputed the commission's allegation that the cumulative effect of the rebates was a further abuse as well as the commission's economic analysis and the size of the fine imposed.
But the appeals court rejected those arguments, saying the tire maker held a dominant position and impeded normal price-based competition.
Michelin has two months to appeal the latest decision. A company spokeswoman said the firm had taken note of the decision but had no further comment.