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LATIN AMERICA

Chile breaks up toilet paper cartel that fixed prices for over a decade

But lax legislation means that the country’s top two manufacturers will likely get off lightly

A woman purchases toilet paper at a supermarket in Santiago. AFP

Chilean anti-trust regulators have charged two of the country’s biggest toilet paper manufacturers with taking part in a price-fixing scheme to corner the market for sanitary tissue and other products between 2000 and 2011, officials said Thursday.

The alleged scheme has outraged Chileans, who in the past have also been victims of price-fixing scandals involving chicken and prescription drugs.

The alleged scheme has outraged Chileans, who have been victims of price-fixing scandals for chicken and drugs

“This is a very serious matter,” said Chilean President Michelle Bachelet on Thursday. “Collusion is a form of abuse that is detrimental to people, to the economy, to trust and to our country's image."

Bachelet vowed to speed up the passage of a pending bill to increase punishments for price-fixing.

According to economic investigators, CMPC Tissue and SCA Chile colluded to share out the market and fix the price of toilet paper rolls and other paper products.

CMPC is controlled by Grupo Matte, which is owned by one of the wealthiest and most powerful families in the country.

The other company, SCA Chile – formerly known as Pisa – was owned by Gabriel Ruiz-Tagle, a sports minister under previous President Sebastián Piñera (2010-2014).

The companies have combined annual sales of around $400 million and control 90 percent of the market for toilet paper, paper napkins, tissues and other related products in Chile.

According to investigators, Ruiz-Tagle and Jorge Morel, CMPC general manager, held their first meeting at a country club outside the capital of Santiago. Afterwards, they held meetings at a fire station in the eastern part of the city with other company officials.

One of the firms was owned by a former minister under past President Sebastián Piñera (2010-2014)

They also allegedly conspired to create bogus e-mail accounts and purchased pre-paid cellphones to allow them to communicate without being discovered, said the FNE economic crimes unit.

When the scandal over the high price of prescription drugs broke in 2008, company officials began to protect themselves by exchanging information on printed paper. The correspondence would arrive at their homes looking like wedding invitations, authorities said.

Price-fixing and collusion in Chile are not punishable with jail time but instead with hefty fines.

In 2014, 10 company officials were acquitted in a pharmaceutical price-rigging scandal.

English version by Martin Delfín.

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