KEY POINTS:
GPG unit, Coats Group, was one of seven companies slapped with a 328.6 million euro ($647 million) fine by European regulators for stitching up the market for zips and fasteners.
British-based Coats was fined 122 million euros ($235.6 million) while the largest individual fine - 150 million euros - was imposed on Japan's YKK.
The European Competition Commission said today the seven ran four illegal cartels - one lasting 21 years. It said they co-ordinated price increases, fixed minimum prices, allocated customers, share markets and swapped "commercially important and confidential information" for zips, snaps and rivets and attaching machines used widely to make clothes.
The stock exchange suspended trading of shares in Sir Ron Brierley's British-registered Guinness Peat Group pending an expected material announcement. The shares were down 5 cents to $1.95.
GPG director Gary Weiss said the fine - the fourth largest in EU history - was a shock and its size "outrageous".
"We totally reject the commission's allegations of market sharing."
He said Coats had fully co-operated and presented the commission with ample evidence that refuted the allegation of market sharing.
"We will therefore vigorously appeal this decision.
"Furthermore, the size of the fine is grossly disproportionate to that which any possible agreement - which we dispute - could have had on the relevant market. We will exhaust all rights and appeals available to us. This is Round One."
Mr Weiss said GPG and Coats already held substantial provisions for such an eventuality but these would have to be reviewed.
The alleged collusion occurred before GPG bought Coats in 2004 for A3;414 million ($1.1 billion). Coats is by far GPG's largest investment, comprising nearly a third of its balance sheet.
Mr Weiss said he knew it was an issue when GPG bought in, "but I don't think anyone within Coats or anywhere else thought it would magnify to the extent with which it has".
Forsyth Barr broker David Price said the news was definitely a negative surprise. But going on a previous commission fine on Coats, he expected the final penalty to be one third lower.
"If you look at the fine versus the scale of the business, it's a pretty hefty fine," Mr Price said.
EU Competition Commissioner Neelie Kroes said it was unacceptable the major fastening technology producers colluded for such a long time to maintain artificial price levels and to share customers and markets for products that are used every day by a lot of customers.
"The highest management of these companies was well aware that this conduct was illegal but decided to continue anyway," she said.
The overall fine includes a 40 million euro penalty on Germany's Prym Group which the commission waived because it was first to blow the whistle.
The fines for YKK and Coats were reduced because the companies had co-operated with the EU cartel investigation.
Smaller fines were levied on others. A Raymond SARL must pay 8 million euro while Scovill Group will have to cough up 6 million euro and Berning & Soehne GmbH & Co. KG was fined 1.1 million euro.
The EU said it started look into the cartel on its own initiative after "certain information had been brought to its attention." It led surprise raids on the companies in November 2001, which saw Prym, Coats and YKK come forward with information to seek immunity or a reduction of fines.
It earlier found Prym and Coats guilty - along with others - and fined them in 2005 for fixing the price of industrial thread and, in 2004, for a cartel on the haberdashery market, including needles.
The EU termed the abuses in the billion euro European clothing accessories market as "very serious".
GPG last month reported a 185 per cent increase in half-year net profit to A3;94m with Coats making US$24.7m, up from $23.1m on revenue of US820.7m, up from US$806.7m.
GPG shares have dropped from $2.10 at the start of the year.
- NZPA