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AP6 gets caught in anti-competitiveness row

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  • AP6 gets caught in anti-competitiveness row

SWEDEN - A row has erupted between two Swedish bicycle firms, including one wholly-owned by Sjätte AP-fonden (AP6), the sixth Swedish national pension fund, over allegations of anti-competitive behaviour.

The furore began last week when Goran Duhrin, chief executive of Cykelringen - the second-largest bicycle firm in Sweden - claimed Sportex, a bicycle firm bought by AP6 in 2004, was so aggressive in its pricing of products that it bordered on anti-competitiveness because it has backing from a government pension fund.

In response to the comments, AP6, which has a mandate to invest in Swedish small and medium-sized growth companies, claimed Duhrin's allegations - that Sportex used incorrect pricing - were false.

A spokesman for the fund said: "He accused us of many things. One is that we won't sell him one of our companies. He has made an offer, which would give us the opportunity to give him Sportex for free or almost for free. We could not accept such an offer."

The pension fund also alleged that when the offer was declined Duhrin contacted the suppliers to Sportex telling them they would not get paid, which delayed shipments to the firm.

AP6 said: "After that we do not acknowledge him as a professional and reliable businessman."

However, Duhrin claimed these allegations are untrue. He told IPE he has never tried to delay shipments to Sportex, although his shipments were delayed for three months in 2008 when Cykelringen's usual supplier in Taiwan prioritised a large Sportex order.

Duhrin admitted he attempted to buy Sportex in 2004, when the asking price was SEK 30m (€2.9m) and he offered SEK 20m, but the negotiations were suddenly broken off and it was announced AP6 had bought Sportex for SEK 79m, which Duhrin claimed was 40 times the last annual profit of SEK 2m.

He also alleged Sportex has continually lost money since the purchase by AP6, but that the firm has been "quite aggressive in the pricing of products and marketing and expansion".

In addition, Duhrin claimed the lack of profit in the sector means if bicycle firms approach banks for corporate financing the interest rates are increased as "they say we're in a risky business".

Duhrin said: "What we're suffering from is these unlimited resources [of Sportex]. They can disturb the market, as they will always get the money from the government."

In response to the pricing claims, AP6 said this was an "extraordinary" accusation as "various Swedish consumer websites" have in the past alleged that in some instances the Cykelringen sales tend to make the bicycles more expensive after the reduction than before the sale.

Despite the allegations that Duhrin disrupted the supply of bicycles to Sportex, AP6 said it does not intend to take any further action at the moment.

In contrast, Duhrin said he has already taken legal action in the administration courts to try and force Sportex to hand over documents, which he said "should be public", about how the business is operated.

He also intends to request meetings with some Swedish politicians to discuss the matter before pushing to get the case reviewed by the EU Commission on the grounds of anti-competitive behaviour.

He claimed "no private investor" would overpay to buy a company and then continue to run it while making a loss. He said: "I think it is very unfair competition. If you lose so much money why not close down the company."

However a spokesman for AP6 argued: "Sportex has had a rough time, no doubt about it, but has managed to show profit and one of the achievements is that the company has managed to build up it's own brands."

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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