sain t-gobain annu al report 2008 annual report

Asbestos-related litigation in Brazil
In Brazil, former Group employees suffering from asbestosrelated
occupational illness are offered either exclusively
financial compensation or lifetime medical assistance
combined with financial compensation. Only a small number
of asbestos-related lawsuits were outstanding at December
31, 2008, and they do not represent a material risk for the
companies concerned.
20.2 Ruling by the European Commission following
the investigation into the construction glass
and automotive glass industries
In November 2007 and 2008, the European Commission
issued its decisions concerning, respectively, the construction
glass industry and the automotive glass industry.
In the November 28, 2007 decision concerning its investigation
into construction glass manufacturers, the European
Commission held that Saint-Gobain Glass France had violated
Article 81 of the Treaty of Rome and fined the company
€133.9 million. Compagnie de Saint-Gobain was named
as being jointly and severally liable for the payment
of this amount. Compagnie de Saint-Gobain and Saint-Gobain
Glass France decided not to appeal this decision and the fine
was paid on March 3, 2008.
In the November 12, 2008 decision concerning its investigation
into automotive glass manufacturers, the European Commission
held that Saint-Gobain Glass France, Saint-Gobain Sekurit
France and Saint-Gobain Sekurit Deutschland Gmbh had
violated Article 81 of the Treaty of Rome and fined them
€896 million. Compagnie de Saint-Gobain was named
as being jointly and severally liable for the payment
of this amount.
The companies concerned believe the fine is excessive and
disproportionate, and have appealed the decision before the
Court of First Instance of the European Communities.
The European Commission has granted them a stay of
payment until the appeal has been heard, in exchange for a
bond covering the €896 million fine and the related interest,
calculated at the rate of 5.25% from March 9, 2009. The necessary
steps have been taken to set up this bond within the
required timeframe.
As a result of these developments, the €694 million in provisions
set aside in the accounts of the companies concerned
at December 31, 2007 – which were reduced to €560 million
at June 30, 2008 following payment of the €134 million fine
– were increased to €960 million at December 31, 2008
to cover the €896 million fine, together with the cost
of the bond and the estimated legal costs over the appeal
period. The additional €400 million set aside in the second
half of 2008 was recorded in “Other business expense”
in the accounts of Saint-Gobain Sekurit France
and Saint-Gobain Sekurit Deutschland GmbH.
NOTE 21
Subsequent events
On January 14, 2009, Compagnie de Saint-Gobain placed
a €1 billion 5 1/2-year 8.25% bond issue. The issue proceeds,
which were received on January 26, will be used to refinance
the Group’s existing debt and extend its average maturity.
212
Saint-Gobain – Financial Report 2008