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Orora (ASX:ORA) has reported it expects a slow-running French regulatory investigation into the country’s glass packaging sector to pose few issues for the company despite its ownership of Saverglass.
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Right before the weekend, French competition regulators arrived unannounced at the Orora-owned Saverglass plant, a brand the former acquired during COVID-19.
Beverage makers have filed a complaint with French regulators over high prices in the early-mid 2020s, to which Orora had two main replies on Monday.
Firstly: Orora only acquired Saverglass in 2022. In its view, most of the cost increases forming part of the industry complaint occurred before its ownership of the brand and so the company has minimal liability exposure.
Secondly: COVID-borne shipping constraints, which kicked off the global inflation crisis – as well as higher energy prices, especially in Europe, worsened by Russia’s invasion of Ukraine – were principally behind the cost increases for beverage makers and not corporate malfeasance.
“It is understood that investigations of this nature typically require years to progress. Customary contractual terms were agreed at the time of Orora’s acquisition of Saverglass in 2023, including Warranty and Indemnity insurance. As it is very early in the process, it is not appropriate to comment further at this time,” Orora wrote.
Still, it’s not entirely in the clear. Some business customers part of the complaint to French regulators were, indeed, customers of Saverglass at the time.
That said, Orora has downplayed this on Monday.
“The complaint originated from participants in the beverage industry in France regarding price increases, and at this stage, it appears that only a small number of those are customers of Saverglass, representing minor trading relationships,” the company said. No quantification of ‘minor’ was offered.
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“The Saverglass leadership team is confident appropriate business practices have been followed, operating independently from other glass packaging manufacturers. Orora, and Saverglass, uphold strong standards of integrity at all times, with integrity being one of the company’s core values as well as having a strong commitment to competition law compliance.”
ORA last traded at $1.86.
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