Regulators bust toilet paper cartel in Chile

Chileans have been overpaying to wipe their bottoms, the nation's anti-trust regulators said Thursday, as they brought charges over a price-fixing scheme by the country's two largest toilet paper manufacturers.

For more than a decade, CMPC Tissue and SCA Chile colluded to split up the market and fix the price of toilet paper and other paper products, said the authority tasked with fighting economic crimes, the FNE.

"This is one of the largest cases of collusion ever uncovered in the country," it said.

In charges brought before the national Free Competition Tribunal, the FNE said the companies began colluding in 2000 to force a new rival out of the market, and continued fixing prices until at least 2011.

The investigators' accusations read like something out of a mafia movie: they say employees from the two companies communicated with pre-paid cell phones, tossed computers into a drainage ditch to destroy evidence and held secretive high-level meetings at a fire station.

The companies have combined annual sales of around $400 million and control 90 percent of the toilet paper market in Chile.

The scheme affected not just the price of toilet paper, but of paper napkins, towels, tissues and facial wipes, the FNE said.

It asked the court to fine SCA Chile -- which is owned by Swedish group Svenska Cellulosa Aktiebolaget -- $15.5 million. CMPC Tissue, which cooperated with investigators, will not face a fine.

Chilean President Michelle Bachelet called the allegations "a matter of the highest gravity" and vowed to speed up passage of a pending bill to increase the punishment for price-fixing.

Chile, which has an image as the least corrupt country in Latin America, has recently been hit by a string of corporate crimes, including price-fixing scandals in the poultry and pharmacy industries.