sain t-gobain annu al report 2008 annual report

Outlook for 2009
No significant developments have been observed during the
past few months, either in terms of new claims or in terms of
compensation paid.
In Brazil, former Group employees suffering from asbestosrelated
occupational illness are offered either exclusively
financial compensation or lifetime medical assistance
combined with financial assistance. 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.
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 held 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 held 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 provision
set aside at December 31, 2007, which was reduced
to €560 million at June 30, 2008 following payment of the
€134 million fine, was 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 cost over the appeal
period. The additional €400 million set aside in the second
half of 2008 was recorded in “Other business expense”.
NOTE 27
Environment – Health – Safety (EHS)
Environmental assets
Costs incurred to mitigate or prevent environmental risks are
capitalized when they are expected to generate future
economic benefits that will flow to the Group. The costs relate
to environmental management and clean-up equipment,
investments in raw material and waste recycling solutions,
measures to reduce consumption of energy and certain raw
materials, as well as research into improving product life
cycles.
Environmental liabilities
When the Group considers that it is exposed to an environmental
risk, a provision for the estimated future cost is
recorded in provisions for other liabilities and charges. Environmental
provisions amounted to €158 million at December
31, 2008 (December 31, 2007: €146 million; December 31, 2006:
€131 million).
The provisions are discounted on a case-by-case basis
according to when the risk is expected to materialize. This is
particularly the case for provisions covering the cost of
dismantling and retiring assets and site restoration costs.
However, when the timing of the risk cannot be estimated
reliably, the provision is considered as short-term and is not
discounted.
Environmental risks and manufacturing facilities governed by
specific environmental regulations are overseen by the
Environment, Health and Safety Department.
175 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Saint-Gobain – Financial Report 2008