Competition: Commission fines seven companies €388.128 million for bleaching chemicals cartels

Competition: Commission fines seven companies €388.128 million for bleaching chemicals cartels

The European Commission has found that nine companies participated in cartels in the hydrogen peroxide (HP) and perborate (PBS) markets in clear violation of the EC Treaty rules against restrictive business practices (Article 81). Seven of these companies (Akzo Nobel, Edison, FMC/Foret, Kemira, Snia, Solvay and Total/Elf Aquitaine/Arkema) were therefore fined a total of €388.128 million. Arkema (formerly Atofina), Solvay and Edison had their fines increased as they were repeat offenders. Degussa, also a repeat offender, would have been fined if it had not received full immunity for providing information about the cartel. L'Air Liquide (and its subsidiary Chemoxal) is subject to the prohibition decision, but the Commission's right to impose fines has expired as the company left the market in 1998. The nine companies exchanged commercially sensitive and confidential information, limited production, allocated market shares and customers, and fixed and monitored (target) prices of HP and PBS in the European Economic Area (EEA) between 1994 and 2000.

Competition Commissioner Neelie Kroes said, “Cartels are unacceptable corporate behaviour that deprive customers of the benefits of the Single Market. These high fines take into account that certain companies are repeat offenders. Directors and shareholders alike should ask why these practices were allowed to continue.”

HP is an oxidising agent used in the pulp and paper manufacturing industries for bleaching textiles, disinfection and other environmental applications such as sewage treatment. HP is also the raw material for the production of downstream peroxigen products, such as persalts (which include PBS). PBS is used mainly as an active substance in synthetic detergents and washing powders. Cartels in HP and PBS involving Degussa, Solvay, Atochem (now Arkema) and L'Air Liquide had already been prohibited by a 1984 Commission Decision. In 2000, the combined EEA market value for HP and PBS was estimated at about €470 million.

In December 2002, Degussa applied to the Commission for immunity from fines. Subsequently, in March 2003, the Commission carried out inspections at Atofina (now Arkema) and Solvay, which prompted several undertakings to apply for reductions in fines.

Explicit evidence

The essence of this infringement can be seen from the record of a meeting between competitors in early 1995 which referred to a discussion of “a model for sharing out among producers”.

At a meeting in a Brussels restaurant on 26 November 1997, the participants discussed the implementation and assessment of the price increases agreed at a high-level meeting in August 1997 and scheduled further price increases.

Records of another high-level meeting in early 1998 show that participants welcomed the good implementation of the price increase of October/November 1997 and verified whether they had all stuck to the implementation guidelines fixed during this and earlier meetings.

Fines

The practices uncovered are a very serious infringement. In setting the fines, the Commission took into account the size of the EEA market, the duration of the cartel and the size of the firms involved. The Commission increased the fines by 50% for those undertakings that are repeat cartel offenders.

The cooperation offered by some companies that provided important information for the exposure of the infringement was rewarded in line with the Commission's Leniency Notice (see IP/02/247 and MEMO/02/23). Degussa was granted full immunity from a fine which would otherwise have been €129.938 million, while Akzo/EKA, Total/Elf AquitaineArkema and Solvay had their fines reduced in return for information provided. The granting of fine reductions depends not only on the value of the information provided but also on its timing. In this case various applications were made within a matter of days or even hours of each other.

With regard to Air Liquide/Chemoxal, although the five-year limitation period for imposing fines had expired (the undertaking left the HP market in 1998) when the Commission started the investigation, the Commission nevertheless adopted a Decision against Air Liquide as Air Liquide had participated in the previous cartel in the sector, there is ample evidence of Air Liquide's participation in the infringement until its exit from the market in 1998 and its role was similar to that of the other parties. Finally, the Decision can help injured parties to bring claims before national courts against all cartel participants.

Action for damages

Any person or firm affected by anti-competitive behaviour as described in this case may seek damages before the courts of the Member States, submitting elements of the published Commission Decision as evidence that the behaviour took place and was illegal. Damages may be awarded without being reduced by reason of the Commission fine.

For more information on the Commission's action against cartels, see MEMO/06/184.