Brussels, 13 December 2000
Commission readopts three decisions imposing fines on Solvay and ICI in the Soda ash case
The European Commission today readopted three decisions fining the Belgian company Solvay, which is the world leader on the soda ash market, and ICI of the UK, for breaches of the European competition rules committed in the 1980s. The original decisions had been annulled by the Court of Justice on procedural grounds. The fines remain unchanged, at €23 million for Solvay and €10 million for ICI.
On 6 April this year the Court of Justice upheld an earlier judgment of the Court of First Instance annulling three Commission decisions which found that Solvay and a German company had entered into an unlawful restrictive practice, and that Solvay and ICI had been abusing their dominant positions; the Court struck down the decisions on purely procedural grounds. The German company did not appeal against the Commission decision in its case, and paid a fine of €1 million (see IP/90/1057).
The Court annulled the decisions because they had been authenticated by the signatures of the Commission's President and Secretary-General only after they had already been notified to their addressees.
Soda ash is a chemical product used in the manufacture of glass.
The unlawful restrictive practice
Towards the end of the 1980s Solvay concluded an agreement guaranteeing the German company a minimum volume of sales, with Solvay itself buying up any shortfall, so as to keep the price of soda ash artificially high in Germany. This agreement was an infringement of Article 81 of the EC Treaty.
Abuse of dominant positions
Solvay and ICI had also abused their dominant positions on the market in soda ash. In the course of the 1980s they had established a system of rebates designed to avoid any danger of real competition in their respective territories, that is to say western continental Europe in the case of Solvay and the United Kingdom and Ireland in the case of ICI. Conduct of this kind is contrary to Article 82 of the EC Treaty.
ICI and Solvay each set up a system of what were called "top-slice" rebates aimed at keeping competitors off the market. Most glass manufacturers, the major users of soda ash, have one main supplier for their core requirements, but like to have a second supplier too so as not to be completely dependent on the first.
To minimise the competitive impact of second suppliers of this kind Solvay and ICI developed a two-tier pricing system. The core tonnage was sold at the normal price, but the additional quantities that the customer might otherwise have bought from another supplier - the "top slice" - were offered at a substantial (and secret) discount.
In some cases this meant that the marginal tonnage was being offered by Solvay or ICI at virtually half price. It was made clear to customers that the special price for the top slice depended on their agreeing to take most, if not all, of their requirements from the dominant producer.
The effect was to prevent other producers from entering into genuine competition with Solvay and ICI. In order to compete, they would have had to offer very large discounts on their entire sales volume, whereas Solvay and ICI were doing this only on the top slice.
The Commission took the view that these were very serious infringements of Article 82, and on 19 December 1990 it adopted decisions imposing fines of €20 million on Solvay and €10 million on ICI. These were considered heavy fines at the time.
Solvay was fined a further €3 million for sharing the market with the German firm.
The 1990 decisions remain unchanged, but have now been adopted in due and proper form. The companies have three months in which to pay.