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Competition: Commission fines four firms €75.86 million for rubber chemical cartel

Commission Européenne - IP/05/1656   21/12/2005

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IP/05/1656

Brussels, 21st December 2005

Competition: Commission fines four firms €75.86 million for rubber chemical cartel

The European Commission has fined four undertakings €75.86 million for operating a cartel in the rubber chemicals market, in clear violation of EC Treaty competition rules which forbid cartels and other restrictive business practices (Article 81). Flexsys, Bayer and Crompton (now Chemtura) (including Crompton Europe and Uniroyal Chemical Company) agreed to exchange information about prices and/or raise prices of certain rubber chemicals (antioxidants, antiozonants and primary accelerators) in the EEA and world-wide markets at least from 1996 to 2001. General Quimica participated to this agreements in 1999 and 2000. Rubber chemicals are synthetic or organic chemicals that improve the production and the characteristics of rubber products, used in a wide range of application, the most important of which is tyres for cars and other vehicles. In 2001, the EEA market value was estimated at about €200 million and the world-wide value at €1.5 billion. The level of the fines confirms the Commission’s determination to crack down hard on firms that take part in cartels. This is the fifth Commission decision in 2005 against hard core cartels.

Competition Commissioner Neelie Kroes said “Cartels are a scourge. I will ensure that cartels will continue to be tracked down, prosecuted and punished, With this latest decision, I am sending a very strong message to company boards that cartels will not be tolerated, and to shareholders that they should look carefully at how their companies are being run. ”

The investigation into the rubber chemicals sector began following an application for conditional immunity from fines by Flexsys in April 2002. Subsequently, the Commission carried out inspections at the premises of Bayer, Crompton Europe and General Quimica in September 2002. Crompton (now Chemtura), Bayer and General Quimica applied for leniency, on 8 October 2002, 24 October 2002 and 7 June 2004, respectively.

Whilst there are a number of indications that collusive activities within the rubber chemicals industry were already taking place at least occasionally in the 1970s, the Commission only has sufficiently firm and convincing evidence of the existence of the cartel for the period covering the years 1996-2001.

Explicit statements

The essence of this infringement can be seen in the description made by one of the participants “there was a contact among competitors from at least the mid 1990’s, before, during and after every price increase for rubber chemicals or at least an attempt to have such contact.”

An employee of the same company, referring to the 1998 price increase, recalled it “as the most orchestrated and collusive ‘agreement’ he ever made”.

Fines

The Commission regards this as a very serious infringement. In fixing the amount of the fines, the Commission took account of the size of the market in the countries affected by the cartel, the length of time the cartel had been operating, the relative weight of the firms involved and their global dimension.

The cooperation offered by some companies that provided useful information for the exposure of the infringement was rewarded in accordance with the Commission’s leniency notice (see IP/02/247 and MEMO/02/23). As mentioned above, Flexsys was given full immunity, and the other firms had their fines reduced in return for the information they provided.

Repsol YPF SA and Repsol Quimica SA, although they did not participate themselves in the arrangements in question, are nevertheless held responsible for the conduct of their wholly owned subsidiary General Quimica.

Action for damages

Any person or firm affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages, submitting elements of the published decision as evidence that the behaviour took place and was illegal. Even though the Commission has fined the companies concerned, damages may be awarded without being reduced on account of the Commission fine. A Green Paper on private enforcement has just been published (see IP/05/1634 and MEMO/05/489).

For more information on the Commission’s action against cartels, see MEMO/05/493.

Fines imposed and reductions granted by the Commission:


Name
Reduction of fine
%
Fine
(€ million)
(*) the corresponding legal entities may be held jointly and severally responsible for the whole or part of the fine imposed
1.
Flexsys NV
100
0
2.
Bayer AG
20
58.88
3.
Crompton Europe Ltd. +Crompton Manufacturing Company, Inc. (former Uniroyal Chemical Company, Inc.) + Chemtura Corporation (former Crompton Corporation)*
50
13.60
4.
General Quimica SA+ Repsol QuimicaSA + Repsol YPF SA*
10
3.38

TOTAL

75.86


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