Brussels, 13th September 2006
Competition: Commission fines 14 companies a total of €266.717 million for price fixing of road bitumen in the Netherlands
(see also MEMO/06/324)
The European Commission has found that 8 suppliers and 6 purchasers of road bitumen in The Netherlands participated in a cartel from 1994 to 2002 to fix prices in violation of the EC Treaty competition rules’ ban on restrictive business practices (Article 81). These 14 companies have been fined a total of €266.717 million. Bitumen suppliers (BP, Esha, Klöckner Bitumen, Kuwait Petroleum, Nynäs, Shell, Total and Wintershall) and construction companies (Ballast Nedam, Dura Vermeer, Heijmans, Hollandsche Beton Groep (now part of Koninklijke BAM Groep), Koninklijke BAM Groep and Koninklijke Volker Wessels Stevin) fixed the gross price of all road pavement bitumen sold in the Netherlands, and agreed uniform minimum rebates for the construction companies that were cartel members, and a smaller maximum rebate for all other road builders. This restricted price competition and disadvantaged smaller road building companies. Shell and KWS had their fine increased as they began and led the cartel. Shell’s fine was also increased for being a repeat offender. KWS’s fine was also increased for having tried to obstruct the Commission’s investigation.
Bitumen, a by-product of fuel production, is mainly used to make asphalt, binding other road surfacing materials together. This cartel covered all bitumen used for road construction in the Netherlands, a market valued around €62 million in 2002.
In June 2002, BP applied to the Commission for immunity from fines. In October 2002, the Commission carried out inspections of various bitumen suppliers and road constructors. It sent Statements of Objections in October 2004. A hearing was held in June 2005.
From at least 1994 to 2002, a delegation of the bitumen suppliers met with the six biggest road construction companies in the Netherlands in a series of meetings, called the “bitumen consultation” (“bitumenoverleg”). These meetings were usually preceded by preparatory meetings of the suppliers and separate preparatory meetings of the six biggest road construction companies (the latter being referred to as “WO5” or “WO6” ( “wegenbouwoverleg”, i.e. road building consultation; “5” or “6” refers to the number of large construction companies participating in the system).
In the joint meetings, participants fixed the gross price of road bitumen to be invoiced to the asphalt production plants and two rebates for the construction companies that own these asphalt production plants: A uniform minimum rebate for the road construction companies that were part of the cartel and a lower maximum rebate for other road construction companies that were not part of the cartel.
The latter therefore had to pay higher prices. The construction companies participating in the cartel appeared not to be particularly concerned about the absolute level of the price of bitumen, as long as they received larger discounts than their smaller competitors. This caused the price level of bitumen in the Netherlands, even after the discounts granted to the large road builders, to gradually rise above that in neighbouring countries. All cartel members, both suppliers and buyers, therefore had an interest in participating in the cartel.
Regular monitoring of the implementation of the agreements took place and “fines” (retroactive extra discounts) could be imposed on the suppliers if they were found to have granted too high rebates to smaller road builders.
In setting the fines, the Commission took account of the very serious nature of the infringement, the limited size of the market, the long duration of the cartel and the size of the firms involved. The Commission increased some of the fines for repeat offenders (50% increase for Shell given its participation in the polypropylene and PVC(II) cartels – for the latter see IP/94/732), for playing an instigating and leading role in the cartel (50% increase for Shell and for KWS) and for attempts to obstruct the Commission investigation (10% increase for KWS). During the inspection in October 2002, KWS twice refused the Commission inspectors access to premises, forcing the Commission to invoke the aid of the Dutch Competition Authority and Dutch police.
Some companies co-operated with the investigation and provided important information about the cartel: this was rewarded in line with the Commission’s Leniency Notice (see IP/02/247 and MEMO/02/23). BP was granted full immunity from a fine which would otherwise have been € 30.78 million, while Kuwait Petroleum had its fine reduced by 30%. Nynäs, Shell, and Total also claimed a reduction of the fine, but failed to qualify given the evidence already in the Commission’s possession. None of the construction companies applied for leniency.
Ballast Nedam first joined the cartel in 1996, when it became a major road builder in the Netherlands. Wintershall sold its bitumen business to Veba (now BP) at the end of 1999.
The fines in this case were based on the 1998 Fining Guidelines, used in this case because they were in force at the time the Statement of Objections was issued.
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 these being reduced on account of the Commission fine. A Green Paper on private enforcement has been published (see IP/05/1634 and MEMO/05/489).
For more information on the Commission’s action against cartels, see MEMO/06/326.
Fines imposed and reductions granted by the Commission in this case: