Brussels, 29th November 2006
Competition: Commission fines producers and traders of synthetic rubber € 519 million for price fixing cartel
The European Commission has fined five groups of companies a total of € 519 million for participating in a cartel to fix prices and share customers for certain types of synthetic rubber (Butadiene Rubber - BR and Emulsion Styrene Butadiene Rubber - ESBR), in violation of the EC Treaty’s ban on restrictive business practices (Article 81). Companies belonging to the groups Eni, Bayer, Shell, Dow, Unipetrol and Trade-Stomil operated the cartel from at least 1996 to 2002. Synthetic rubbers BR and ESBR are extensively used for the production of tyres as well as for the production of other consumer goods. The fines on ENI, Shell and Bayer were increased because these companies had already been found guilty of taking part in cartels (although Bayer does not have to pay its fine because it received full immunity for having been the first company to reveal the cartel to the Commission). The overall fine is the second highest imposed by the Commission in a cartel case, and brings the total amount of cartel fines imposed this year to €1.843 billion - a new annual record for the Commission.
Competition Commissioner Neelie Kroes said “Cartels strike at the heart of healthy economic activity. They undermine competition, raise prices for consumers and reduce the diversity, quality and innovation of European companies. The Commission has imposed high fines in this case, but if companies continue to indulge in cartel activities, then they can expect their fines to be even higher in the future”.
Both Butadiene Rubber (BR) and Emulsion Styrene Butadiene Rubber (ESBR) are primarily used in tyre production. The main customers for BR and ESBR are the major tyre producers (such as Michelin, Pirelli and Goodyear). Other customers for BR and ESBR are producers of various types of consumer goods such as shoe soles, floor coverings and golf balls. While ESBR was produced or traded by all companies addressed by the Decision, BR was only produced by Eni, Bayer, Shell and Dow.
The investigation was prompted by applications for leniency lodged by Bayer in December 2002 and January 2003, under the 2002 Leniency Notice. In March 2003, the Commission carried out an unannounced inspection at Dow, which subsequently applied for leniency. Bayer received full immunity from fines under the Commission’s leniency programme, as it was the first company to come forward with information about the cartel.
The cartel Decision is based on numerous documents, corporate statements and witness interviews provided by the leniency applicants, together with meetings notes discovered by the Commission during the on-site inspection. The cartel agreements were made before or after the official meetings concerning BR and ESBR of the European Synthetic Rubber Association (ESRA). The cartel meetings took place in various cities (Milan, Vienna, Amsterdam, Prague and London, among others). During these meetings the participants agreed prices and exchanged information on key customers and the amounts of synthetic rubber supplied to them.
The statements from Bayer were to a large extent confirmed by the statements given by Dow. At a later stage, Shell also admitted to having participated in the cartel.
These practices are a very serious infringement of EC Treaty competition rules’ ban on cartels and restrictive business practices. In fixing the fines, the Commission took into account the size of the EEA market for the product, the duration of the cartel and the size of the firms involved. The Commission increased the fines by 50% for Eni, Shell and Bayer because they were repeat offenders – they had already been condemned by the Commission for cartels in the polypropylene, PVC and citric acid sectors (see IP/86/191, IP/94/732 and IP/01/1743).
The cooperation of companies that provided important information on the infringement was rewarded, in line with the Commission’s 2002 Leniency Notice (see IP/02/247 and MEMO/02/23). Consequently, Bayer (although itself a repeated offender) was granted full immunity, and the fine of Dow was reduced by 40%. The grant of reductions in fines depends not only on its value but also on how early the information is disclosed. Although Shell admitted to participating in the cartel, its contribution to the Commission's investigation did not qualify the company for a reduction of the fine under the provisions of the 2002 Leniency Notice, as it did not amount to significant added value.
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/06/451.
Fines imposed and reductions granted by the Commission:
(*) the corresponding legal entities may be held jointly and severally responsible for the whole or a part of the fine imposed