Brussels, 2 April 2014
Antitrust: Commission fines producers of steel abrasives € 30.7 million in cartel settlement
The European Commission has found that Ervin, Winoa, Metalltechnik Schmidt and Eisenwerk Würth participated in a cartel to coordinate prices for steel abrasives in Europe for over six years and has imposed fines totalling € 30 707 000. Steel abrasives are loose steel particles used for cleaning or enhancing metal surfaces in the steel, automotive, metallurgy and petrochemical industries. They are also used for cutting hard stones such as granite and marble. Ervin was not fined as it benefited from immunity under the Commission's 2006 Leniency Notice for revealing the existence of the cartel to the Commission. Since all four undertakings agreed to settle the case with the Commission, their fines were reduced by 10%.
Commission Vice President in charge of competition policy, Joaquín Almunia, said: "The cartel in steel abrasives is yet another example of how the cartelisation of a particular input product may affect a wide range of European industries. Defeating cartels is a key precondition of the efficient functioning of markets and, ultimately, of the competitiveness of the EU economy as a whole. "
For more than 6 years, with varying durations from autumn 2003 until the Commission carried out unannounced inspections in June 2010, the cartelists had contacts on a bilateral and multilateral basis to discuss key price components of their sales in the whole European Economic Area (EEA).
Metal scrap, which is the main raw material for steel abrasives, is characterised by sharp price fluctuations as well as significant price differences between the EEA countries. To compensate for such fluctuations, the cartel participants set up a specific surcharge (called the "scrap surcharge" or "scrap cost variance (SCV)") based on a common formula. When energy prices rose sharply in 2008, the cartel members agreed that they would all introduce at the same time an "energy surcharge" or "energy complement".
In addition, the cartelists agreed not to compete against each other on price with respect to individual customers.
In the context of the same investigation, the Commission had also opened proceedings against Pometon S.p.A. and the investigation will continue under the standard (non-settlement) cartel procedure for Pometon.
The total fines imposed are as follows:
In setting the level of fines, the Commission took into account the companies' sales of the products concerned in the EEA, the serious nature of the infringement, its geographic scope and its duration.
For all of the parties to this case, steel abrasives constitute a large fraction of their turnover. For this reason, the fines of all parties would have been capped at 10% of their total turnover, the legal maximum set out in the Antitrust Regulation. Exceptionally, therefore, the Commission exercised its discretion in accordance with point 37 of the Guidelines and reduced the fines in a way that takes into account the characteristics of the companies and their differences in participation in the infringement.
Ervin received full immunity for revealing the existence of the cartel and thereby avoided a fine of € 4.1 million for its participation in the infringement.
Moreover, under the Commission's 2008 Settlement Notice, the Commission reduced the fines imposed on all the undertakings by 10% as they acknowledged their participation in the cartel and their liability in this respect.
More information on this case will be available under the case number 39792 in the public case register on the Commission's competition website, once confidentiality issues have been dealt with. For more information on the Commission’s action against cartels, see its cartels website.
The settlement procedure
Today's decision is the thirteenth settlement decision since the introduction of the settlement procedure for cartels in June 2008 (see IP/08/1056 and MEMO/08/458). Under a settlement, undertakings that have participated to a cartel acknowledge their participation in the infringement and their liability for it. The settlement procedure is based on the Antitrust Regulation 1/2003 and allows the Commission to apply a simplified procedure and thereby reduce the length of the investigation. This is good for consumers and for taxpayers as it reduces costs; good for antitrust enforcement as it frees up resources to tackle other suspected cases; and good for the companies themselves that benefit from quicker decisions and a 10% reduction in fines.
The Commission previously reached settlements with participants in cartels for DRAMs (see IP/10/586), animal feed phosphates (see IP/10/985), washing powder (see IP/11/473), glass for cathode ray tubes (see IP/11/1214), compressors for fridges (see IP/11/1511), water management products (see IP/12/704), wire harnesses (see IP/13/673), Euro interest rate derivatives and Yen interest rate derivatives (see IP/13/1208), Polyurethane Foam (see IP/14/88), Power Exchanges (see IP/14/215) and Bearings (see IP/14/280).
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. The case law of the Court and Council Regulation 1/2003 both confirm that in cases before national courts, a Commission decision is binding proof 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.
In June 2013, the Commission has adopted a proposal for a Directive that aims at making it easier for victims of anti-competitive practices to obtain such damages (see IP/13/525 and MEMO/13/531). More information on antitrust damages actions, including a practical guide on how to quantify the harm typically caused by antitrust infringements, the public consultation and a citizens' summary, is available at: http://ec.europa.eu/competition/antitrust/actionsdamages/documents.html