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   The  European Commission has found that Europe's two major  producers  of
   soda  ash, SOLVAY and ICI, have been in serious breach ofthe  Community's
   competition rules set out in Articles 85 and 86 of the Treaty of Rome.
   For  many years the companies have been operating a cartel  agreement  to
   divide  up  the market between them and to ensure that  neither  competed
   with  the  other.  They  also had an illegal  rebate  scheme  to  exclude
   competitors  and  tie in customers.  Furthermore, Solvay  had  a  special
   agreement  with  CHEMISCHE  FABRIK KALK (CKF) to  divide  up  the  German
   market.  In  view  of  the seriousness of the case,  the  Commission  has
   imposed fines of 30 million ecu on Solvay and 17 million ecu on  ICI.  It
   has also imposed a fine of 1 million ecu on CFK.
   Soda  ash  accounts for up to 60 per cent of the raw  material  costs  of
   glass  making,  so  the adverse effect of  restrictive  arrangements  and
   abusive behaviour is ultimately felt by millions of consumers as well  as
   by  the many industries which use glass,  such as cars and  construction.
   The  case  is  thus  significant not only  to  industrial  users  but  to
   individual consumers as well.
   The  level  of  the fines reflects the seriousness of the  case  and  the
   determination  of the Commission to ensure that industrial  companies  do
   not continue to flout the competition rules in a way which undermines the
   creation  of  a single market.  This market should now be  opened  up  to
   genuine  competition.  As a further step to that end, the Commission  has
   refused to provide an exemption under Article 85 (3) for American Natural
   Soda Ash Corporation to operate an export cartel for sale of natural  ash
   into the Community.  Its six member companies must now be free to  market
   individually and competitively in the Community.
   The Commission proceedings
   The  Commission  brought  the proceedings  against  the  three  producers
   following  surprise investigations in March 1989 at a number of soda  ash
   producers  who were suspected of infringing EEC  competition  rules.  The
   investigations  uncovered a series of anti-trust abuses in  the  European
   soda  ash  market which is dominated by SOLVAY and  ICI.  The  Commission
   decision  follows  a  long procedure including an oral  hearing  held  in
   Brussels earlier in the year.
                                     - 2 -
   Non-competition arrangement
   SOLVAY  and  ICI  are the two largest European  producers  of  soda  ash.
   SOLVAY  has  always  dominated Continental Western Europe  where  it  has
   factories in seven countries and holds some 70% of the available  market,
   while ICI has over 92% of the market in the United Kingdom and Ireland.
   The essence of the Article 85 case found proven against ICI and SOLVAY is
   that  they  divided  up  the market between them  so  that  neither  ever
   competed  with  the other.  SOLVAY stayed out of the United  Kingdom  and
   Ireland and ICI in return kept out of SOLVAY's continental markets.
   The  soda ash market has been the subject of cartel agreements  from  the
   very  beginning.  In the nineteen-thirties the world market  was  divided
   between SOLVAY, ICI, IG Farben and the American producers.  Following the
   ending  of  hostilities  in  1945, SOLVAY and  ICI  restated  their  non-
   competition  policy in a top-secret document entitled "Page  1000"  which
   was  uncovered  by Commission investigators at ICI Soda Ash  Products  in
   Northwich,  Cheshire.  The two producers had formally put an end  to  the
   cartel  agreement in 1973 when the United Kingdom entered  the  Community
   but  in  practice they continued as before.  They  continued  to  consult
   regularly so as to ensure that the status quo was  maintained.  Following
   the closure of one of ICI's plants in the early 1980's, SOLVAY  continued
   to  provide  long-term support for ICI's position by  supplying  it  with
   large tonnages for resale in ICI's traditional markets.
   ICI  and  SOLVAY thus saw themselves not so much as  competitors  but  as
   partners and conducted themselves accordingly.  The whole purpose of  the
   arrangements was to maintain the territorial status quo so that they  did
   not  compete and each was dominant and able to control the market in  its
   own allotted territory.
   The  Commission  took  the  view that  the  undertakings  bore  an  equal
   responsibility and fined each 7 million ecu for this infringement.
   "Top slice" rebates
   In addition to the "non-competition" arrangement, both ICI and SOLVAY had
   put into effect a system of exclusionary "top slice" rebates contrary  to
   Article  86  of the Treaty which forbids abuse of  a  dominant  position.
   Most  large  users of soda ash have one main supplier  for  their  "core"
   requirements  (say  80%  of their needs) but like  to  have  a  secondary
   supplier for the rest as a counterbalance against the dominant  supplier.
   In order to minimize the competitive effect of such supplies, both SOLVAY
   and  ICI developed a two-tier pricing system where   the  "core"  tonnage
   was sold at normal prices but the additional quantities (or "top  slice")
   which  the  customer  would otherwise buy from  a  second  supplier  were
   offered  at a substantial (and secret) discount.  SOLVAY gave not only  a
   20% discount but also a variable cheque rebate.
   In  some  cases these "sweeteners" 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.  While  such inducements cost the  dominant  supplier
   little, alternative suppliers quoting for the marginal tonnage would have
   to offer a price below their costs if they wished to get any business.
                                     - 3 -
   The  Commission  and the Court of Justice have always stressed  that  the
   giving of exclusionary rebates by dominant producers is a serious  breach
   of Article 86.  Indeed as recently as 1980-82, both SOLVAY and ICI, whose
   long-term "evergreen" contracts for soda ash were then under scrutiny  by
   the  Commission, were warned by DG IV against giving special  inducements
   to customers.
   For  this behaviour and various other breaches of Article 86, SOLVAY  has
   been  fined  20  million ecu.  ICI has been fined 10 million  ecu  for  a
   similar infringement practised in the United Kingdom.
   The German market
   The  SOLVAY-CFK agreement, for which SOLVAY was fined 3 million  ecu  and
   CFK 1 million ecu, involved SOLVAY making up CFK's sales in Germany to  a
   "guaranteed"  minimum tonnage in exchange for CFK moderating its  pricing
   American imports
   At  the same time as prohibiting the cartel and abusive practices of  the
   European  producers, the Commission has also refused an  exemption  under
   Article  85(3) for ANSAC ("American Natural Soda Ash  Corporation"),  the
   export cartel of the American natural ash producers.    Production  costs
   from  natural deposits are only one-third of those of synthetic  ash  and
   despite  shipping  costs  natural  ash can be  sold  in  Europe  at  very
   competitive prices.
   Until September 1990, imports of U.S. ash were restricted by anti-dumping
   measures which have now all been removed.  ANSAC had argued that only  if
   the six American producers were combined in a single selling agency could
   U.S.  ash  be sold commercially in Europe.   The Commission now  sees  no
   reason  why these producers, all large corporations,  should not be  able
   to enter the EEC market independently.
   (million ecu)
                               SOLVAY        ICI                   CFK
   SOLVAY-ICI (Art. 85)          7            7                     -
   SOLVAY-CFK (Art. 85)          3            -                     1
   SOLVAY (Art. 86)             20            -                     -
   ICI (Art. 86)                 -           10                     -
                               _____         ____                  ____
30 17 1

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