Competition: Commission imposes €66.34 million fines on animal feed vitamin cartel

The European Commission has decided to impose fines totalling €66.34 million on Akzo Nobel, BASF and UCB for operating a cartel in the market for choline chloride,. Choline chloride, also known as vitamin B4, is used mainly as a feed additive for poultry and pigs, to increase growth, reduce mortality and improve meat quality. Clients are animal feed producers, which in turn supply to European farmers. The level of the fines confirms the Commission’s determination to crack down hard on companies engaged in cartel practices such as price fixing and market sharing.

Competition Commissioner Neelie Kroes commented “The Commission will simply not tolerate that the benefits of the EU’s Single Market are denied to customers by cartels and other anti-competitive practices. We will not allow the advantages of abolishing physical frontiers and creating pan-European markets to be neutralised by companies carving up the spoils amongst themselves. I have made it crystal clear that the fight against cartels will be one of my top priorities as Competition Commissioner. This decision demonstrates that I intend to walk the walk as well as talk the talk.”

After a careful investigation, triggered by information brought to the knowledge of the Commission in the framework of its leniency programme, the Commission has concluded that Akzo Nobel of the Netherlands, BASF of Germany UCB of Belgium and Bioproducts and DuCoa of the USA, Chinook of Canada, colluded in secret to set prices and share markets for choline chloride in the European Economic Area (EEA) in violation of EC Treaty rules (Article 81).

Together the companies involved controlled around 80% of the world market and of the EEA market for choline chloride. In 1997, the last full year of the infringement, the world market for choline chloride was worth around €180 million and that of the EEA market over €50 million.

From 1992 to April 1994, the main North American and European producers of choline chloride met in secret to increase worldwide prices, allocate world markets and control competitors. The North American producers agreed to withdraw from Europe, in exchange for the European producers withdrawing from North America. Between March 1994 and October 1998, the European producers continued to meet and agreed prices and price increases for specific national markets in the EEA, allocated individual clients among themselves and agreed EEA-wide market shares.

As the North American companies ended their participation in the infringement in April 1994, they escaped fines, given that the first investigative action of the Commission took place more than five years later.

The five year limitation period for the imposition of fines therefore applied to the North American producers. Decisions are, however, addressed also to them, in particular to warn them not to engage in any such behaviour in the future.

The Commission considered the infringement to be a very serious one because of its nature and its geographic scope. The Commission also took account of the value of the EEA market for the product, the duration of the infringement, the individual weight of the companies in the infringement, their overall size, the fact that BASF had already been condemned for similar infringements before and the co-operation each of the three European producers gave to the investigation. As a result, the Commission imposed the following fines:

-- Akzo Nobel: € 20.99 million

-- BASF: € 34.97 million

-- UCB: € 10.38 million