NewsFlashEC fines Bayer Euro59m for rubber chem cartel

21 December 2005 13:07  [Source: ICIS news]

BRUSSELS (ICIS news)--European Union (EU) regulators on Wednesday fined Bayer Euro58.9m ($71m) and Crompton/Chemtura Euro13.6m for fixing the price of rubber chemicals.

The European Commission (EC) ruled that the companies along with Flexsys were operating a cartel between 1996 and 2001, agreeing to share information about prices of rubber chemicals, in contravention of its competition rules. A fourth company, General Quimica/Repsol was found to have participated in the illegal agreement between 1999 and 2000.

The EC imposed fines totaling Euro75.9m on the four firms although it waived the fine on Belgian company Flexsys which blew the whistle on the price-fixing scheme. 

Crompton and Chemtura were fined Euro13.6m and General Quimica and Repsol companies Euro3.4m.

The Commission has vowed to take a hard stance against cartels. Competition Commissioner Neelie Kroes said: “Cartels are a scourge. I will ensure that cartels will continue to be tracked down, prosecuted and punished, With this latest decision, I am sending a very strong message to company boards that cartels will not be tolerated, and to shareholders that they should look carefully at how their companies are being run.”

Bayer and Chemtura were investigated after Flexsys, a joint venture between Solutia and Akzo Nobel, alerted EU regulators. Flexsys has not been charged following its tip-off.

Wednesday’s ruling follows similar judgments in the US. Last year Bayer paid US authorities $4.7m for antitrust violations related to rubber chemicals.

US authorities last year fined Crompton $50m fine for its part in a conspiracy to fix prices of rubber chemicals.

The European Commission can fine companies up to 10% of their annual sales for violating competition rules, although fines usually range between 2% to 3% of sales. The largest EU anti-trust fine was Euro462m levied against Roche Holding in 2001 for fixing the price of vitamins.

Bayer had earmarked $50m for the EU investigation. It has declined to comment on Wednesday’s decision

The EC said that Flexsys, Bayer and Crompton (now Chemtura) (including Crompton Europe and Uniroyal Chemical Company) agreed to exchange information about prices and/or raise prices of antioxidants, anti-ozonants and primary accelerators in the European Economic Area (EEA) and worldwide markets at least from 1996 to 2001.

It said the EEA market was worth Euro200m in Europe and Euro1.5bn worldwide in 2001.

The investigation into the rubber chemicals sector began in April 2002 following the application for conditional immunity from fines by Flexsys. The Commission raided offices of Bayer, Crompton Europe and General Quimica in September 2002 and the companies applied for leniency at later dates.

By: Jon Eldridge
+44 20 8652 3214

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