EC fines BASF, Akzo and UCB Euro66m in choline chloride cartel crackdown

Source: ICIS News

2004/12/09

LONDON (CNI)--The European Commission (EC) on Thursday imposed fines totalling Euro66.4m ($88m) on three chemical companies that operated a price-fixing cartel in the animal feed vitamin choline chloride during the 1990s.

German chemicals giant BASF was fined Euro35m, Netherlands-based Akzo Nobel Euro21m, and Belgium's UCB Euro10.4m.

BASF was signalled out for a particularly heavy fine, the Commission indicated, because it had already been condemned for similar infringements before.

Also implicated in the ring were the US companies Bioproducts and DuCoa and Canada's Chinook. All have already been heavily fined by the US and Canadian authorities. However, the North American companies have escaped the Commission's wrath because they withdrew from the European markets in April 1994, putting them outside the legal time limits for anti-competitive activities. The Commission, however, warned them not to indulge in any future price-fixing.

The choline chloride ring controlled 80% of the world market, said the Commission. In 1997, the last full year of the cartel's operations, the European Economic Area (EEA) market for choline chloride, also known as vitamin B4, was worth Euro50m out of a total world market of Euro180m.

The Commission's investigation followed a tip-off from one of the cartel's members under its special programme of leniency for whistleblowers. It discovered that North American members of the cartel agreed to withdraw from the European market in return for a quid pro quo by European producers.

Later, BASF, Akzo and UCB held meetings to agree their prices and price increases for European markets. They also shared out individual clients among themselves and agreed on their European market shares.

The Commission said it considered the case to be "very serious" because of its worldwide scope, the huge size of the market and the length of time it went on.

Its decision was based on the recommendation of newly-appointed Competition Commissioner Neelie Kroes, who was keen to prove herself an enemy of anti-competitive practices after her appointment was greeted by some criticism.

Commenting on the fines, Kroes said there had been suggestions that she would hold back from taking tough regulatory action "because I was too close to business interests, that I would be some kind of pussy cat”. These fines, she said, were "hard evidence" to the contrary.

"This is clear proof that as Competition Commissioner I will be steadfast in applying zero tolerance to those who operate cartels to the disadvantage of customers," said Kroes. "I have made it crystal clear that the fight against cartels will be one of my top priorities as Competition Commissioner. I said I would blow the whistle when needed - today you see that commitment put into practice."