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MOSCOW (MRC) -- Clariant, Celanese, and
Orbia have been fined a total of EUR260 million (USD296 million) by the European
Commission for breaching EU competition rules by participating in a cartel
related to ethylene purchases in Europe, said Chemweek.
Westlake,
which also participated in the cartel, received full immunity by revealing the
breach, avoiding an aggregate fine of about EUR190 million, the Commission
says.
The four companies “took part in a cartel concerning purchases on
the ethylene merchant market. They colluded to buy ethylene for the lowest
possible price. All four companies acknowledged their involvement in the cartel
and agreed to settle the case,” the Commission says. The cartel’s activity
covered the territories of Belgium, France, Germany, and the Netherlands, it
says.
Clariant has been fined EUR155.8 million, Celanese EUR82.3 million,
and Orbia EUR22.3 million. All three benefited from fine reductions for their
cooperation with the investigation, according to the Commission. Clariant’s
total fine factors in a "reduction under leniency notice" of 30%, and Orbia
received a 45% leniency reduction with Celanese receiving a 20% leniency
reduction. The companies also received a further 10% reduction in their imposed
fines in view of their “acknowledgement of the participation in the cartel and
of the liability in this respect,” the Commission says. “The reductions reflect
the timing of their cooperation and the extent to which the evidence they
provided helped the commission to prove the existence of the cartel in which
they were involved,” it adds.
The Commission says its investigation
showed that from December 2011 to March 2017 during the process of establishing
the monthly contract price for ethylene, the four purchasers coordinated their
price-negotiation strategy in relation to ethylene sellers to influence the
industry price reference to their advantage. Unlike in most cartels where
companies conspire to increase their sales prices, the four companies colluded
to lower the value of ethylene, to the detriment of the product’s sellers, says
the Commission. The companies coordinated their price-negotiation strategies
before and during the bilateral monthly contract price-settlement negotiations
with ethylene sellers to push the price down to their advantage and also
exchanged price-related information, it says.
The Commission's
investigation began in June 2016 with an application submitted by Westlake under
the Commission’s 2006 leniency notice, followed by applications for reduction of
fines by the other parties, it says. “This cartel aimed at manipulating the
prices [that] the companies paid for their ethylene purchases,” says Commission
executive vice president Margrethe Vestager. “The four companies in the cartel
have colluded and exchanged information on purchasing prices, which is illegal.
The Commission does not tolerate any form of cartels. EU antitrust rules not
only prohibit cartels related to coordination of selling prices, but also
cartels related to coordination of purchasing prices. This protects the
competitive process for inputs,” she says.
As the cartel related to
collusion on purchase prices, the Commission used the value of purchases rather
than the value of sales in the EU to set the level of fine. It says it also
“took account of the duration of the infringement, the individual weight of the
companies in the infringement, their overall size, and the fact that Clariant
had previously been sanctioned for a similar infringement."
The
Commission has extended by three months the due date for payment of the fines to
a total of six months from the date of the investigation’s decision, saying it
has taken into consideration the impact of the COVID-19 outbreak on all sectors,
and potential short-term liquidity issues of companies. Fines imposed on
companies found in breach of EU antitrust rules are paid into the general EU
budget.
Clariant says the Commission’s investigation found one of its
former employees had infringed on competition law and that it had been found
liable for this conduct and fined. “Clariant deeply regrets the incident and is
disappointed that its strong culture of compliance, based on a clear code of
conduct and an antitrust compliance program including a multitude of tailored
antitrust trainings, was not upheld,” it says. The company has assisted the
relevant authorities throughout the investigation and “fully cooperated with the
European Commission, a fact that has been recognized and reduced the fine.
Clariant will continue to promote the highest ethical standards and ensure
compliance in the future,” it says.
Clariant says it made “a provision
for the investigation in 2019.” Earlier this year the company said it had set
aside USd236.5 million to cover costs from the investigation. Westlake has also
issued a statement, saying the cartel's practices were uncovered as a result of
Westlake’s internal compliance program. "Westlake voluntarily disclosed these
practices to the European Commission and fully cooperated with the related
investigation," it says. "Based on the company’s voluntary notification and
cooperation, the European Commission granted Westlake immunity from government
fines."
Ethylene and propylene are feedstocks for producing polyethylene
(PE) and polypropylene (PP).
According to MRC's ScanPlast report,
Russia's estimated PE consumption totalled 595,170 tonnes in the first five
month of 2020, up by 10% year on year. Deliveries of all ethylene polymers,
except for linear low density polyethylene (LLDPE), rose partially because of an
increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP
shipments to the Russian market was 457,930 tonnes in January-May 2020
(calculated by the formula production minus export plus import). Deliveris of
exclusively PP random copolymer increased. |
