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Clariant, Celanese, Orbia fined almost $300 million for participation in EU ethylene-purchasing cartel

July 16, 2020
Chemical Value Chain

Clariant, Celanese, and Orbia have been fined a total of €260 million ($296 million) by the European Commission for breaching EU competition rules by participating in a cartel related to ethylene purchases in Europe.

Westlake, which also participated in the cartel, received full immunity by revealing the breach, avoiding an aggregate fine of about €190 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 €155.8 million, Celanese €82.3 million, and Orbia €22.3 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 $236.5 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.”

By: Mark Thomas

Source: Chemical Week

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