Bleach makers not whiter than white

The European Commission has fined companies a total of over €388 million for operating a cartel on bleaching chemicals.

The European Commission has fined nine companies a total of over €388 million for operating a cartel on bleaching chemicals.

The Commission found that the companies participated in cartels in the hydrogen peroxide (HP) and perborate (PBS) markets in clear violation of EC Treaty rules against restrictive business practices (Article 81).

Seven of these companies (Akzo Nobel, Edison, FMC/Foret, Kemira, Snia, Solvay and Total/Elf Aquitaine/Arkema) were fined a total of €388.128 million. Arkema, Solvay and Edison had their fines increased, as they were repeat offenders. Degussa, also a repeat offender, would have been fined if it had not received full immunity for providing information about the cartel. L’Air Liquide is subject to the prohibition decision, but the Commission’s right to impose fines has expired as the company left the market in 1998. The nine companies exchanged commercially important and confidential information, limited production, allocated market shares and customers and fixed and monitored target prices of HP and PBS in the European Economic Area (EEA) between 1994 and 2000.

Competition Commissioner Neelie Kroes said, “Cartels are unacceptable corporate behaviour that deprive customers of the benefits of the Single Market. These high fines take into account that certain companies are repeat offenders. Directors and shareholders alike should ask why these practices were allowed to continue.”

HP is an oxidising agent used in the pulp and paper manufacturing industries for bleaching textiles, disinfection and other environmental applications such as sewage treatment. HP is also the raw material for the production of downstream peroxigen products, such as persalts, which include PBS. PBS is used mainly as an active substance in synthetic detergents and washing powders. Cartels in HP and PBS involving Degussa, Solvay, Atochem (now Arkema) and L’Air Liquide were already prohibited by a 1984 Commission Decision. In 2000, the combined EEA market value for HP and PBS was estimated at about €470 million.

In December 2002, Degussa applied to the Commission for immunity from fines. Subsequently, the Commission carried out inspections at Atofina (today Arkema) and Solvay in March 2003, which triggered applications for reduction of fines by several undertakings.

The Commission cites as evidence the record of a meeting between competitors in early 1995 which referred to discussion of “a model for sharing out among producers”.

At a meeting in a Brussels restaurant on 26 November 1997 the participants discussed the implementation and assessment of price increases agreed at a high-level meeting in August 1997 and scheduled further price increases.

Records of another high level meeting in early 1998 show that participants welcomed the implementation of the October/November 1997 price increase and discussed whether they had all stuck to the implementation guidelines fixed during this and earlier meetings.

In fixing the fines, the Commission took account of the size of the EEA market, the duration of the cartel and the size of the firms involved. The Commission increased the fines by 50% for those undertakings that are repeat cartel offenders.

The action now allows for adversely affected companies to claim damages.