South Africa’s Sasol was among nine petrochemicals companies fined a total of €676-million by the European Commission for forming a ”paraffin mafia” to fix prices and carve up markets for paraffin wax.
The biggest individual fine of €318,2-million was imposed on Sasol of South Africa and Germany, which the European Union executive described as the leader of the illegal cartel, an official statement said.
”There is probably not a household or company in Europe that has not bought products affected by this ‘paraffin mafia’ cartel, with all that implies in terms of paying over the odds, higher costs and economic damage,” EU Competition Commissioner Neelie Kroes said.
Paraffin waxes are used in a wide range of products from candles to paper cups and plates, the wax coating of cheese, chemicals, tyres and chewing gum.
Anglo-Dutch oil major Shell escaped a potential fine of €96-million because it blew the whistle first to the EU competition authorities.
Kroes said the cartel was known inside Shell as the ”paraffin mafia” and in Sasol as ”Blauer Saloon” (Blue Saloon) after the hotel bar in Hamburg, Germany, where the first meetings of executives from the companies were held.
It was a very serious infringement of EU treaty antitrust rules, compounded by the duration of the cartel, she said.
It was the fourth-highest fine ever imposed by EU regulators on a sector, topped only by the record €992,3-million on elevator companies last year, €790,5-million on makers of vitamins in 2001 and €750,5-million on manufacturers of gas insulated switchgear in 2007.
The other companies fined were Total (€128,1-million), Exxon Mobil (€83,6-million), RWE (€37,4-million), ENI (€29-million), Hansen & Rosenthal (€23,7-million), Repsol (€19,8-million), and Tudapetrol (€12-million).
The commission said the cartel activity took place between 1992 and 2005, when it began investigating with raids on petrochemicals companies prompted by an application from Shell for leniency in return for information provided.
The companies were well aware their activity was illegal, Kroes added.
”I sincerely hope … that these high fines will encourage the management of these companies and others to look very carefully at what their staff are doing, and I hope that in turn the shareholders … will look very carefully at the management,” she said.
The commission said individuals or companies that were victims of the cartel were entitled to seek damages in national courts of EU member states.
Meanwhile, Sasol on Wednesday said it was ”surprised” by and did not understand the reasons for the magnitude of the fine imposed by the European Commission.
The global petrochemical giant said it now plans to study the reasons for the finding ”with a view to lodging an appeal against it”.
As a result of Sasol’s cooperation and support in the investigations, the commission reduced the base amount of the fine by 50% to €318,2-million.
Sasol argued that it only became a co-shareholder in an existing wax business located in Hamburg, Germany, owned by the Schümann group in 1995.
In July 2002 Sasol acquired the remaining shares in the joint venture and became the sole shareholder of the business.
”Sasol Limited was unaware of these infringements before the European Commission commenced their investigation at the wax business in Hamburg in April 2005,” Sasol said.
Sasol said it has intensified its competition and anti-trust law compliance programmes in all its businesses including joint ventures. —