Paraffin wax cartel fined a total of Euro 676 million

ERJ staff report (DS)

Brussels -- The European Commission has imposed a total of € 676 million in fines on 9 groups - ENI, ExxonMobil, Hansen & Rosenthal, Tudapetrol, MOL, Repsol, Sasol, , RWE and Total - for participating in a cartel for paraffin wax. Shell also participated in the cartel but was not fined because it blew the whistle on the cartel to the Commission. The infringement committed by ExxonMobil, Sasol, Shell, RWE and Total also related to slack wax sold to end-customers on the German market.

The cooperation with the investigation of three groups under the Commission's leniency programme was also rewarded. Sasol, Repsol and ExxonMobil were granted a reduction of their fines of 50 percent, 25 percent and 7 percent respectively.

Paraffin waxes are used in a wide variety of products including tyres and car components as well as in the rubber, packaging, adhesive and chewing gum industries. The market is worth almost 500 million euros. Slack wax is the raw material required for the manufacture of paraffin waxes. It is produced in refineries as a by-product in the manufacture of base oils from crude oil. It is also sold to end-customers, for instance to producers of particle board.

Competition Commissioner Neelie Kroes 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. Such illegal cartel behaviour cannot and will not be tolerated by the Commission, and companies' managers and shareholders should take note"

From 1992 to 2005, the producers of paraffin waxes and slack wax operated a cartel in which they fixed prices for paraffin waxes. ExxonMobil, MOL, Repsol, Sasol, Shell and Total also engaged in market allocation for this product and ExxonMobil, Sasol, Shell, RWE and Total also fixed prices for slack wax sold to end-customers on the German market. The companies held regular meetings to discuss prices, allocate markets and/or customers and to exchange sensitive commercial information.

In the Shell group, the cartel was called “paraffin mafia” and in the Sasol group, “Blauer Salon” (“blue saloon”), after a hotel bar in Germany where the first meetings of the cartel took place. Subsequent meetings took place at a series of top hotels all over Europe, including Milan, Vienna, Budapest, Paris, Munich and Strasbourg.

Sasol was hit by far the hardest, being hit with a fine of Euro 318.2 million -- almost half the total fine. Total of France received a Euro 128.2 million fine, while ExxonMobil was hit by a Euro 83.6 million fine.

Oil supplier H&R intends to fight its fine. The company said the EC, "imposed a fine of altogether € 36 million on companies of the Hansen & Rosenthal Group and H&R WASAG AG for anti-competitive behaviour in the paraffin sector during the years 1994 - 2005. Of the total amount, H&R Chemisch-Pharmazeutische Spezialitäten GmbH, a subsidiary of H&R WASAG AG, is being ordered to pay a sum of € 22 million, with sales partners a further of € 14 million. The written substantiation for the fines has not yet been issued."

The company added, "The board of H&R WASAG AG sees grounds for substantial legal objections, which already applied to the investigation proceedings. This is also reflected in the balance sheet treatment of the matter as a contingent risk. Appropriate procedural steps will be instituted against the fine once the written substantiation has been received."

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Press release from EC