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Commission fines ethylene purchasers €260 million in cartel settlement

Christian Fernsby ▼ | July 20, 2020
The European Commission has fined Orbia, Clariant and Celanese a total of € 260 million for breaching EU antitrust rules.
Commission   Celanese
Westlake was not fined as it revealed the cartel to the Commission.

Topics: Commission cartel

The 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.

Ethylene purchasers usually buy ethylene under supply agreements. The purchase price of ethylene is very volatile and in order to reduce the risk of price volatility, ethylene supply agreements refer to a pricing formula, which often includes a so-called “Monthly Contract Price” (MCP), an industry price reference resulting from individual negotiations between ethylene buyers and sellers.

The Commission's investigation revealed that from December 2011 to March 2017 during the process of establishing the MCP, four ethylene purchasers coordinated their price negotiation strategy vis-à-vis the ethylene sellers to influence the MCP to their advantage.

The companies are Westlake of the US, Orbia of Mexico, Clariant of Switzerland and Celanese of the US. The practices covered the territory of Belgium, France, Germany, and the Netherlands.

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 ethylene sellers.

In particular, the companies coordinated their price negotiation strategies before and during the bilateral MCP ‘settlement' negotiations with ethylene sellers to push the MCP down to their advantage. They also exchanged price-related information. These practices are prohibited by the EU competition rules.

In order to avoid under-deterrence, the Commission used its discretion under the 2006 Guidelines on fines to increase the amount of the fine for all companies by 10%.

Furthermore, in setting the amount of the fine, the Commission 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.

Under the Commission's 2006 Leniency Notice:

- Westlake received full immunity for revealing the cartel, thereby avoiding an aggregate fine of ca. € 190 million.

- Orbia (€22 367 000 fine), Clariant (€155 769 000 fine) and Celanese (€82 307 000 fine) benefited from reductions of their fines for their cooperation with the Commission investigation.

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.