EU slaps $966-mn fine on self-styled ‘paraffin mafia’

October 1st, 2008 - 9:58 pm ICT by IANS  

Brussels, Oct 1 (DPA) The European Commission, the executive branch of the European Union (EU), Wednesday imposed a fine of nearly $1 billion on nine business groups, including ExxonMobil and Total, which were found guilty of fixing prices and market shares for paraffin wax.The 676-million-euro ($966-million) fine is the fourth-largest cartel punishment in EU history, and covers a cartel which ran for 13 years and which participants called the “paraffin mafia”.

According to the commission, from 1992 to 2005 the group of 10 companies - ENI, ExxonMobil, Hansen & Rosenthal, Tudapetrol, MOL, Repsol, Sasol, Shell, RWE and Total - conspired to fix prices for paraffin wax in a market worth some 500 million euros a year.

Cartel organisers met in top hotels in European glamour spots such as Milan, Paris and Vienna to arrange their activities. Shell staff called the group the “paraffin mafia”, while South Africa’s Sasol, which led the cartel, called it the “blue saloon” group, after the German bar where the cartel first met, a commission statement said.

But in 2005, Shell blew the whistle on the group, prompting the European Union’s executive to launch raids on the other firms.

On the basis of Shell’s confession and the results of the raids, the commission slapped fines on the companies ranging from 318 million euros for Sasol to just 12 million euros for German firm Tudapetrol, the size of the fine being determined by the level of involvement of each firm.

The commission originally boosted Sasol’s fine by 50 percent as it had led the cartel, but then reduced the amount because the company subsequently cooperated with investigators.

In a statement reacting to the fine, Sasol said that it was “surprised by and does not understand the reasons for the magnitude of this fine and will be studying the reasons for the finding with a view to lodge an appeal against it”.

As the whistle-blower, Shell walked away without a fine, despite having been found guilty of taking part in other cartels.

Italy’s ENI, which was also found guilty of taking part in earlier cartels, saw its fine boosted by 60 percent to 29 million euros.

The companies in question can challenge the fines in the European Court.

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