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Houston Chronicle: EU Fines 14 Companies Over $340 Million

EXTRACT: Royal Dutch Shell PLC has to pay by far the highest fine in the road bitumen probe with euro108 million (US$137 million). In a statement, the EU Commission said the company was an instigator, took the leadership in the cartel and was a repeat offender. Shell’s fine was increased by 50 percent because of its involvement in previous cartels and another 50 percent for instigating and leading the cartel.

THE ARTICLE

Sept. 13, 2006, 7:33AM
By RAF CASERT Associated Press Writer
© 2006 The Associated Press

BRUSSELS, Belgium — The European Union fined 14 companies involved in Dutch road works a total of euro267 million (US$340 million) Wednesday, ruling that they had run a cartel over eight years to fix the price of a key asphalt ingredient.

Royal Dutch Shell PLC has to pay by far the highest fine in the road bitumen probe with euro108 million (US$137 million). In a statement, the EU Commission said the company was an instigator, took the leadership in the cartel and was a repeat offender. It said the KWS company tried to obstruct the Commission’s investigation.

The fines were the seventh-largest imposed on a cartel by the EU head office. EU Competition Commissioner Neelie Kroes has often stressed that one of her main objectives is to counter market-distorting cartels.

The bitumen road construction market in the Netherlands was valued at euro62 million (US$79 million) in 2002 and the fines combined were over four times the annual value.

“It is very high compared to the value of the market,” said EU spokesman Jonathan Todd, arguing that there were serious aggravating circumstances involving Shell and KWS, which was fined euro27.36 million (US$34.77 million).

Shell’s fine was increased by 50 percent because of its involvement in previous cartels and another 50 percent for instigating and leading the cartel.

KWS’ fine was also increased by 50 percent for its leading role in the cartel and another 10 percent for obstructing the probe. The Commission said EU inspectors were twice refused access to KWS buildings.

On the other hand, BP PLC was granted full immunity for cooperating and escaped a euro30.8 million (US$39.1 million) fine. Kuwait Petroleum had its fine reduced by 30 percent to euro16.6 million (US$21.1 million).

Todd said similar investigations into the bitumen sector were also ongoing in Spain and Belgium.

In the biggest EU antitrust fines, a 2001 vitamin cartel ruling cost eight drug companies euro855 million (US$1.09 billion) in EU fines and, in a German cement price-fixing case, 12 firms were ordered to pay euro702 million (US$892 million).

The Commission said the Dutch cartel stretched from 1994 to 2002, when representatives from eight suppliers and six construction companies would meet for “bitumen consultation” to fix prices and optimize profits.

“All cartel members, both suppliers and buyers, therefore had an interest in participating in the cartel,” the EU statement said. It kept small players at a disadvantage. The Dutch government also had to pay more for the extension of its highway net.

Other suppliers fined were Esha with euro11.5 million (US$14.62 million), Kloeckner Bitumen at euro10 million (US$12.7 million), Nynas at euro13.5 million (US$17.2 million), Total with euro20.3 million (US$25.7 million) and Wintershall with euro11.6 million (US$14.8 million).

Other construction companies were Ballast Nedam with euro4.7 million (US$5.91 million), Dura Vermeer euro5.4 million (US$6.9 million), Heijmans euro17.1 million (US$21.7 million), Hollandsche Beton Groep euro7.2 million (US$9.2 million) and Koninklijke BAM euro13.5 million (US$17.2 million).

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