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E.U. - European Commission fines animal feed phosphates producers €175,647,000 for price-fixing and market-sharing

The European Commission has fined producers of animal feed phosphates a total of €175,647,000 for operating a cartel that lasted over three decades and covered a large part of the European Economic Area

July 22, 2010

E.U. - European Commission fines animal feed phosphates producers €175,647,000 for price-fixing and market-sharing

The European Commission has concluded its first settlement of a cartel case in a hybrid scenario, where both the settlement and ordinary procedures were followed. It has fined producers of animal feed phosphates a total of €175,647,000 for operating a cartel that lasted over three decades and covered a large part of the European Economic Area (EEA) territory. All but one company settled the case with the Commission and therefore received a 10% reduction each of their fine. Animal feed phosphates are chemical compounds used in feed for animals such as cattle, pigs, poultry, fish and pets.

"After the pre-stressing steel case, I am again surprised that the main producers of a vital compound for animal feed abused a substantial part of the European animal feed market for nearly 35 years." said Joaquín Almunia, Commission Vice-President in charge of competition policy, adding: "while companies that cooperate with the Commission, including under the settlement procedure, can count on immunity or a reduction of the fine, there should be no doubt about our determination to unearth and punish cartel members ".

The Commission imposed a fine totalling €175,647,000 in its first "hybrid" cartel case. It, therefore, adopted two decisions: a streamlined settlement decision for those undertakings which have agreed to settle and admitted their participation in the cartel and, on the other hand, a standard decision for one company which decided not to settle and for which the ordinary procedure was followed.

The Commission was first informed about the cartel in 2003 by Kemira, one of the participants that applied for leniency. Today's decision establishes that the cartel existed from as early as March 1969 until February 2004, although not all producers were involved for the entire period. The cartel members operated a market-sharing and price-fixing cartel covering most of the EU and subsequently also a great part of the EEA territory. To this end, they allocated market shares, feed phosphates sales quotas and customers among themselves, and coordinated prices and sales conditions when necessary. Such coordination is by its very nature one of the most serious violations of Article 101 of the Treaty on the Functioning of the EU.

The cartel arrangements, known as the ‘Club’, CEPA (Centre d’Etude des Phosphates Alimentaires) or later Super CEPA, proved to be resilient and able to adapt to different industry and market conditions over the years. Throughout the whole period, the undertakings had frequent contacts and met regularly to coordinate through price monitoring and market sharing agreements at both European and country levels.

Settlement proceedings, based on Commission Regulation (EC) No 622/2008 of 30 June 2008, were initiated with all undertakings. After the Commission had informed the parties of the fines ranges, one company, Timab Industries S.A./Compagnie Financière et de Participation Roullier, decided to discontinue the settlement proceedings, becoming the only party in the ordinary procedure. As foreseen in point 32 of the Commission Settlement Notice of 2 July 2008, the fine for all addressees of the settlement decision is reduced by 10%.

In setting the fines, the Commission has taken into account the sales of the companies involved in the market concerned, the very serious nature of the infringement, the geographic scope of the cartel and its long duration.

Due to the very long duration of the cartel, the fines for some of the companies would have exceeded the legal maximum of 10% of the 2009 turnover. They were, therefore, reduced within that legal ceiling.

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