Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC Intends to Reinstate Enhanced Fine on Synthetic Rubber Cartel Participants After Earlier Annulment, (Mar 1, 2013)

By Jeffrey May, J.D.

The European Commission (EC) announced today that it intends to re-impose an enhanced antitrust fine on ENI S.p.A. and its affiliate Versalis S.p.A., previously known as Polimeri Europa S.p.A., now that it has rectified procedural defects that led the General Court to annul the enhancement in 2011. The EC has sent a second statement of objections to ENI and Versalis, providing “full details” supporting the 50% fine “uplift.”

In November 2006, the EC fined five groups of companies a total of € 519 million for participating in a cartel to fix prices and share customers for certain types of synthetic rubber (Butadiene Rubber and Emulsion Styrene Butadiene Rubber) used for the production of tires and other consumer goods. Companies belonging to the groups ENI, Bayer, Shell, Dow, Unipetrol, and Trade-Stomil operated the cartel from at least 1996 to 2002, according to the EC. The fines on ENI, Shell, and Bayer were increased based on recidivism. These companies had already been found guilty of taking part in cartels. Bayer did not have to pay its fine, however, because it received full immunity for having been the first company to reveal the cartel to the EC.

The EC imposed a €272.25 million fine jointly and severally on ENI and Versalis. The fine uplift represented €90.75 million. Shortly thereafter, ENI announced that it would appeal the decision, contending that there were no factual and legal grounds for attributing liability to it as parent company and questioning the sanctions imposed as entirely disproportionate and unjustified.

On appeal, the General Court upheld the finding that ENI and Versalis violated EC competition law; however, it annulled the fine enhancement based on the parties’ prior participation in two cartels. The court decided that the EC “had not adduced sufficient detailed and specific evidence” to justify its conclusion that the three violations had been committed by the same firm.

ENI and Versalis have since appealed the General Court judgments to the Court of Justice of the European Union. They also questioned the EC's planned resumption of proceedings in an effort to reinstate the annulled portion of the fine. Separately, the EC cross-appealed on the issue of the annulment of the fine enhancement to the Court of Justice.

News: Antitrust