Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC investigates biofuels sector over ethanol benchmarks, (Dec 7, 2015)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has opened a formal antitrust investigation to review whether three ethanol producers have manipulated ethanol benchmarks published by a price reporting agency in breach of European Union (EU) antitrust rules, the agency announced today. The three companies involved in the investigation—Abengoa S.A. of Spain, Alcogroup SA of Belgium, and Lantmännen ek för of Sweden, along with their relevant subsidiaries—produce, distribute, and trade ethanol.

Ethanol is an alcohol made from biomass, such as wheat, maize or sugar beet, that is mainly added to gasoline and used as a biofuel for certain motor vehicles. The EC has concerns that these companies may have colluded to manipulate ethanol benchmarks published by the price reporting agency Platts by agreeing between them to submit or support bids with a view to influencing benchmarks upwards and thus driving up ethanol prices. Such practices, if confirmed, harm competition and undermine EU energy objectives by increasing prices for renewable energy, such as biofuels used for transport. This could lead to a reduction of the use of biofuels as an alternative to fossil fuels, with negative consequences both for consumers and the environment, according to the EC.

The prices assessed and published by price reporting agencies such as Platts serve as benchmarks for trade in the physical markets and in the financial derivative markets for a number of commodity products both in Europe and worldwide. In 2013, the EC proposed a regulation to enhance the governance, integrity, and reliability of benchmarks used in financial instruments and contracts. This regulation is at the final stage of adoption by the Council and European Parliament.

Unannounced inspections. Article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits anticompetitive agreements and concerted practices. The EC's investigation started with unannounced inspections carried out in May 2013. The inspections took place in two EU member states. Further inspections were carried out in October 2014 and March 2015. The EC has informed the companies concerned and the competition authorities of the member states that it has opened proceedings in this case.

There is no legal deadline for bringing an antitrust investigation to an end. The duration of an investigation depends on a number of factors, including the complexity of the case, the cooperation of the undertakings with the EC, and the exercise of the rights of defense. The EC will now conduct an in-depth investigation as a matter of priority.

“Competitive biofuels markets are crucial to promote cleaner transport and to cut greenhouse gas emissions. This is an important element of the Commission’s ambitious strategy to limit greenhouse gas emissions and to boost renewable energies,” said Margrethe Vestager, Commissioner in charge of competition policy.

Companies: Abengoa S.A.; Alcogroup SA; Lantmännen ek för

News: Antitrust