The Australian’s Matthew Stevens took a swipe at the European Union’s investigation of the BHP Billiton bid for Rio Tinto. From what he wrote, he seems to think the EU doesn’t know vey much about competition or things like cartels, price fixing and the like. Unlike the ACCC with its long and impeccable track record of victories?
IN so comprehensively clearing BHP Billiton’s $US120 billion takeover offer for global minerals rival Rio Tinto, Graeme Samuel has thrust the Australian Competition and Consumer Commission to the very heart of Europe’s pretentious and ludicrously long-winded review of the legal sustainability of the merger plan.
Until yesterday, the European Commission’s apparently morbid fascination with the proposal to create the world’s first super-major miner seemed justified. But no longer.
Sure, the European competition test is expressed in slightly different language to the competition regime that Samuel is required to protect.
The Australian competition test is that a merger should not produce a substantial “lessening of competition”, and Australian consumers are its central constituency.
In Europe, on the other hand, the regulator’s review focuses on whether a deal will “impede effective competition” and it is able to assess the impact of any merger across a far wider range of constituencies.
Well, Matthew should have a chat to the ACCC who will tell him that the Europeans are the nasty folk of world trade and anti-cartel behaviour. They are the heavy guys of global competition authorities and take the whole idea of competition very seriously indeed. And overnight they scored a huge win over a claimed cartel that fixed the price of wax used in candles, plates and paper cups.
It doesn’t sound much, but the fine was huge — 676 million euros, close to $A1.2 billion, depending on exchange rates. That was the fourth highest fine from the EU ever (check this list for all-time list). The companies involved were Exxon, Total, ENI, Saso1 (which was fined 318 million euros and the fourth highest individual fine ever) and five others. Nine companies in total. Sasol’s fine was boosted by 50% because it was the leader of the pack.
The Commission said the cartel ran from 1992 to 2005.
From 1992 to 2005, the producers of paraffin waxes and slack wax operated a cartel in which they fixed prices for paraffin waxes. ExxonMobil, MOL, Repsol, Sasol, Shell and Total also engaged in market allocation for this product and ExxonMobil, Sasol, Shell, RWE and Total also fixed prices for slack wax sold to end-customers on the German market. The companies held regular meetings to discuss prices, allocate markets and/or customers and to exchange sensitive commercial information.
In the Shell group, the cartel was called “paraffin mafia” and in the Sasol group, “Blauer Salon” (“blue saloon”), after a hotel bar in Germany where the first meetings of the cartel took place. Subsequent meetings took place at a series of top hotels all over Europe, including Milan, Vienna, Budapest, Paris, Munich and Strasbourg.
They might be a bunch of European public servants, but they don’t scare easily, and as the link to the website shows, have levied some enormous fines in major industries and against some of the world’s biggest companies.
So they won’t be pressured or threatened by lobbying by BHP, Rio or European steel groups, or by BHP’s supporters in Melbourne.