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America October 18, 2023 4 mins read

Clariant Loses €155M Chemical Cartel Fine

America ı By Rihem Akkouche

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Clariant Loses €155M Chemical Cartel Fine

In a gripping legal showdown, Clariant, the chemical giant, was dealt a staggering blow as it failed to shrink a €155.7 million ($164.2 million) fine imposed for its involvement in an ethylene purchasing cartel. European judges, in a decision that left the company reeling, upheld the European Commission's discretion in setting these substantial fines for breaches of competition law.

Clariant AG and Clariant International AG mounted a fierce legal battle to mitigate the fine levied by the executive arm of the European Union. The fine stemmed from the chemical company's participation in an ethylene purchasing cartel operating between December 2011 and March 2017, alongside chemical and specialty material companies Celanese and Orbia. A fourth company secured full immunity by exposing the cartel, eluding an aggregate fine of nearly €190 million.

Clariant Loses €155M Chemical Cartel Fine : Clariant's Legal Struggle

Clariant embarked on a mission to annul part of the Commission's decision regarding a €94 million fine. Their aim was to reduce it to a "proportionate amount." However, the General Court of the European Union emphatically rejected this quest. The Commission, far from backing down, advocated for an even steeper penalty, a staggering €181 million.

The crux of Clariant's argument was that the Commission unjustly inflated the basic fine, failed to exercise its discretion properly, and imposed a penalty far exceeding the necessary deterrent for similar offenses. Clariant contended that mitigating circumstances had not been considered in the fine calculation.

The Swiss multinational giant asserted that the cartel was put in place by a company it acquired 14 years later. It maintained that only one Clariant employee had participated in the misconduct, entirely unbeknownst to other company staff. This led to claims that the Commission had violated the principles of proportionality, equal treatment, protection of legitimate expectations, and legal certainty.

Additionally, Clariant argued that the Commission failed to adequately explain the rationale behind increasing the basic fine. Nevertheless, the General Court rejected this argument, ruling that the Commission had meticulously outlined its reasons in the decision.

Competition Law Breaches Unveiled

The European Commission contended that the companies, including Clariant, had engaged in the exchange of price-related information and had conspired to manipulate the monthly supply contract price for ethylene. This collusion substantially impacted the market price, causing harm to sellers of the industrial chemical.

Although the Commission had not verified whether the price manipulation was successful, it deemed these practices as an agreement to restrict competition within the ethylene market.

Clariant Loses €155M Chemical Cartel Fine :  A Pivotal Rejection

The Commission had further sought to repeal a 10% reduction in the fine for cooperation with the EU executive during the settlement of the fine. Their argument asserted that Clariant had questioned facts they had confirmed during the administrative procedure. However, the General Court vehemently rejected this, refusing to increase the fine to €181 million.

In an additional blow, the Court ordered Clariant to bear 90% of the Commission's legal costs.

Timeline of the Violations

The Commission imposed this substantial fine after discovering that Clariant had been involved in exchanging sensitive commercial and pricing-related information while fixing a price element associated with ethylene purchases in Belgium, Germany, France, and the Netherlands from December 26, 2011, to March 29, 2017.

Silent on the Verdict

In response to the verdict, Clariant maintained silence, refraining from issuing an immediate comment on the ruling. The European Commission spokesperson, on the other hand, acknowledged the judgment and highlighted its significance.

"This sends an important signal on the soundness of the Commission's assessment, which in turn may influence companies' decisions to appeal," the spokesperson remarked. As for the Commission's unsuccessful attempt to augment the fine, it vowed to scrutinize the judgment closely to inform its future actions.

Clariant Loses €155M Chemical Cartel Fine : The Decision-Makers

The panel of judges presiding over this case included General Court President Marc van der Woude, Judge-Rapporteur Geert De Baere, along with Judges Gabriele Steinfatt, Krisztián Kecsmár, and Suzanne Kingston.

Legal Representation

Clariant was represented by Frank Montag and Maria Dreher-Lorjé of Freshfields Bruckhaus Deringer LLP. The European Commission was represented by Adela Boitoș, Ion Victor Rogalski, and Jan Szczodrowski of the Legal Service of the EU Commission.

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Rihem Akkouche

Rihem Akkouche is a passionate journalist dedicated to shedding light on compelling stories, sparking conversations, and fostering a more informed world.

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