Corporate & Securities Law

EC Imposes Fines of $172m on Marine Hose Companies

By Sheppard Mullin Richter Hampton, LLP

On January 28, the European Commission (EC) imposed fines of approximately $172m on five companies for their alleged participation in a cartel for marine hoses between 1986 and 2007 in violation of the ban on anticompetitive agreements in the EC Treaty (Article 81).  Marine hoses are used to transport crude oil to and from ships for transportation from production sites.  The EC alleged that the cartel members fixed prices for marine hoses, allocated bids and markets and exchanged commercially sensitive information.  EC Competition Commissioner Neelie Kroes said, “For 20 years, this cartel added to the prices consumers paid for their oil deliveries.  I will not tolerate illegal cartels and will continue to impose heavy fines on those companies found guilty of this kind of serious malpractice."
 

The EC's investigation was initiated by an amnesty application for immunity lodged under the EC's 2006 Leniency Notice.  The EC conducted surprise inspections coordinated with several other jurisdictions in May 2007.  For the first time, the EC also inspected a private home using its investigatory powers.

The EC alleged that between 1986 and 2007, the producers of marine hoses operated a worldwide cartel by regularly meeting to fix prices and exchanging sensitive market information.  The EC alleged that these meetings took place in several locations in Europe, East Asia and the US and that cartel members referred to some markets as their "private markets" and agreed upon a dozen or so pages of detailed "cartel rules."

In a press release, the EC stated that this alleged cartel constituted a very serious infringement of EC Treaty antitrust rules.  In setting the fines, the EC took into account the respective affected sales of the companies involved as well as the combined market share and the geographical scope of the cartel agreements.  Two companies' fines were increased by 30% because of their leadership of the cartel.

The fines in this case were calculated using the EC's 2006 Guidelines on Fines which was in force at the time that the EC issued its Statement of Objections in May 2008.

Authored by:

Neil Ray

(619) 338-6595

nray@sheppardmullin.com

Full post as published by Antitrust Blog Review on February 10, 2009 (boomark / email).