EU to charge ExxonMobil, Shell and Ballast Nedam with price-fixing

Oct 15, 2004 02:00 AM

European Union regulators will charge oil companies, including ExxonMobil and Shell, and road builders such as Ballast Nedam NV with fixing the price of a petroleum product used to pave streets, people familiar with the matter said.
The European Commission, the EU's Brussels-based regulatory arm, will charge the producers and consumers with colluding to fix prices for bitumen in The Netherlands, Belgium, Germany, Portugal and Spain, sources said. The regulator can levy cartel fines as high as 10 % of sales.

Europe's $ 915 bn construction industry has come under scrutiny from Finland to Portugal as EU and national antitrust regulators crack down on cartels in everything from copper pipes to asphalt that often eat into government taxes.
"The construction sector is like a big flower that has attracted the interest of a lot of bees looking for honey," said Christof Swaak, an antitrust lawyer with Stibbe in Amsterdam. "The Commission is just one of the bees working away."

The commission will send a statement detailing its charges to companies it raided in October 2002, which also included Total and BP, the sources said. Competition Commissioner Mario Monti, whose term ends Oct. 31, has imposed almost EUR 5 bn ($ 6.2 bn) in antitrust fines since 1999 against companies ranging from Microsoft, the world's largest software maker, to drug maker Roche Holding.
The EU statement of objections will be sent to the companies, sources said. The companies will have an opportunity to argue their case before the commission and will have two months to reply to the statement of objections.

"We are aware of an investigation by the EU commission in relation to the bitumen market," said Russ Roberts, a spokesman for Esso Nederland, a unit of Irving, Texas-based ExxonMobil, the world's biggest publicly traded oil company. "We've replied to all of the queries and questions of the EU commission in this matter. We have not received any statement of objections."
Adrie van Kessel, a spokeswoman for Nieuwegein, The Netherlands-based Ballast Nedam, the fourth-biggest Dutch building company, said the company had "no official confirmation" that formal charges were being readied.
"We've been cooperating fully with the commission's enquiry but haven't been informed of any decision that the commission has made," said Leon Tops, a spokesman for Shell, which is headquartered in London and The Hague.

The completion of the bitumen probe and possible fine will be left to Neelie Kroes, Monti's successor and a former director of Ballast Nedam since 1990. Kroes, who has resigned from the builder's board, promised during confirmation hearings earlier to recuse herself from investigations that may lead to an appearance of a conflict of interest.
Bitumen, a by-product of processing crude oil, is used primarily in the construction industry for surfacing roads and waterproofing. EU production amounts to about 250 mm tpy, according to the European Asphalt Pavement Association.

The commission said in an Oct. 10, 2002, statement that "it carried out unannounced inspections at the premises of a number of companies in The Netherlands, Belgium, Germany, Portugal and Spain. The inspections follow suspicions of one or more cartels in the bitumen sector in the Dutch, Belgium-Luxembourg and Spanish markets."
Under EU law, the commission can fine companies it finds guilty of operating a cartel as much as 10 % of annual sales. It typically opts for less.

National regulators have also been cracking down on cartels in the construction industry. Lemminkaeinen Oyj, the second-biggest road-paving company in the Nordic region, in March was fined EUR 68 mm by the Finnish Competition Authority for fixing the price of asphalt.
Royal BAM Group, the largest building company in The Netherlands, said it was being investigated by the Dutch antitrust regulator, NMA.

Source: Bloomberg
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