Brussels, 23 January 2008

Antitrust: Commission fines synthetic rubber producers € 34.2 million for price fixing cartel

The European Commission has imposed fines totalling € 34 230 000 on the Bayer and Zeon groups for fixing prices for Nitrile Butadiene Rubber (NBR) in violation of the EC Treaty’s and the EEA Agreement’s ban on cartels and restrictive business practices (Article 81 of the EC Treaty and Article 53 of the EEA Agreement). NBR is used mainly in car manufacturing for fuel and oil handling hoses, seals, o-rings and water handling applications. Between late 2000 and 2002, Bayer and Zeon managed to raise or otherwise stabilise prices through a series of meetings and other illicit contacts. Bayer's and Zeon's fines are reduced by 30% and 20%, respectively, because they co-operated with the investigation under the Commission's 2002 Leniency Notice (see IP/02/247 and MEMO/02/23). However Bayer's fine was increased by 50% because it had been fined for cartel activity in a previous Commission decision.

Competition Commissioner Neelie Kroes said: "This is the fourth cartel decision in the synthetic rubber industry in just over 3 years. I hope that this is the last. Buyers of synthetic rubber should be concerned about how much these cartels have cost them. And shareholders should be concerned about how much the fines have cost them."

NBR is a type of synthetic rubber consisting of a complex family of unsaturated copolymers of acrylonitrile and butadiene. Resistance to petroleum fluids, good physical properties and useful temperature range make NBR a widely used rubber, used predominantly in the motor industry.

The Commission's investigation started with surprise inspections in March 2003, prompted by an application for immunity lodged by a third company under the 2002 Leniency Notice (see IP/02/247 and MEMO/02/23). Both Bayer and Zeon co-operated with the Commission and submitted additional evidence.

The cartel
From at least 2000 to 2002, the producers of NBR operated a cartel in which they fixed prices. The companies held regular meetings to discuss prices and to coordinate price increases, to exchange sensitive commercial information and to follow-up the implementation of their illegal plans.

These practices constitute very serious infringements of EC Treaty antitrust rules. In setting the fines, the Commission took into account the respective affected sales of the companies involved as well as the combined market share, the geographical scope and the implementation of the cartel agreements. The Commission increased the fines for Bayer by 50% because it had already been fined for cartel activities in a previous Commission decision. However, the decisions adopted in recent years concerning other infringements of competition rules perpetrated by Bayer in the synthetic rubber industry did not lead to a further increase of this fine as they took place in a similar period of time and therefore are parallel infringements. The three decisions adopted by the Commission in this sector and the corresponding fines were:
Rubber Chemicals in December 2004: € 75.86 million (IP/05/1656)
Synthetic Rubber BR/ESBR in November 2006: € 519 million (IP/06/1647)
Chloroprene Rubber in December 2007: € 243.2 million (IP/07/1855)
The cooperation of both undertakings under the Commission's leniency programme was rewarded. Bayer and Zeon were granted a reduction of their fines of 30% and 20% respectively. In addition, Zeon benefited from a further reduction as it was the first to disclose the first period of the cartel to the Commission.
The fines in this case are based on the 2006 Guidelines on Fines (see IP/06/857 and IP/06/256), in force at the time the Statement of Objections was notified.
The fines imposed and the leniency reductions granted by the Commission in this case are as follows:

Name and location of undertaking Fine(€) Reduction under the Leniency Notice(%) Reduction under the Leniency Notice (€)
Bayer (Germany) 28.870.000€ 30% 12.380.000€
Zeon (Japan) 5.360.000€ 20% 1.340.000€
TOTAL 34 230 000

Action for damages
Any person or firm affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages, submitting elements of the published decision as evidence that the behaviour took place and was illegal. Even though the Commission has fined the companies concerned, damages may be awarded without these being reduced on account of the Commission fine. A Green Paper on private enforcement has been published (see IP/05/1634 and MEMO/05/489).
For more information on the Commission’s action against cartels, see MEMO/08/30.