EC to Fine 23 Firms Over Price Fixing

BRUSSELS — The European Community’s executive commission said Wednesday that it was fining 23 major petrochemical companies a total of $70 million for taking part in two price-fixing and market-sharing cartels.

The companies included such household names as Dow Chemical Co. of the United States; Bayer AG, BASF AG and Hoechst AG of West Germany, and British Petroleum Co., Imperial Chemical Industries PLC and Shell Transport & Trading of Britain.

The European Commission, the EC’s executive body, announced the fines after a five-year probe.

Peter Sutherland, the outgoing EC commissioner in charge of competition, said at a news conference: “The Commission has taken its decision because of the clear infringement of the Treaty (of Rome). It is particularly important in the context of 1992 to ensure that competition in the common market is not distorted.”

PVC Cartel

The EC has set 1992 as the target year for making the trade bloc into a single market for goods, services and labor.

The executive commission has powers under the Treaty of Rome to fine companies seen as distorting competition in the EC. The companies involved can appeal to the European Court of Justice in Luxembourg.

West Germany’s BASF said a statement that it would appeal, adding that the commission’s competition authorities had conceded in investigations so far that the alleged agreements had not affected market shares or prices.

The EC charged that one cartel operated in the low-density polyethylene market, where the companies fined represent 80% of the market. The other alleged cartel was in the PVC market, where the firms in question have a market share of 95%. Low-density polyethylene and PVC are key intermediate products used in the plastic processing industry.

Quota System

A commission official said during the investigation that a blueprint of a cartel agreement had been found but declined to say at which company. Both cartels had a system of regular meetings to fix target prices and quotas, plan initiatives to raise prices and monitor the operation.

A commission spokesman said the PVC cartel was set up in about October, 1980, when the market was suffering from falling demand after a boom year in 1979. The commission says documents found showed that the cartel operated a quota system until at least mid-1984.

The low-density polyethylene cartel was set up in 1976 after many producers had developed new production capacity that turned out to exceed demand, the EC said. It is believed to have continued until at least November, 1984.