2005/566/: Commission Decision of 9 December 2004 relating to a proceeding under Article 81 of the EC Treaty and Article 53 of the EEA Agreement (Case No C.37.533 — Choline Chloride) (notified under document number C(2004) 4717) Text with EEA relevance
Date: 2004-12-09
Institutions: European Commission
Subjects: European Economic Area, control of restrictive practices, fine, infringement procedure (EU), international market, restriction on competition, sanction (EU), unlawful agreement, vitamin

L 190/22

EN

Official Journal of the European Union

22.7.2005

COMMISSION DECISION

of 9 December 2004

relating to a proceeding under Article 81 of the EC Treaty and Article 53 of the EEA Agreement
(Case No C.37.533 — Choline Chloride)

(notified under document number C(2004) 4717)

(Only the English, French and German texts are authentic)

(Text with EEA relevance)

(2005/566/EC)

On 9 December 2004, the Commission adopted a decision relating to a proceeding under Article 81 of
the EC Treaty and Article 53 of the EEA Agreement. In accordance with the provisions of Article 30 of
Council Regulation (EC) No 1/2003 (1), the Commission herewith publishes the names of the parties
and the main content of the decision,
including any penalties imposed, while having regard to the
legitimate interest of undertakings in the protection of their business interests. A non-confidential version
of the full text of the decision can be found in the authentic languages of the case and in the
Commission’s working languages at DG COMP’s website at the following address: http://europa.eu.int/
comm/competition/index_en.html

I. SUMMARY OF THE INFRINGEMENT

2. The market for choline chloride

(1)

(2)

(3)

1. Introduction

This Decision is addressed to Akzo Nobel N.V., Akzo
Nobel Nederland B.V., Akzo Nobel Chemical
Interna-
tionals B.V., Akzo Nobel Chemicals B.V. and Akzo
Nobel Functional Chemicals B.V.,
jointly and severally
(hereinafter Akzo Nobel), BASF A.G. (hereinafter BASF),
Bioproducts
Bioproducts),
Chinook Group Limited Partnership and Chinook
Group
(hereinafter
Chinook), DuCoa L.P.
(hereinafter DuCoa) and UCB
S.A. (hereinafter UCB).

Incorporated

(hereinafter

severally

Limited,

jointly

and

The addressees participated in a single and continuous
infringement of Article 81(1) of the Treaty establishing
the European Community (hereinafter the EC Treaty or
the Treaty) and, from 1 January 1994, Article 53(1) of
the Agreement on the European Economic Area (here-
inafter EEA Agreement), covering the whole of the EEA
territory.

The Commission initiated an investigation into the global
choline chloride industry after it received a leniency
application in April 1999 from the US supplier
Bioproducts. The investigation covered the period from
1992 to the end of 1998 (hereafter referred to as the
period of investigation).

(1) OJ L 1, 4.1.2003, p. 1. Regulation as amended by Regulation (EC)

No 411/2004 (OJ L 68, 6.3.2004, p. 1).

(4)

(5)

Choline chloride belongs to the B-complex group of
It is mainly used
water-soluble vitamins (vitamin B4).
feed
in the animal
additive, especially for poultry and swine,
to increase
increase feed efficiency,
growth, reduce mortality rates,
increase egg production and improve meat quality.

feed industry as a traditional

and

exporting

to Central

the start of

the period of

At
investigation, choline
chloride was produced mainly in Europe and North
America (United States and Canada), although there
was also choline chloride production capacity in China,
Japan, Korea and Taiwan. The North American
India,
producers were
South
America, Europe, the Far East and South-East Asia. The
European producers were starting to export to Central
and South America, Africa, South-East Asia and the Far
East. European and North American producers also had
production facilities in different areas of the world and
were expanding local production in order to cut trans-
portation and storage costs and better penetrate local
In particular, BASF established production
markets.
facilities in Mexico, Brazil and Thailand, Akzo Nobel
and UCB in China, Ducoa in Mexico and Chinook in
Singapore.

(6)

The size of the worldwide market for choline chloride
was estimated at EUR 183,7 million in 1997, the last full
year of the infringement, the EEA accounting for EUR
52,6 million. During the period of
the
producers involved in the infringement controlled more
than 80 % of the world market. The European producers
concerned controlled close to 80 % of the EEA area.

investigation,

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Official Journal of the European Union

L 190/23

3. Description of the cartel

2. Basic amount

(7)

(8)

(9)

In so far as the EEA is concerned, the choline chloride
cartel operated at two different, but closely related levels,
the global
level and the European level. At the global
level, all producers subject to this proceeding participated
in anti-competitive activities concerning the EEA between
June 1992 and April 1994. These activities included the
setting and increase of worldwide prices, the allocation of
the control of distributors and
worldwide markets,
converters and the exchange of commercially sensitive
information.

(11)

The North American producers did not participate in a
series of further anti-competitive meetings strictly among
the European producers to coordinate their behaviour on
the European market. These meetings took place in the
period between March 1994 and October 1998.
Activities included the setting and increase of prices
(both for the EEA as a whole, for particular national
markets and for individual customers), the allocation of
individual customers among the participating under-
takings, the allocation of markets shares for each under-
taking for the EEA market as a whole, the control of
distributors and converters and the exchange of commer-
cially sensitive information.

The Commission has found that the arrangements at the
global and European levels together were part of an
overall scheme which laid down the lines of action in
the EEA of the members of the cartel and restricted their
in order to pursue a
individual commercial conduct
single
the
aim, namely
anti-competitive
distortion of normal competitive conditions in the EEA
for choline chloride. The North American producers
participated in this scheme for some time (between
October 1992 and April 1994, a period of one year
and six months) and the European producers for the
entire period (between October 1992 and September
1998, a period of five years and eleven months).

economic

II. FINES

1. Limitation period

Gravity

The infringement
in this case consisted primarily of
secret collusion among cartel members to fix prices in
the EEA, supported by market sharing and agreed actions
against competitors there. These kinds of horizontal
restrictions are, by their very nature, among the worst
kinds of violations of Article 81(1) of the Treaty and
Article 53(1) of
the EEA Agreement. Taking into
account the nature of the infringement committed and
the fact that it covered the whole of the common market
and, following its creation, the EEA in its entirety, the
Commission considers that Akzo Nobel, BASF and UCB
have committed a very serious infringement of Article
81(1) of the Treaty and 53(1) of the EEA Agreement.
In the Commission’s view these factors are such that the
infringement must qualify as very serious, even if the
actual impact of the infringement cannot be measured.

Differential treatment

inter alia,

(12) Within the category of very serious infringements, the
scale of likely fines makes it possible to apply differential
treatment to undertakings in order to take account of the
effective economic capacity of
the offenders to cause
significant damage to competition. Taking into account
that the infringement started at the global level, with the
participation of North American companies which
agreed,
to withdraw from the European
market, the Commission considers it appropriate in this
case to use the global market shares of the undertakings
to determine their
participating in the infringement
respective weight. Chinook was
the largest market
operator in the world, with a market share of 19,3 %.
It is therefore placed in a first category. DuCoa, with a
market share of 16,3 %, is placed in a second category.
UCB, Bioproducts and Akzo Nobel, with market shares
of 13,4 %, 12,2 % and 12 % respectively, are placed in a
third category. Finally, BASF, with a market share of
9,1 %, is placed in a fourth category.

(10)

The North American producers ended their participation
in the infringement at the end of the global meeting
which took place between 14 and 20 April 1994. The
first action taken by the Commission to investigate the
infringement was on 26 May 1999. As this action took
place more than five years after the North American
producers had ended their participation to the infrin-
gement (1), no fines can be imposed on the North
American producers, Bioproducts, Chinook and DuCoa.

(1) See Article 1 of Council Regulation (EC) No 2988/74 (OJ L 319,
29.11.1974, p. 1) and Article 25 of Council Regulation (EC)
No 1/2003.

Sufficient deterrence

(13) Within the category of very serious infringements, the
scale of likely fines also makes it possible to set the
fines at a level which ensures that they have sufficient
deterrent effect,
the size of each
taking into account
undertaking. In this respect, the Commission notes that
in 2003, the most recent financial year preceding this
Decision, the turnover of UCB was EUR 3 billion, that
of Akzo Nobel EUR 13 billion and that of BASF EUR
33,4 billion. Accordingly, the Commission considers it
appropriate to multiply the fine for Akzo Nobel with a
factor of 1,5 and that of BASF with a factor of 2.

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Duration

(14) Akzo Nobel N.V, together with Akzo Nobel Nederland
B.V., Akzo Nobel Chemicals International B.V., Akzo
Nobel Chemicals B.V. and Akzo Nobel Functional
Chemicals B.V., BASF A.G and UCB S.A participated in
the infringement at least from 13 October 1992 until 30
September 1998, a period of
five years and eleven
months.

in
producers. They were implemented in particular
respect of the key elements of prices and allocation of
clients in Europe and the control of converters, even if
such implementation may have been less than fully
successful in achieving an actual impact on the market
because of remaining competition on that market. None
of
the three producers concerned have provided any
indication that they had any desire, and undertook any
to deliberately abstain from implementing the
action,
the EEA
agreements
during the period in which they adhered to them.

they concluded in respect of

3. Aggravating circumstances

Recidivism

(15) At

the time the infringement

took place, BASF had
already been subject to previous Commission prohibition
decisions for cartel activities in Decisions 69/243/EEC (1)
and 94/599/EC (2). The fact that BASF repeated the same
type of conduct, albeit in a sector other than those in
which it had previously incurred penalties, shows that the
first penalties did not prompt BASF to change its
conduct
the undertaking. This constitutes
for the Commission an aggravating circumstance. This
aggravating circumstance justifies an increase of 50 %
the fine to be imposed on
in the basic amount of
BASF. A 50 % rate is the normal rate employed by the
Commission in cases involving recidivism.

throughout

(18)

Length of the investigation

the

the

in general

duration of
that

BASF argues that a reduction should be granted because
investigation. The
of
long
Commission observes
is no
there
requirement on the Commission to reduce the fine
because of the length of an investigation. The normal
limitation periods spelled out in Article 25 of Regulation
(EC) No 1/2003 apply. In particular, paragraph 5 of that
Article states that the limitation period shall expire at the
latest on the day on which a period equal to twice the
limitation period has elapsed without the Commission
having imposed a fine or a periodic penalty payment.
This period is far from having expired in this proceeding.

4. Attenuating circumstances

Early termination of the infringement

(16)

that
In the Commission’s view,

BASF and UCB claim a reduction for early termination.
Cartel
infringements are by their very nature hard-core
anti-trust violations. Participants in these infringements
they are engaged in
normally realise very well
in such
illegal activities.
cases of deliberate illegal behaviour,
that a
company terminates this behaviour before any inter-
vention of the Commission does not merit any particular
reward other than that the period of infringement of the
company concerned will be shorter
than it would
otherwise have been.

the fact

Crisis situation

(19)

BASF argues that a reduction should be granted for the
alleged fact that the choline chloride industry was in a
crisis situation. The Commission observes that the fact
that an undertaking may not happen to make profits on
a certain commercial activity is no licence for it to enter
into secret collusion with competitors to cheat customers
and other competitors. As a general rule, cartels risk
coming into play not when undertakings make large
profits but precisely when a sector encounters problems.

Non-implementation

Disciplinary measures and compliance programme

(17) Akzo Nobel, BASF and UCB claim that the infringement
or elements thereof were not, not fully or not effectively
Commission’s
the
implemented.
in so far as they pertained to the EEA
arrangements,
least by the European
market, were implemented, at

view,

the

In

(1) OJ L 195, 7.8.1969, p. 11.
(2) OJ L 239, 14.9.1994, p. 14.

(20)

infringement

BASF argues that it should receive a reduction for having
taken disciplinary measures against employees involved
and for having introduced a
in the
Commission
compliance
the
welcomes measures
to avoid
cartel
such measures
infringements
cannot change the reality of the infringement and the
need to sanction it appropriately in this Decision.

taken by undertakings
in the

programme. While

future,

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Official Journal of the European Union

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Effective cooperation outside of the 1996 Leniency Notice

level,

(21) UCB was the first undertaking to voluntarily inform the
Commission of the fact that in addition to meetings at
the global
the European producers had held a
number of meetings among themselves at the European
level. The evidence voluntarily provided by UCB on these
meetings allowed the Commission to determine the
duration of the infringement as five years and eleven
months. Had the Commission remained aware only of
the arrangements at the global level, the duration of the
infringement would have been one year and six months.
In order to reward UCB for this increase in the duration,
the Commission considers it appropriate to grant UCB a
reduction for attenuating circumstances equal to 25,8 %
of the basic amount. This reduction corresponds to the
40 % increase in the basic amount resulting from a
duration of the infringement of five years and eleven
months instead of one year and six months.

5. Application of the 1996 Leniency Notice

Significant reduction of a fine (‘Section D’: reduction from
10 % to 50 %)

(22) Akzo Nobel, BASF and UCB all co-operated with the
Commission at different stages of the investigation with
a view to receiving the favourable treatment set out in
the 1996 Leniency Notice, which applies
in this
proceeding (1).

BASF

(23)

evidence

the value of

regarding these

BASF was the third company to voluntarily submit
evidence on the global arrangements. When BASF
submitted its evidence, the Commission already had at
its disposal
arrangements
submitted by Chinook and by Bioproducts. Irrespective
of
the evidence submitted by Chinook,
Bioproducts’ evidence in itself was clearly sufficient to
the cartel’s existence
constitute decisive evidence of
within the meaning of section B of the 1996 Leniency
it
Notice. Therefore, when BASF made its submissions,
was not the first undertaking to provide decisive evidence
of the cartel’s existence to the Commission. As a result,
sections B and C of the 1996 Leniency Notice do not
apply to BASF, nor to the other two European producers.

(24) As to its substance, the evidence submitted by BASF,
which was limited to the global arrangements, may be
said to have materially contributed to establishing the
the infringement within the meaning of
existence of

(1) According to point 28 of

the 2002 Leniency Notice,

from
14 February 2002, the 2002 Notice replaces the 1996 Notice for
all cases in which no undertaking has contacted the Commission in
order to take advantage of the favourable treatment set out in that
notice. As in this case several undertakings applied for leniency with
the Commission before 14 February 2002,
the 1996 Leniency
Notice applies.

section D of the 1996 Leniency Notice, which provides
for possible reductions of between 10 % and 50 %. But
the value of these submissions remained quite limited
the extensive evidence on the
taking into account
in the Commission’s
already
arrangements
global
possession.

(25) After

receiving the Statement of Objections, BASF
informed the Commission that it did not substantially
contest the facts on which the Commission based its
allegations, except for certain factual corrections which
the Commission has accepted.

(26)

the different elements of coop-
Taking into account
eration mentioned,
that
the Commission considers
BASF is entitled to a 20 % reduction of the fine that
would otherwise have been imposed.

UCB

(27) UCB voluntarily informed the Commission of nine cartel
meetings held at the European level, from March 1994
until October 1998. It mentioned the participants and
provided a brief general description of the contents of
these meetings. It also added contemporaneous reports of
the first two of these cartel meetings, which took place in
1994. At the time when UCB made this submission, the
Commission was not aware of any meetings at
the
European level. Together,
this evidence constituted a
significant material contribution to the establishment of
the infringement, even if no written contemporaneous
evidence was provided for the period from 1995 to
1998.

(28) After

receiving the Statement of Objections, UCB
informed the Commission that it did not substantially
contest the facts on which the Commission based its
allegations, except for certain factual corrections which
the Commission has accepted. However,
in the same
submission UCB claimed that, although it participated
it was
in a number of meetings at
level. In
never a party to any agreement at the global
the Decision, the Commission has rejected this claim as
unfounded. Therefore, as UCB did in fact, after receiving
the Statement of Objections, contest an essential element
of the facts on which the Commission based its alle-
receive any reduction for not
gations,
contesting the facts on which the Commission bases its
allegations.

it does not

the global

level,

(29)

Taking into account
the different elements of coop-
eration mentioned, the Commission considers that UCB
is entitled to a 30 % reduction of the fine that would
otherwise have been imposed.

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Akzo Nobel

(30)

In January 2002, Akzo Nobel submitted a voluntary
report on the European arrangements. This report gave
a detailed description of the contents of the arrangements
at the European level, including considerable information
that UCB had not provided. However, the fact that Akzo
Nobel filed this report two and a half years after UCB
had made its submission on these arrangements should
be taken into account in the leniency reduction granted.

(31) After receiving the Statement of Objections, Akzo Nobel
informed the Commission that it did not substantially
contest the facts on which the Commission based its
allegations, except for certain factual corrections which
the Commission has accepted.

(32)

otherwise

Taking into account
the different elements of coop-
that
eration mentioned,
the Commission considers
Akzo Nobel is entitled to a 30 % reduction of the fine
that would
been imposed. This
have
assessment takes into account, on the one hand, that
Akzo Nobel’s report on the European arrangements
was about as valuable to the Commission as the infor-
mation and evidence on those arrangements supplied
earlier by UCB, but arrived two and a half years later
and, on the other hand, that Akzo Nobel, as opposed to
UCB, did not contest the facts on which the Commission
based its allegations. As a result, both undertakings merit
the same percentage reduction.

6. Decision

(33)

The following undertakings infringed Article 81(1) of the
Treaty and, from 1 January 1994, Article 53(1) of the
EEA Agreement by participating,
the periods
in a complex of agreements and concerted
indicated,
practices consisting of price fixing, market sharing and
agreed actions against competitors in the choline chloride
sector in the EEA:

for

(35)

(a) Akzo Nobel N.V,

together with Akzo Nobel
Nederland B.V., Akzo Nobel Chemicals International
B.V., Akzo Nobel Chemicals B.V. and Akzo Nobel

Functional Chemicals B.V., from 13 October 1992
until 30 September 1998;

(b) BASF A.G., from 13 October 1992 until 30 Sep-

tember 1998;

(c) Bioproducts Incorporated,
until 14 April 1994;

from 13 October 1992

(d) Chinook Group Limited Partnership, together with
from 13 October 1992

Chinook Group Limited,
until 14 April 1994;

(e) DuCoa, L.P., from 13 October 1992 until 14 April

1994;

(f) UCB S.A.,

from 13 October 1992 until 30 Sep-

tember 1998.

(34)

For these infringements, the following fines are imposed:

Nederland

(a) Akzo Nobel N.V, Akzo
B.V.,
Nobel
Chemicals
Akzo Nobel
International B.V., Akzo
Nobel Chemicals B.V. and
Akzo Nobel
Functional
Chemicals B.V., jointly and
severally

(b) BASF AG

(c) UCB SA

EUR 20,99 million;

EUR 34,97 million;

EUR 10,38 million.

infringement

immediately
The undertakings listed in recital 33 shall
insofar as they
bring their
refrain from
have not already done so. They shall
repeating any act or conduct as the infringement found
in this case, and from any act or conduct having the
same or similar object or effect.

to an end,