2006/902/EC: Commission Decision of 21 December 2005 relating to a proceeding under Article 81 of the Treaty establishing the European Community and Article 53 of the EEA Agreement against Flexsys NV, Bayer AG, Crompton Manufacturing Company Inc. (former Uniroyal Chemical Company Inc.), Crompton Europe Ltd, Chemtura Corporation (former Crompton Corporation), General Química SA, Repsol Química SA and Repsol YPF SA. (Case No COMP/F/C.38.443 — Rubber chemicals) (notified under document number (2005) 5592)   (Text with EEA relevance)
Date: 2005-12-21
Institutions: European Commission
Subjects: chemical product, economic concentration, infringement procedure (EU), merger control, rubber industry

L 353/50

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Official Journal of the European Union

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COMMISSION DECISION

of 21 December 2005

relating to a proceeding under Article 81 of the Treaty establishing the European Community and
Article 53 of the EEA Agreement against Flexsys NV, Bayer AG, Crompton Manufacturing Company
Inc. (former Uniroyal Chemical Company Inc.), Crompton Europe Ltd, Chemtura Corporation
(former Crompton Corporation), General Química SA, Repsol Química SA and Repsol YPF SA.

(Case No COMP/F/C.38.443 — Rubber chemicals)

(notified under document number (2005) 5592)

(only the English, German and Spanish texts are authentic)

(Text with EEA relevance)

(2006/902/EC)

1.

SUMMARY OF THE INFRINGEMENT

(4)

1.1.

Addressees

(1)

This decision is addressed to the following undertakings:

— Flexsys N.V.;

— Bayer AG;

The major global producers of rubber chemicals are
Flexsys, Bayer and Chemtura (former Crompton), account-
ing together for approximately a half of the world-wide
rubber chemical market. There are a number of significant
smaller competitors, such as General Química (Spain),
Duslo (Slovakia), Istrochem (Slovakia), Noveon (USA) and
Great Lakes (USA), as well as many minor competitors
particularly in Asia.

— Crompton Manufacturing Company,
Uniroyal Chemical Company Inc.);

Inc.

(former

(5)

— Crompton Europe Ltd;

— Chemtura Corporation (former Crompton Corpora-

tion);

The major customers for rubber chemicals are the globally
operating big tire companies Michelin (France), Goodyear
(USA), Bridgestone/Firestone (Japan), Continental
(Ger-
many) and Pirelli (Italy), accounting together for about 35-
40 % of world-wide consumption.

— General Química SA;

— Repsol Química SA;

— Repsol YPF SA.

(6)

rubber chemicals business
The geographic scope of
in the mid-
changed gradually from regional to global
1990s. This affected the scope of the cartel as well, so that
after 1995 the parties reached understandings mostly
about world-wide price increases.

(2)

(3)

The addressees of the Decision participated in a single,
complex and continuous infringement of Article 81 of the
Treaty establishing the European Community and of
Article 53 of the Agreement on the European Economic
Area, involving the fixing of prices and the exchange of
confidential information concerning certain rubber che-
micals (antioxidants, antiozonants and primary accelera-
tors) in the EEA and worldwide markets.

1.2.

The rubber chemicals sector

Rubber chemicals are synthetic or organic chemicals that
act as productivity and quality enhancers in the manu-
facture of rubber, mainly used in vehicle tires. In 2001, the
EEA market value was estimated at EUR 200 million,
covering the categories antiozonants, antioxidants and
primary accelerators that were affected by the cartel.

1.3.

Functioning of the cartel

(7) Whilst there are a number of indications that collusive
industry were
activities within the rubber chemicals
already taking place at least occasionally in the 1970s,
the Commission only has sufficiently firm evidence of the
existence of the cartel for the period covering the years
1996-2001 for Flexsys, Bayer and Crompton (now
(including Crompton Europe and Uniroyal
Chemtura)
Chemical Company). These undertakings agreed to raise
prices of certain rubber chemicals (antioxidants, antiozo-
nants and primary accelerators) in the EEA and world-wide
markets at least in 1996, 1998, 1999, 2000 and 2001.
General Química, which must be considered a fringe
player, participated to these agreements in 1999 and 2000.

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(8)

Coordination of price increases normally followed a
general pattern, involving contacts among the competitors
during a preparatory phase preceding the announcement
to customers,
thereafter during the negotiations with
customers, and lastly after the contracts had been made to
monitor compliance and success on the market. During
the contacts preceding the coordinated action, the parties
sought support for a suggested price increase and agreed
upon its amount, the products and territory covered, as
well as the leader and the timing of the announcements.
During the implementation phase, the focus was on the
customers’ reactions to the announced price increases and
exchanges on the positions regarding price negotiations
with the customers. The follow-up contacts included
exchange of detailed information on
typically the
contracted volumes and prices with specific customers.

1.4.

Procedure

(9)

The investigation into the rubber chemicals sector was
initiated as a result of an application for conditional
immunity from fines by Flexsys in April 2002, which was
the Commission
granted in June 2002. Subsequently,
carried out inspections at the premises of Bayer, Crompton
Europe and General Química in September 2002.

(10) Crompton (now Chemtura), Bayer and General Química
applied for leniency, on 8 October 2002, 24 October 2002
and 7 June 2004, respectively. The Commission informed,
in due course, all the applicants of its intention to apply
reductions of fines.

(11) On 12 April 2005, the Commission adopted a Statement
of Objections against Bayer, Crompton, Crompton Europe,
Flexsys, Akzo Nobel,
Uniroyal Chemical Company,
Pharmacia (former Monsanto), General Química, Repsol
Química, Repsol YPF, Duslo, Prezam, Vagus and Istrochem.
An Oral Hearing on the case was held on 18 July 2005.
The proceedings were subsequently closed against Akzo
Nobel NV, Pharmacia Corporation, Duslo a.s., Prezam a.s.,
Vagus a.s., and Istrochem a.s.

1.5.

Liabilities

(12) Repsol YPF SA and Repsol Química SA, although they did
not participate themselves in the arrangements in question,
are nevertheless held responsible for the conduct of their
wholly owned subsidiary General Química.

2.

FINES

2.1.

Basic Amount

market, where this can be measured, and the size of the
relevant geographic market.

(15) Considering the nature of

the infringement and its
geographic scope (the infringement in this case consisted
primarily of secret collusion between cartel members to fix
prices in the EEA and elsewhere, supported by the
exchange of confidential
information), the infringement
must be qualified as very serious.

2.1.2. Differential treatment

(16) 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, as well as to set the fine
at a level which ensures that it has sufficient deterrent
effect.

(17) Based on the fact that both the geographic scope of the
cartel and the rubber chemicals business in general
is
essentially world-wide, the global market shares in 2001,
the last full year of the infringement, are used as reference
values in the calculation of the fines.

(18)

Flexsys was the largest market operator in the world, with
a market share of approximately [20-30] %. It is therefore
placed in a first category. Bayer, with a market share of
approximately [10-20] %, is placed in a second category.
Crompton, with a market share of approximately [10-
20] %,
is placed in a third category. Finally, General
Química, with a market share of approximately [0-10] %, is
placed in a fourth category. The starting amounts will be
fixed proportionally, albeit not arithmetically, having
regard to the market shares.

2.1.3. Sufficient deterrence

(19) 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, taking into account the size of each undertaking. In
2004, the total turnovers of the undertakings were as
follows: Bayer EUR 29,7 billion; Crompton approximately
EUR 2 billion; Flexsys EUR approximately 425 million and
Repsol YPF 41,7 billion. Accordingly, the Commission
considers it appropriate to multiply the fine for Bayer by 2
and for Repsol by 2,5.

(13) The basic amount of the fine is determined according to

the gravity and duration of the infringement.

2.1.1. Gravity

(14)

In assessing the gravity of the infringement, the Commis-
sion takes account of its nature, its actual impact on the

2.1.4. Increase for duration

(20)

Flexsys, Bayer and Uniroyal (including Crompton Europe)
committed an infringement of six years, whereas Cromp-
ton Corporation (now Chemtura) is liable for an infringe-
ment of
these
undertakings committed an infringement of long duration,
and their starting amounts will consequently be increased
by 10 % for each full year of infringement.

five years and four months. All of

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(21) General Química committed an infringement of eight
months. Its infringement amounting to less than one year,
no increase will be applied to its fine.

2.2.

Attenuating circumstances

(22)

fine due to its passive and minor

In the case of General Química, it is appropriate to reduce
its
role in the
infringement, as compared to the other participants in
the cartel, by 50 %.

2.3.

Application of the 2002 Leniency Notice

2.3.1. Immunity

(23)

Flexsys was the first to submit evidence which enabled the
Commission to adopt a decision to carry out an
investigation in connection with the alleged cartel in the
rubber chemicals industry. Flexsys has co-operated fully,
on a continuous basis and expeditiously throughout the
Commission's administrative procedure and provided the
Commission with all evidence available to it relating to the
suspected infringement. Flexsys ended its involvement in
the suspected infringement no later than the time at which
it submitted evidence under the Leniency Notice and did
not take steps to coerce other undertakings to participate
in the infringement. Hence, Flexsys qualifies for a full
immunity from fines.

(24) Crompton has contested Flexsys’ immunity, claiming inter
alia that Flexsys has failed to fulfil the conditions of its
immunity by coercing other parties and by continuing the
infringement after its application for immunity. After a
close investigation of Crompton's allegations, the Commis-
sion considers that there is no decisive material evidence to
support these allegations.

2.3.2. Point 23 (b), first indent (reduction of 30-50 %)

(25) Crompton was the first undertaking to meet the require-
ments of point 21 of the Leniency Notice, as it provided
the Commission with evidence which represents signifi-
cant added value with respect to the evidence already in the
Commission's possession at the time of its submission. It
qualifies, therefore, under point 23 (b), first indent, for a
reduction of 30-50 % of the fine.

2.3.3. Point 23 (b), second indent (reduction of 20-30 %)

(27) Bayer was the second undertaking to meet the require-
ments of point 21 of the Leniency Notice, as it provided
the Commission with evidence which represents signifi-
cant added value with respect to the evidence already in the
Commission's possession at the time of its submission. It
qualifies, therefore, under point 23 (b), second indent, for a
reduction of 20-30 % of the fine. The extent of the value
added by Bayer to the case is limited and it has admitted
the infringement only for its last four years. Thus, the
Commission considers that Bayer qualifies for the very
minimum reduction within the relevant band,
i.e. a
reduction of 20 %.

2.3.4. Point 23 (b), third indent (reduction of up to 20 %)

the time of

(28) General Química was the third undertaking to meet the
requirements of point 21 of the Leniency Notice, as it
provided the Commission with evidence which represents
significant added value with respect to the evidence already
in the Commission's possession at
its
submission. General Química qualifies, therefore, under
point 23 (b), third indent, for a reduction of up to 20 % of
the fine. Considering that General Química fulfilled the
condition of significant added value relatively late in the
proceedings, over a year and a half after the Commission's
inspections to its premises, and that the extent to which its
submission added value to the evidence has remained
limited, the Commission finds that General Química (and
Repsol) is entitled to a 10 % reduction of the fine that
would otherwise have been imposed.

2.3.5. Final remark on the application of the leniency notice

(29)

In this case, the Commission also issued a strong warning
against leniency applicants attempting to weaken its ability
to prove the infringement, where, taken together, there is a
consistent body of
indicia and evidence showing the
existence of the cartel. The Commission considered that
such attitude puts the extent and continuity of cooperation
of leniency applicants into serious doubt.

3.

DECISION

(30) The following undertakings have infringed Article 81(1) of
the Treaty and Article 53 of
the EEA Agreement by
participating, for the periods indicated, in a complex of
agreements and concerted practices consisting of price
fixing and the exchange of confidential information in the
rubber chemicals sector in the EEA:

(26)

In view of its early cooperation, the quality of its evidence
and its extensive and continuous cooperation throughout
the proceedings, the Commission considers that Crompton
qualifies for the maximum of 50 % reduction

a)

Bayer AG, from 1 January 1996 until 31 December
2001;

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L 353/53

b)

c)

d)

e)

f)

g)

h)

Crompton Manufacturing Company Inc., from 1 Jan-
uary 1996 until 31 December 2001;

any act or conduct having the same or similar object or
effect.

Crompton Europe Ltd., from 1 January 1996 until
31 December 2001;

(32) For the infringements referred to above,, the following fines

are imposed on the following undertakings:

Chemtura Corporation, from 21 August 1996 until
31 December 2001;

Flexsys N.V., from 1 January 1996 until 31 December
2001;

General Química SA, from 31 October 1999 until
30 June 2000;

Repsol Química SA, from 31 October 1999 until
30 June 2000;

Repsol YPF SA, from 31 October 1999 until 30 June
2000.

Flexsys N.V

(a)
(b) Crompton Manufacturing
Company, Inc., jointly and
severally with Crompton
Europe Ltd.
of which jointly and sever-
ally with Chemtura Cor-
poration:
Bayer AG:

(c)
(d) General

Química

SA,
jointly and severally with
Repsol Química SA and
Repsol YPF SA

EUR 0,
EUR 13,60 million,

EUR 12,75 million,

EUR 58,88 million,
EUR 3,38 million.

(31) The undertakings listed above shall immediately bring to
an end the infringements also referred to above, insofar as
they have not already done so. They shall refrain from
repeating any act or conduct described above, and from

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 the DG Competition website
at http://ec.europa.eu/comm/competition/.