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February 24, 2003
Volume 81, Number 8
CENEAR 81 8 p. 4
ISSN 0009-2347


Collusion probe by cartel authorities is latest to hit chemical industry


Regulators from Europe, Japan, the U.S., and Canada have undertaken a coordinated investigation into price-fixing activity among producers of plastics heat stabilizers, impact modifiers, and processing aids.

PIPE DOWN Large quantities of additives are used to make PVC water and sewer pipes.
European Commission (EC) authorities acknowledge that they carried out dawn raids on 14 companies in Belgium, the Netherlands, France, Germany, Italy, and the U.K. looking for evidence of anticompetitive behavior among producers of additives used mostly in polyvinyl chloride. Targets included Atofina and Akzo Nobel's Ackros unit.

In Japan, authorities raided Mitsubishi Rayon, Kureha Chemical Industry, and Kaneka. In the U.S., Rohm and Haas says it is cooperating with government requests for information. Crompton Corp. also says it is cooperating with authorities. Crompton adds that it has received conditional amnesty from criminal prosecution in the U.S. and Canadian heat-stabilizer investigations and expects similar treatment by European Commission officials.

This is the second time that Crompton has taken advantage of amnesty programs available to companies that come forward with evidence of collusion. Amnesty also figured into Crompton's revelation in December of price fixing among makers of ethylene-propylene rubber (C&EN, Dec. 16, 2002, page 13).

Crompton turned up that evidence in October after it undertook an internal probe into reports that its employees participated in a rubber additive chemicals cartel along with Bayer and Flexsys, a joint venture of Solutia and Akzo Nobel. Crompton insiders report that CEO Vincent A. Calarco was angered that company employees might engage in collusive behavior and embarrassed that it might have occurred during his watch. He vowed to weed out evidence of other illegal activity.

Amnesty may shield Crompton from government fines, which can be substantial, but it cannot protect the firm from aggrieved customers who file civil cases to recover overcharges, points out Henry J. Kahwaty, a director with financial and economic consultants LECG.

EC spokeswoman Amelia Torres credits her agency's leniency program, offered to firms like Crompton that come forward with evidence of collusion, with eliciting 30 confessions since the program was enhanced a year ago.

U.S. Justice Department antitrust actions, which included breaking a vast vitamin cartel in 1999, have also relied on amnesty offers. Other probes since 1996 led to revelations of collusion among makers of lysine, citric acid, sorbates, amino acids, and monochloroacetic acid.

In a speech before the American Bar Association in New York City earlier this month, R. Hewitt Pate, acting assistant attorney general for the Justice Department's Antitrust Division, said "The leniency program has played a major role in cracking the majority of the international cartels that the division has prosecuted. The application rate has surged over the past year to better than two per month."

Cooperation among antitrust authorities is also bringing results. Torres says the EC has stepped up efforts to coordinate with counterparts in other parts of the world. Informal contacts and workshops arranged by a "virtual" international competition network, Pate said in his speech, help to promote "convergence and cooperation among antitrust authorities."

The success that such efforts have had in bringing four major government agencies to cooperate in the plastic additives investigation surprises Kahwaty, a former Justice Department economist. "I've never seen all four agencies coordinate an investigation like this before," he says.


Chemical & Engineering News
Copyright © 2003 American Chemical Society

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