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‘Paraffin mafia’ comes unstuck after €676m fines

Times Online
The Times
October 2, 2008

Rory Watson in Brussels

The European Commission imposed one of the highest cartel fines in its history yesterday as it penalised nine companies for operating an illegal “paraffin mafia” for more than 13 years.

The combined penalties of €676 million (£534 million) on the companies for fixing prices and carving up markets for paraffin wax – which is used in products such as candles, tyres and adhesives – are the latest sign of the Commission’s determination to stamp out cartels that prevent customers benefiting from competition.

Neelie Kroes, the EU Competition Commissioner, said: “There is probably not a household or company in Europe that has not bought products affected by this ‘paraffin mafia’ cartel, with all that implies in paying over the odds, higher costs and economic damage.”

The Commission made dawn raids on the companies three years ago after Shell, one of its members, blew the whistle on the illegal activities.

The investigators found that the companies held regular meetings to discuss prices, allocate markets and customers and exchange sensitive commercial information.

Shell escaped a possible fine because it provided the Commission investigators with the initial vital information.

Sasol, the South African-German company that was considered the leader of the group, was fined €318.2 million. Among its employees, the cartel was dubbed the Blauer Salon (Blue Saloon) after the hotel bar in Germany where the first meetings were held.

Sasol, the world’s biggest manufacturer of motor fuel from coal said: “Sasol is surprised by and does not understand the reasons for the magnitude of this fine and will be studying the reasons for the finding with a view to lodge an appeal against it.”

The other companies fined were Total of France (€128.2 million), ExxonMobil of the US (€83.6 million), RWE of Germany (€37.4 million), ENI of Italy (€29.1 million), Hansen & Rosenthal of Germany (€24 million), MOL of Hungary (€23.7 million), Repsol of Spain (€19.8 million) and Tuda-petrol of Germany (€12 million).

The global paraffin wax market is worth almost €500 million.

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