Siseko Njobeni
2 October 2008
Johannesburg — THE European Commission yesterday slapped a € 318,2m (R3,7bn) fine on Sasol for its role as a leader of a price-fixing "paraffin mafia" cartel that operated in the European paraffin wax market for 13 years.
The cartel of nine was jointly fined € 676m, and Sasol's penalty was the largest.
The commission started investigating the cartel in 2005 when one of the members, oil multinational Shell, blew the whistle on the companies' activities in return for immunity from a € 96m fine.
"Shell was the first company to inform us about the cartel," European Competition Policy Commissioner Neelie Kroes said yesterday. 96m fine.
The € 318,2m, the biggest antitrust fine imposed on a South African company and which Sasol said it might appeal against, dwarfs the punishment meted out to the other members of the cartel. Kroes said this was because of the role Sasol played as leader of the cartel. The fine is payable in three months. Sasol's financial statements for the year to June showed it had R4,3bn in cash and cash equivalents.
The other cartel members are: Total (France, fined € 128m), Exxon Mobil (US, € 83m), Repsol, (Spain, € 20m), Tudapetrol (Germany, € 12m), Hansen and Rosenthal (Germany, € 24m), RWE (Germany, € 37m) and MOL (Hungary, € 23m).
The € 676m fine is the fourth-highest yet imposed by the commission. Kroes said the penalty was a reflection of the duration of the cartel and the size of the affected market, which was worth almost € 500m a year.
"There is probably not a household or a company in Europe that has not bought products affected by this cartel," she said.
Kroes said in a hard-hitting statement that the cartel's meetings took place at top hotels in Milan, Vienna, Paris, Munich and Strasbourg. Kroes said companies participating in the cartel knew what they were doing, and that it was wrong.
This was not Sasol's first brush with competition authorities. In May 2005, SA's Competition Commission found that Sasol Chemicals and two other companies, Kynoch and Omnia Fertiliser, had fixed fertiliser prices. The matter has since been referred to the Competition Tribunal.
Sasol spokeswoman Jacqui O'Sullivan said yesterday the group was surprised, did not understand the reasons for the magnitude of the fine, and would be "studying the reasons for the finding with a view to lodging an appeal against it".
O'Sullivan said the group was not aware of the infringements before the start of the probe in April 2005.
But analyst Paul Theron of stockbroking firm Vestact said an appeal might be ill-advised, given that the fine was reduced by 50% for good behaviour.
He said news of the fine coincided with a recovery in Sasol's share price after Monday's sell-off. "Before the news of the fine broke, the share was trading at R363,63. It fell about R10 per share, but has recovered a bit since then."
Theron said that had it not been for the news of the fine, Sasol's share price might have recovered more.
Sasol fell 5,12% on the JSE yesterday and it was R332 at the close.
Paraffin wax is used in a wide range of products, including tyres, car components, waxed paper, paper cups and plates, packaging, chewing gum, wax coating on cheese, and candles.
The cartel covered 75% of the European paraffin wax market.
"I hope that the harsh lesson of these high fines will encourage the management of these companies to look very carefully at what their staff is doing. And I hope that in turn the shareholders of these companies look very carefully at the management," Kroes said.
The commission earlier this year ordered Microsoft to pay € 899m for not complying with terms of a 2004 ruling.
In 1995, three years after the apparent start of the anticompetitive behaviour, Sasol became a co-shareholder in a wax business in Hamburg, Germany, owned by the Schumann group.
In July 2002, Sasol acquired the remaining shares in the joint venture.
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