Johanensburg - South African chemicals company Sasol faces a €318m or R3.68bn because of its involvement in a "paraffin mafia" cartel in Europe fixing paraffin wax prices and market sharing. The company could also be liable for legal action from customers.
Sasol does not appear to have made any provision for the fine, according to its 2008 financial results. It had cash and cash equivalents of R4.3bn at the end of June 2008.
The European Commission imposed a fine of €676m on nine firms in the cartel, with Sasol receiving the largest penalty, which would have been a whole lot worse were it not for the company's cooperation into the investigation.
"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 terms of paying over the odds, higher costs and economic damage," Competition Commissioner Neelie Kroes said in a statement.
The paraffin wax market in Europe is worth €500m.
The infringement committed by ExxonMobil, Sasol, Shell, RWE and Total also related to slack wax - the raw material to make paraffin wax - sold to end-customers on the German market, the Commission said.
All participants fixed prices for the products concerned.
ExxonMobil, MOL, Repsol, Sasol, Shell and Total in addition allocated markets and customers for paraffin waxes.
"The fine for Sasol was increased by 50% because it was the leader of the cartel. The fine for ENI was increased by 60% as it had been previously taking part in similar cartels," it said.
Sasol's fine was then reduced by 50% because of its cooperation into the investigation, it added.
Sasol said in a media release the fine was payable in three months. It has production capacity of 430 000 tonnes/year of paraffin wax and wax emulsions in Germany.
Sasol's entire wax business, including operations in South Africa and the United States, generated turnover of R6.6bn in 2008 and an operating profit of R381m from sales of 704 000 tonnes of wax products.
"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," it said.
The Commission said the producers of paraffin wax and slack wax operated in a cartel between 1992 and 2005.
"The companies held regular meetings to discuss prices, allocate markets and/or customers and to exchange sensitive commercial information," it said.
"In the Shell group, the cartel was called 'paraffin mafia' and in the Sasol group, 'Blauer Salon' ('blue saloon'), after a hotel bar in Germany where the first meetings of the cartel took place.
"Subsequent meetings took place at a series of top hotels all over Europe, including Milan, Vienna, Budapest, Paris, Munich and Strasbourg."
Sasol said it became a co-shareholder of a German wax firm owned by the Schümann group in 1995 before becoming the sole owner in July 2002.
?Sasol Limited was unaware of these infringements before the European Commission commenced their investigation at the wax business in Hamburg in April 2005,? Sasol said.
Shell was let off its fine of €96m because it approached the Commission about the cartel.
- Miningmx.com
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