Yesterday, the European Commission announced that it has imposed fines totalling over €131 million on five companies involved in the marine hoses cartel, which operated worldwide between 1986 and 2007. The cartel members, Bridgestone, Dunlop Oil & Marine/Continental, Trelleborg, Parker ITR and Manuli, fixed prices for marine hoses, allocated bids and markets and exchanged commercially sensitive information, all contrary to Article 81 of the Treaty of Rome. Regular cartel meetings took place in several locations in Europe, East Asia and the US. Cartel members referred to some markets as their "private markets" and agreed upon a dozen or so pages of detailed "cartel rules" to limit their conduct on the market.
We have been following the story of the marine hoses cartel since 2007, when we reported on the arrest of participants at the OTC in Houston (see UK execs arrested in US for involvement in alleged international marine hose cartel). The arrests followed dawn raids by the competition authorities of the US, EU and UK. In June 2008 we reported on the men's conviction (see A wake up call for the oil industry) for the cartel offence – the first such convictions in the UK. Since we last reported the men convicted have had their sentences cut on appeal to between 20 and 30 months.
The cartel came to light (as is often the case) because another one of the members, Yokohama, chose to take advantage of the Commission's leniency programme and become a "whistleblower". Companies which reveal the existence of cartels to the competition authorities can under certain conditions obtain immunity from fines, as Yokohama did in this case. Manuli could not receive full immunity as it was not the first to report the cartel but it was granted a 30% reduction of its fine for its co-operation with the investigation under the Commission's leniency programme.
On the other hand, the fines for Bridgestone and Parker ITR were increased by 30% because of their leadership of the cartel. Competition Commissioner Neelie Kroes said "For 20 years, this cartel added to the prices consumers paid for their oil deliveries. I will not tolerate illegal cartels and will continue to impose heavy fines on those companies found guilty of this kind of serious malpractice."
When markets are suffering price falls, as is the case in some parts of the oil services sector at the moment, there can be a great temptation to seek to "stabilise" the market by the use of illegal cartels. Good compliance programmes can help to eradicate this behaviour or to mitigate fines if it does occur.
For more information, please see the European Commission's press release or contact Judith Aldersey-Williams and Susan Hankey.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 30/01/2009.
