Sasol’s e318 million (R4.6 billion) antitrust fine has been cut by more than half after judges said EU regulators had wrongly blamed the petrochemicals firm for the behaviour of a unit.
The fine for fixing the price of paraffin wax was cut to e150m by the EU’s General Court in Luxembourg on Friday.
The court said officials were wrong to hold Sasol and its German unit responsible for price-fixing by Hamburg-based wax business Schumann. Sasol bought a stake in the firm in 1995 and acquired the rest of the company in 2002.
Exxon Mobil’s French unit, Esso, also won a challenge that reduced its fine to e62.7m from e83.6m. German utility RWE’s fine was cut to e35.9m from e37.4m. The Luxembourg-based tribunal criticised the way the EU calculated the fines for Exxon and RWE.
Sasol said the effect of the reduced fine would be accounted in its full-year 2014 results. The company had been unaware of Schumann’s cartel activities before the EU started its probe in 2005, it said.
The EU defended the high fines in 2008 by saying the conspiracy lasted 13 years and the market for paraffin wax, which is used in a wide variety of products from car tyres to chewing gum, was worth e500m a year.
The European Commission “will carefully assess” the court’s conclusions for how it held parent companies liable for their units’ behaviour, Antoine Colombani, a spokesman for the regulator, said.
The court had confirmed “all the substantial findings of the commission” on the companies’ participation in the cartel, he said.
The General Court’s ruling can be appealed to the EU’s highest tribunal.
Last month Sasol was slapped with a hefty R534m fine by the Competition Tribunal in South Africa for charging local customers high prices for key chemical ingredients.
The tribunal found that between 2004 and 2007 Sasol Chemical Industries charged Safripol excessive prices for purified propylene and polypropylene. During the period it charged Safripol two different prices: a higher tier 2 price and a lower tier 1 price.
Propylene is a thermoplastic polymer used in a variety of applications including packaging, labelling, textiles, stationery, plastic parts and different types of reusable containers.
The tribunal imposed a penalty of R205.2m in respect of purified propylene. It imposed a R328.8m penalty in respect of polypropylene.
The tribunal ordered Sasol to revise future pricing of polypropylene and propylene to drive down prices.
When the tribunal applied a price cost test, it found that Sasol’s mark-ups on purified propylene prices over actual costs during the complaint period were in the range of 39.9 percent to 41.5 percent for tier 2 sales to Safripol, and in the range of 25.1 percent to 26.5 percent for tier 1 sales to the same plastics producer.
Experts close to the matter said excessive pricing of polypropylene raised costs for South African manufacturers and weakened the country’s efforts to deepen industrialisation, improve industrial competitiveness and create jobs.
The share price of Sasol gained 60c to close at R619.61 on the JSE on Friday. – Bloomberg, with additional reporting by Ayanda Mdluli