Sasol faces R3,7bn price-fixing penalty

By Time of article published Oct 2, 2008

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By Ingi Salgado

The European Union's competition regulator has slapped a fine of €318,2-million (about R3,7-billion) on the European wax division of petrochemicals producer Sasol for leading a price-fixing cartel dubbed the "paraffin mafia".

The penalty, payable in three months, is nearly 10 times the R381-million operating profit generated in the year to June 2008 by Sasol Wax, the unit that houses the group's Hamburg-based European wax operations.

Sasol said in response yesterday that it was "surprised and does not understand the reasons for the magnitude of this fine".

It would be studying the reasons for the finding with a view to lodging an appeal.

Sasol's fine comprises nearly half of the total €676-million penalty imposed on nine cartel participants. The other guilty parties are:

- Exxon Mobil, the world's biggest oil multinational.

- Italian oil and gas group ENI.

- German groups Hansen & Rosenthal, Tudapetrol and RWE.

- Hungarian oil producer MOL.

- Spanish oil group Repsol.

- French oil major Total.

Europe's biggest oil group, Shell, avoided a fine because it had disclosed the cartel.

South Africa's Competition Commission said yesterday it had received complaints against Sasol's South African wax division for excessive pricing and exclusionary practices.

"We are looking into it," said commissioner Shan Ramburuth, adding that no formal investigation had yet been launched.

Because Sasol is the dominant producer of wax in South Africa, competition issues revolve less around collusion than dominance. The Competition Tribunal prohibited a merger between Sasol and candle-making group Prices Daelite several years ago, but this was subsequently overturned by the Competition Appeal Court.

- See Business Report for more detailed articles.

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