EU cuts cement cartel fine by over 50%

A European court has substantially reduced record fines imposed in 1994 on Europe's cement producers, including Irish Cement, for operating a market-sharing cartel. The decision is the most significant setback to date to the European Commission's antitrust powers.

Irish Cement, a wholly-owned subsidiary of CRH, had its 1994 fine of €3.524 million (£2.78 million) reduced to €2.065 million. It was also ordered to pay its own costs and a third of the Commission's costs.

The European Commission had found Irish Cement, and other EU cement producers, guilty of infringements of Article 85 of the Treaty of Rome. Irish Cement had contended that it was not in any way involved with Article 85 infringement and challenged the initial fine which was based on 4 per cent of its 1992 turnover.

It said yesterday it was pleased that the European Court of First Instance has substantially reduced the fine originally imposed. But it said it "believed that the detailed submissions it made to the Court proved that it was not involved in the activities complained of, and regrets that the Court did not cancel the entire fine". Irish Cement noted the "decision is complex and detailed and relates to events alleged to have taken place in the early 1980s". And it said "a decision whether to appeal will be made following a full review of the judgment". The penalties imposed on Italcementi of Italy and its subsidiary Ciments Francais, together the worst hit, were reduced to €39.2 million from €59 million.

The total fine on 33 producers was more than halved to €110 million from €248 million and national cement associations were totally absolved.

The fines were imposed by the European Commission, the European Union's competition watchdog, in November 1994 in what remains a record collective penalty for anti-competitive practices. But the Luxembourg-based court said the Commission had failed to respect the right of defence by limiting access to its files, wrongly accused some companies of participating in incriminating meetings and miscalculated the period over which the infringements took place.

The Commission had correctly established the existence of an agreement designed to prevent shipments of cement from one EU country or region to another.

But, said the court in a statement, "the Commission has not adequately proved the participation of some undertakings in that agreement".

This was the case notably of Dutch firm ENCI and Castle Cement, two subsidiaries of Germany's Heidelberger, and Greek companies Heracles and Titan Cement which saw their fines - €5-€8 million - annulled.

"In the case of all the other addressees of the decision, the Court has held that the duration of their participation in the infringement was less than found by the Commission," it added.

The fine on France's Lafarge was reduced to €14.2 million from €23.9 million, Heidelberger's own fine went from €15.6 million to €7.06 million, Blue Circle's was halved to €7.7 million and Portugal's Cimpor fell to €4.3 million from €9.3 million.

The Commission put on a brave face, saying the ruling was based on breaches of procedure. It could not say at this stage whether it would appeal to the European Court of Justice, the EU's higher court. Appeals must be filed within two months.

Under EU law the Commission can fine companies up to 10 per cent of their worldwide turnover for participating in price-fixing and market-sharing agreements. In practice, however, it has never approached that amount and the starting point for cartel fines is €20 million per company.