European Commission relies on whistle-blowing in fighting cartels
Wednesday, 08 February 2017
The European Commission has fined three European recycling companies a total of €68 million for fixing prices for purchasing scrap automotive batteries in breach of EU antitrust rules. A fourth company, Johnson Controls from the US, was not fined because it revealed the existence of the cartel to the Commission.
“Well functioning markets can help us reduce waste and support the circular economy,” Commissioner Margrethe Vestager, in charge of competition policy, said at press conference today (8 February).
“Therefore, we do not tolerate behavior that undermines competition. The four companies fined today have colluded to maximise their profits made from recycling scrap batteries, reducing competition in this essential link of the recycling chain.”
From 2009 to 2012, the four recycling companies took part in a cartel to fix the purchase prices of scrap lead-acid automotive batteries in Belgium, France, Germany, and the Netherlands. The companies are Campine (Belgium), Eco-Bat Technologies (UK), Johnson Controls (US) and Recylex (France).
According to Commissioner Vestager, the recycling of used batteries is an excellent example of the circular economy in EU. Around 58 million automotive batteries are recycled in the EU every year.
Recycling companies purchase use automotive batteries (from cars, vans or trucks) from scrap dealers or scrap collectors. They carry out the treatment and recovery of scrap batteries and then sell recycled lead, mostly to battery manufacturers, who use it to make new car batteries.
Unlike in most cartels where companies conspire to increase their sales prices, the four recycling companies colluded to reduce the purchase price paid to scrap dealers and collectors for used car batteries.
This behavior was intended to lower the value of used batteries sold for scrap, to the detriment of used battery sellers. The companies affected by the cartel were mainly small and medium-sized battery collectors and scrap dealers.
The companies involved knew very well that their behavior was illegal, says Vestager. The majority of the anti-competitive contacts between the four recycling companies took place on a bilateral basis, mainly through telephone calls, emails, or text messages, sometimes in coded language.
Asked by The Brussels Times how and when the Commission discovered the illegal cartel, she replied that the investigation had been going for quite some time and was disclosed thanks to whistle-blowing – in this case not by a disgruntled insider but apparently by the company itself.
“Companies participating in cartels have a strong incentive to cooperate with the Commission and turn themselves in since their fines will be reduced or cancelled. This also means that partners in a cartel cannot trust each-other and this works as a deterrent against engaging in business practices that is distorting free competition.”
In this case Johnson Controls received full immunity for revealing the existence of the cartel to the Commission, thereby avoiding a fine of € 38 million.