Commission Fines Ethanol Producer Lantmännen €47.7 Million over Ethanol Benchmarks Cartel

December 08, 2023

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(European Commission) The Commission has fined Lantmännen ek för and its subsidiary Lantmännen Biorefineries AB (formerly named Lantmännen Agroetanol AB) (together ‘Lantmännen') around €47.7 million for participating in a cartel concerning the wholesale price formation mechanism for ethanol in Europe. This decision follows the adoption of a settlement decision against Abengoa in 2021 and the closure of proceedings against Alcogroup in 2023.

The infringement

Ethanol is an alcohol made from biomass (such as wheat, maize or sugar beet) that, when added to gasoline, can be used as biofuel for motor vehicles. The port of Rotterdam and the Amsterdam-Rotterdam-Antwerp barge market were the most important trading locations for ethanol in the European Economic Area (‘EEA') at the time of the infringement. S&P Global Platts (‘Platts'), a company that provides price assessments for different commodity markets, used a price assessment process called ‘Market on Close' (‘MOC') to establish its ethanol benchmarks, which were widely used as reference prices in the industry. The key period for Platts' price assessment process was the time between 16:00 and 16:30 London time (called ‘the MOC Window).

Lantmännen is the largest ethanol producer in the Nordic region and referenced most of its ethanol sales contracts to the monthly average of Platts' ethanol benchmarks during the infringement period. Therefore, the level of Platts' ethanol benchmarks could directly influence the revenues that Lantmännen received from its ethanol sales during that period.

The Commission's investigation revealed that Lantmännen, together with two other companies:

Coordinated its trading conduct on a regular basis before, during and after the MOC Window.
Agreed to limit the supply of physical ethanol in the Rotterdam area that could end up in the MOC Window.
Exchanged commercially sensitive information in order to implement the coordinated behaviour.

This conduct was based on a common plan aimed at artificially increasing, maintaining and/or preventing from decreasing the level of Platts' ethanol benchmarks. Lantmännen expected that this would lead to higher prices for its ethanol sales under the ethanol supply contracts that were referenced to those benchmarks. Illegal contacts took place between traders typically in the form of chats.

The Commission's investigation showed that Lantmännen participated in a single and continuous infringement of Article 101(1) of the Treaty on the Functioning of the European Union (‘TFEU') and Article 53(1) of the Agreement on the ‘EEA, which covered the entire EEA. Lantmännen's involvement lasted from 14 November 2012 to 25 March 2014.

Fines

The fine was set on the basis of the Commission's 2006 Guidelines on fines (see also MEMO).

In setting the level of the fine, the Commission took into account, in particular, the sales value achieved by Lantmännen in the EEA based on certain sales of physical fuel-grade ethanol referenced to Platts' ethanol benchmarks, the serious nature of the infringement, its geographic scope and its duration.

The fine imposed on Lantmännen totals around €47.7 million.

Background

Article 101 of the TFEU and Article 53 of the EEA Agreement prohibit cartels and other restrictive business practices.

Following inspections in May 2013, October 2014, and March 2015, the Commission initiated proceedings against Lantmännen, Alcogroup S.A. and Abengoa S.A in December 2015.

In July 2018, the Commission sent a Statement of Objections (‘SO') to Alcogroup and Abengoa. At the time, Lantmännen was in settlement discussions with the Commission.

Following Abengoa's expression of interest to join the settlement discussions with the Commission in mid-2021, the Commission adopted a settlement SO in November 2021 and subsequently a settlement decision against Abengoa in December 2021. Lantmännen did not confirm the content of the settlement SO and the Commission eventually reverted to the ordinary procedure for Lantmännen.

As a result, the Commission adopted a new SO against Lantmännen and Alcogroup in July 2022. In May 2023, the Commission closed proceedings against Alcogroup based on insufficient ground to further pursue the investigation against the company. Therefore, today's decision does not make any findings concerning any liability of Alcogroup for participation in an infringement of EU competition law in this case.

Fines imposed on companies for breaching EU antitrust rules are paid into the general EU budget. This money is not earmarked for particular expenses, but the contributions of all Member States to the EU budget for the following year are reduced accordingly. The fines therefore help finance the EU and reduce the burden for taxpayers. In accordance with Article 141(2) of the EU-UK Withdrawal Agreement, this case is a “continued competence case”. The EU shall therefore reimburse the UK for its share of the amount of the fine once this has become definitive. The Commission will take care of collecting the fine, calculating the UK's share and reimbursing it.

More information on this case will be made available under the case number AT.40054 in the public case register on the Commission's competition website once any confidentiality issues have been resolved. For more information on the Commission's action against cartels, see its cartels website.

The settlement procedure

The settlement procedure for cartels was introduced in June 2008 (see press release and MEMO). In a cartel settlement, parties acknowledge their participation in a cartel and their liability for it. They also accept the maximum amount of the fine which the Commission intends to impose. Cartel settlements are based on Antitrust Regulation 1/2003, and allow the Commission to apply a simplified and shortened procedure. This benefits consumers and taxpayers as it reduces costs. It also benefits antitrust enforcement as it frees up resources. Finally, the parties themselves benefit in terms of quicker decisions and a 10% reduction in fines.

In general, a company willing to settle a cartel investigation is bound by its settlement submission according to point 22 of the Settlement Notice. Therefore, a settlement submission cannot be withdrawn at a later stage if the settlement SO issued by the Commission reflects the material elements of its settlement submission. When a company nevertheless chooses to withdraw unilaterally from settlement, the Commission will consider all options in any final decision against the company, including whether aggravating circumstances would justify an increase of the relevant fine.

Whistleblower tool

The European Commission has set up a tool to make it easier for individuals or companies to alert it about anticompetitive behaviour while maintaining their anonymity. The tool protects whistleblowers' anonymity through a specifically-designed encrypted messaging system that allows two way communications. The tool is accessible via this link.

Action for damages

Any person or company affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages. The case law of the Court of Justice of the European Union and Council Regulation 1/2003 both confirm that in cases before national courts, a Commission decision constitutes binding proof that the behaviour took place and was illegal. Even though the Commission has fined the companies concerned, damages may be awarded by national courts without being reduced on account of the Commission fine.

The Antitrust Damages Directive makes it easier for victims of anti-competitive practices to obtain damage s. More information on antitrust damages actions, including a practical guide on how to quantify antitrust harm, is available here.

Quote(s)

Biofuels can play a key role in promoting cleaner transport and cutting greenhouse gas emissions, in line with the Commission’s Green Deal objectives. It is therefore essential for the biofuels market to work efficiently. Today, we are closing our cartel investigation by fining one of the largest ethanol producers in the Nordic region for colluding to influence ethanol benchmarks in the market. This shows our commitment to preserve competition in all markets, especially those relevant for the green transition

Commissioner Didier Reynders, in charge of competition policy - 06/12/2023 READ MORE

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