EU Fines Oil Companies over ‘Paraffin Mafia’

A group of nine paraffin wax producers were ordered to pay fines totaling almost euro700 million (almost $1 billion) for forcing European consumers to pay more because paraffin was kept at artificially high prices.

European Commission Neelie Kroes said the cartel leader was Sasol Ltd. of South Africa but also included such multinationals as ExxonMobil, Repsol, Shell and Total. Paraffin wax is obtained from petroleum and is used in candles, wax paper, cosmetics and many other products.

The overall total of €676 million ($967 million) is the fourth highest fine ever and the fine slapped on Sasol of €318.2 million ($455.12 million) was the fourth largest for an individual company.

The European market for paraffin wax totals about €500 million ($700 million) a year and the cartel covered about three quarters of that for 13 years. "The 'paraffin mafia' cartel ran from 1992 to 2005," Kroes said.

At first, Kroes said, the companies showed a common resolve to rig the market when they started meeting secretly in Hamburg's Blauer Salon under the code name "the blue saloon group."

Meetings all over Europe followed as the cartel flourished. But then Shell started informing the commission about the illegal practices.  "By being the first to bring us evidence, Shell avoided a fine of euro96 million ($137 million)," she said.

Sasol's fine was increased by 50 percent for being the cartel leader but the South African company also got a reduction for being the second company for cooperating with Kroes's office. Still, its fine was one of the highest ever.

Total of France was given a fine of euro128 million ($183 million) and the U.S. company ExxonMobil euro83.5 million ($119 million).

Other companies fined were Repsol of Spain, ENI of Italy, Tudapetrol, Hansen & Rosenthal and RWE of Germany and MOL of Hungary.

PetrolWorld 051008   Source: EU & AP