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Commission fines "paraffin mafia" cartel EUR 676m

01 October 2008, 22:47 CET

(BRUSSELS) - The European Commission on Wednesday announced it was fining paraffin wax producers more than 676 million euros (956 million dollars) for operating a price fixing cartel that included Shell, Exxonmobil and Total.

Shell escaped a fine under the whistle-blower rule, which applies to companies that help EU competition authorities to uncover a cartel.

The biggest fine of over 318 million euros was handed out to South African company Sasol.

US giant ExxonMobil received an 83.5-million-euro fine with smaller penalties going to fellow cartel members Repsol of Spain, Italy's ENI, Tudapetrol, Hansen and Rosenthaland and RWE of Germany, French Total and MOL of Hungary.

They were penalised for "participating in a cartel for paraffin wax in the European Economic Area (EEA)" between 1992 and 2005.

"Shell also participated in the cartel but was not fined because it revealed the existence of the cartel to the commission," the EU executive said in a statement.

Paraffin waxes are used in a products ranging from candles and waxed paper, paper cups and plates, to tyres, packaging and chewing gum.

"There is probably not a household or company in Europe that has not bought products affected by this 'paraffin mafia' cartel, with all that implies in terms of paying over the odds, higher costs and economic damage," said EU Competition Commissioner Neelie Kroes.

"Such illegal cartel behaviour cannot and will not be tolerated by the Commission, and companies' managers and shareholders should take note."

The infringement committed by ExxonMobil, Sasol, Shell, RWE and Total also related to slack wax sold to end-customers on the German market.

Slack wax is the raw material used to produce paraffin wax.

The fine for Sasol was increased by 50 percent "because it was the leader of the cartel," while ENI's fine was increased by 60 percent as it had been previously taking part in similar cartels, the commission said.

A spokesman for the Total group in Paris said it had received notification and was "awaiting the reasons for the decision" in order to determine what measures are necessary.

ExxonMobil was more immediately penitent, saying in a statement that it "deeply regrets its involvement, although limited, in the infringement of competition laws through the participation of a few of the company's former employees."

"Honesty, integrity, and strict legal compliance are the cornerstones of the way ExxonMobil conducts its business," the firm added.

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