Exxon Mobil, Total, Sasol Fined by EU for Wax Cartel

By Matthew Newman

Oct. 1 (Bloomberg) -- Exxon Mobil Corp.,Total SA, Eni SpA and six competitors were fined 676 million euros ($957 million) by European Union regulators over claims they participated in a cartel that fixed the price of paraffin wax used in candles, paper cups and plates.

Sasol Ltd., South Africa's biggest fuel supplier, was fined 318 million euros, the highest penalty levied on the nine wax producers by the European Commission in Brussels. Total, Europe's third-largest oil company, was fined 128 million euros.

``There is probably not a household or company in Europe that has not bought products affected by this `paraffin mafia' cartel,'' said EU Competition Commissioner Neelie Kroes in a statement. ``Such illegal cartel behavior cannot and will not be tolerated.''

Kroes has made fighting cartels one of her main priorities since her five-year term began in 2004. The penalties are the fifth this year and the fourth highest against a single cartel. The biggest price-fixing fine was 992.3 million euros in 2007 against five elevator makers.

Irving, Texas-based Exxon Mobil, the world's biggest oil company, was fined 83.6 million euros and Repsol YPF SA, Spain's largest oil company, received a 19.8 million-euro penalty.

Johannesburg-based Sasol said it would likely appeal the ruling and that it is liable with two units to pay 250 million euros.

Closed Total Unit

``Sasol is surprised by and does not understand the reasons for the magnitude of this fine and will be studying the reasons for the finding,'' the company said in a statement.

Total's fine was for acts allegedly committed between 1992 and 2005, the year the company closed down its paraffin wax operations, Total spokeswoman Elisabeth de Reals said. The company will wait to receive the reasons for the fine before deciding on an appeal.

Exxon Mobil said in a statement that it ``deeply regrets its involvement'' in the cartel and the conduct was limited to the participation of a few of the company's former employees.

Kroes said the fines are high because the conspiracy lasted 13 years and the market for paraffin wax, which is used in a wide variety of industries from car tires to chewing gum, is worth 500 million euros a year.

Shell Cooperation

Royal Dutch Shell Plc, Europe's largest oil company, avoided a 96 million-euro fine because it was the first company to cooperate with inspectors, Kroes said.

The cartel ran from 1992 to 2005. Conspirators first met at the Blauer Salon or Blue Saloon in Hamburg, Germany. Shell referred to the price-fixing as the ``paraffin mafia'' in internal documents, Kroes said.

Other meetings were held in ``top hotels'' in Milan, Vienna, Budapest, Paris, Munich and Strasbourg, France, she said.

Sasol's penalty was increased by 50 percent because it was the cartel's leader. The fine for ENI was increased by 60 percent to 29.1 million euros because it previously took part in cartels, according to the commission.

Sasol said that as a result of its ``cooperation and support'' of the EU cartel investigations, the commission reduced the base amount of the fine by 50 percent.

Sasol's wax unit generated 629 million rand ($76.2 million) of the company's 25.6 billion rand operating profit in the 2007 fiscal year, it said in its annual report.

The fine is a ``negative, these things are always horrible to deal with,'' Paul Theron, a fund manager at Vestact in Johannesburg, said in an interview today.

In addition, H&R Wasag AG and its Tudapetrol unit were fined a total of 36 million euros; Mol Nyrt., Hungary's largest oil producer, was fined 23.7 million euros and RWE AG, Germany's second-largest utility, was penalized 37.4 million euros.

Salzbergen-based H&R Wasag said in a statement said it will challenge the levy. An Eni official had no immediate comment.

To contact the reporter on this story: Matthew Newman in Brussels at Mnewman6@bloomberg.net.