- Italian Antitrust Authority Imposes € 22 Million in Fines on Ten-year LPG Cartel
- April 19, 2010 | Author: Stefano Macchi di Cellere
- Law Firm: Jones Day - Milan Office
On March 24, 2010, the Italian Antitrust Authority (IAA) issued a decision finding the three main Italian liquefied petroleum gas (LPG) suppliers guilty of setting up a cartel to fix the prices of LPG in cylinders and small tanks to be sold in the Italian market, thus infringing Article 101 of the EU Treaty (formerly Article 81). This case has attracted attention because this cartel managed to keep itself secret for so long and it was possible to successfully uncover the activities only with the cooperation of one of the cartelists.
The IAA fined Butan Gas S.p.A. and Liquigas S.p.A. over € 22 million, while the third supplier obtained full amnesty, having cooperated in full during the proceedings and sought leniency (pursuant to Article 15, paragraph 2-bis, of Italian law No. 287/1990).
The IAA started an initial investigation on April 2008, after a few customers complained that the cost of LPG in Sardinia was higher than in the rest of the country. The investigation advanced only when significant valuable information was offered by the third supplier, whose cooperation was required as a condition of leniency. At first the IAA had believed that the market affected was limited to the sale of LPG cylinders in the Italian Region of Sardinia. After the third supplier lodged its leniency application in October 2008 and provided information on the full reach of the cartel, the IAA expanded the scope of its investigation. Ultimately, the IAA alleged that the cartel affected the sale of LPG in small tanks, in addition to the market for the sale of LPG in cylinders, and all of Italy, not just Sardinia. The IAA found that the three suppliers had a combined market share of 40% in LPG in cylinders and 36% in LPG in small tanks, thus controlling a significant part of the Italian market for the sale of LPG for domestic use.
The IAA determined that, during the period 1995 to 2005, the three suppliers coordinated the price of LPG in cylinders and in small tanks. According to the IAA, the evidence it collected showed that the top managers of the three suppliers held frequent private meetings to discuss their price-fixing strategy and monitor the cartel. The IAA also relied on parallel changes in the prices of LPG in cylinders and small tanks as indicating coordination among the suppliers. In particular, the IAA determined that, between 1995 and 2005, 74-80% of the three suppliers’ decisions to modify their price lists were coordinated.
In light of these determinations, the IAA found that the three suppliers had infringed Article 101 by establishing and operating a ten-year cartel to fix prices of LPG in small tanks and cylinders to be sold in the Italian market.
The IAA imposed fines that were significantly larger than similar past cases: almost € 5 million for Butan Gas and over € 17 million for Liquigas. In determining these fines, the IAA took into account the extraordinarily long duration of the cartel (10 years) and the seriousness of the infringement (both EU and Italian law define price-fixing cartels as one of the most serious type of antitrust law infringement). The IAA decided not to fine third supplier, given its complete cooperation with the IAA.
This case also reflects the increasing trend of Italian companies, especially international players accustomed to demanding competition law compliance programs, to cooperate with enforcement authorities in antitrust investigations. Especially where a company may be able to negotiate leniency, cooperation with authorities can be the best route to avoid liability for past antitrust violations.