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Paraffin Wax

August 2009

HAUSFELD LAUNCHES SECOND CARTEL LAWSUIT IN A MONTH

International claimant law firm Hausfeld & Co LLP (Hausfeld) has launched its second High Court cartel action in the space of a month. The firm has commenced proceedings against industry giants Shell and Exxon Mobil for their involvement in the paraffin wax price fixing cartel. The cartel took place throughout Europe for a period of 13 years between 1992 and 2005 and involved seven other major producers of paraffin wax. The European paraffin wax market is estimated to be worth almost €500 million.

Paraffin wax is used in a wide variety of products including candles, waxed paper, paper cups and plates. Hausfeld has issued the claim on behalf of several large European candle manufacturers, and is in the process of being instructed by additional candle manufacturers as well as other substantial wax purchasers seeking to take action against the cartelists. The sales at issue for all claimants run into the hundreds of millions of euros.

In October 2008 the European Commission imposed fines totaling €676m on nine corporate groups involved in the production of paraffin wax and slack wax (the raw material required for the manufacture of paraffin wax) for participating in the cartel. Shell was not fined because it revealed the existence of the cartel to the Commission. Exxon Mobil was fined almost €84m. The infringement decision by the Commission forms the basis of this action against Shell and Exxon Mobil, because in follow-on damages actions before national courts, a Commission decision is binding proof that the anti-competitive behaviour took place and was illegal.

In order to allow the claimants to bring this action, Hausfeld negotiated an innovative agreement with specialist after-the-event insurer FirstAssist Legal Protection to provide them with protection against disbursements and adverse costs risks arising from the case.

This is the second High Court cartel action that Hausfeld has launched in London in the space of a month, following its claim on behalf of Waha Oil Company against Dunlop for its involvement in the marine hose cartel. In September 2008 Hausfeld lawyers commenced proceedings against British Airways for its involvement in the air cargo cartel.

Anthony Maton, partner in Hausfeld & Co LLP, comments:

“The paraffin wax cartel operated for 13 years throughout Europe. This action has been commenced to offer our clients and potentially hundreds of other businesses who have been affected a means to recoup their considerable losses. We are able to offer claimants an innovative funding package that minimises the threat of incurring prohibitive legal costs for cartel actions and maximises their chances of recovery, and we would therefore urge those affected by the paraffin wax cartel to come forward and contact us.

“This is the third cartel action that we have launched in London during the space of a year, which demonstrates that the UK is increasingly becoming the European forum of choice for the private enforcement of cartel abuse.”

Background – the paraffin wax cartel

- Paraffin waxes are used in a wide variety of products such as candles, waxed paper, paper cups and plates, the wax coating on cheese, chemicals, tyres and car components as well as in the rubber, packaging, adhesive and chewing gum industries. The market is estimated to be worth almost €500m. Slack wax is the raw material required for the manufacture of paraffin waxes.

- Between 3 September 1992 and 28 April 2005, the producers of paraffin waxes and slack wax operated a cartel in which they, amongst other things, fixed prices for paraffin waxes.

- The European Commission’s investigation started with surprise inspections in April 2005, prompted by an application for immunity lodged by Shell.

- On 1 October 2008, the Commission announced that as a result of its investigation it had imposed fines totaling €676m on nine corporate groups involved in the production of paraffin wax and slack wax: ENI (Italy), ExxonMobil (USA), Hansen & Rosenthal (Germany), Tudapetrol (Germany), MOL (Hungary), Repsol (Spain), Sasol (South Africa and Germany), RWE (Germany) and Total (France).

- As Shell was the first company to come forward with information about the cartel under the Commission’s 2002 Leniency Notice it received full immunity from fines.

 

Practice Areas: Antitrust / Competition

 

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