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“Dawn Raids” in the bioethanol industry – the investigations continue…

The European Commission is conducting further investigations into the bioethanol industry, in addition to those carried out by the EFTA Surveillance Authority and the Office of Fair Trading.

Businesses operating in the bioethanol industry are advised to ensure that their competition law compliance programmes are up to date and are being actively implemented.

What has happened?
The European Commission has announced that it has conducted a further unannounced inspection (“dawn raid”) in Spain at the premises of a company active in the production, distribution and trading of ethanol.

The Commission is concerned that suppliers have colluded to distort price information submitted to a Price Reporting Agency.

What is the background to this?
In May 2012 Pannonia Ethanol complained to the European Commission about the operation of Platts Market-On-Close system used to determine ethanol prices, reporting that it was able to set ethanol prices below those reported by Platts.

On 14 May 2013 the European Commission carried out unannounced inspections at Shell and BP’s offices in the UK, and at the offices of Argos Energies in the Netherlands. In conjunction with the Commission, the EFTA Surveillance Authority also carried out an inspection of Statoil’s premises in Norway on the same day.

The investigations concerned an alleged agreement to collude in reporting prices to Platts, to prevent others from participating in the price reporting process, and disrupt the false reporting. An additional inspection was also carried out at the premises of Abengoa in Spain.

The European Commission followed the May 2013 investigation with further unannounced visits to the premises of the Belgian ethanol producer, Alcogroup, and at the premises of Lantemannen Agroetanol in Sweden in October 2014.

These inspections were carried out because the Commission was concerned that Alcogroup or its subsidiaries had colluded with other firms to manipulate the reference price of ethanol in a certain direction from 2007.

Similar investigations were commenced in Japan and the United States of America after the “dawn raids” in Europe.

On 24 March 2015 the European Commission carried out a further unannounced investigation in Spain.

What might happen next?
The European Commission and domestic competition authorities – such as the UK’s Competition and Market’s Authority – may carry out further investigations either into the same alleged price fixing arrangements or in respect of any other anti-competitive activity that may have been discovered as a result of regulator’s investigations in the last three years.

Companies found to have participated in price-fixing or other anti-competitive arrangements may be fined up to 10% of their world-wide turnover and may be sued by anyone who has suffered damage as a result of the unlawful conduct.

What does this mean for me?
Companies operating in the bioethanol industry may become involved in the current investigation or in any investigation resulting from the competition authorities inquiries in the last three years.

It is common for competition authorities to carry out “follow-on” investigations into other arrangements as a result of information gained in the course of an investigation.

As a result of all this, companies should ensure that their competition compliance policies are up to date and being implemented properly.

A properly implemented competition compliance policy will minimise the risk of the company inadvertently infringing competition law and, in the event of any advertent or inadvertent breach of competition law, will minimise the sanctions imposed on the company.

Companies should also consider whether they may assist the competition authorities by providing the authorities with evidence of anti-competitive arrangements operated by their competitors.

Also, companies operating in the bioethanol industry should consider whether they may have suffered loss and damage as a result of any anti-competitive conduct and how they may recover such loss and damage.

How can Ward Hadaway help?
Our lawyers have wide-ranging experience and expertise in assisting clients in competition law matters.  We support our clients in taking pro-active compliance measures as well as managing the impact of investigations by competition authorities or recovering loss and damage arising as a result of anti-competitive activity.

For more details on how we can help, please get in touch.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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