Overview
The European Commission has recently stepped up its scrutiny of the construction chemicals sector in several EU Member states. The investigation concerns the supply of chemical additives for cement and chemical admixtures for concrete and mortar. On July 20, the Commission sent Statements of Objections (SOs) to several manufacturers and national trade associations, alleging that they may have coordinated future price increases in France, Germany and Spain.
The case is particularly noteworthy because the Commission's preliminary concerns center not only around price coordination between competitors, but also on the role of trade associations in preparing public communications concerning price increases of their members. Against the backdrop of significant cost pressure following the COVID-19 pandemic and Russia's war against Ukraine, the Commission is examining whether industry-wide exchanges crossed the line between legitimate responses to market conditions and prohibited coordination under Article 101 TFEU.
The investigation serves as a timely reminder that, even in periods of exceptional market disruption and cost inflation, competitors must continue to determine their commercial strategies and pricing independently.
Alleged Anticompetitive Conduct
The case concerns the supply of chemical additives for cement and chemical admixtures for concrete and mortar, which are used to enhance the performance and efficiency of construction materials. The investigation began with unannounced inspections by the Commission in October 2023 in several Member States.
According to the Commission's preliminary view, between 2021 and 2022, the manufacturers concerned have coordinated future price increases in response to rising raw material costs. This anti-competitive conduct allegedly took place through the preparation of press releases within national trade associations concerning the anticipated price increases and their justification. By way of example, on November 25, 2021, the German association Deutsche Bauchemie issued a press release stating that the concrete industry should prepare for significant price increases across all raw material groups used in concrete admixtures, describing those price increases as “inevitable”. The Commission has identified three separate suspected infringements relating to France, Germany and Spain.
The SOs were sent to Cemex, Chryso, Mapei, Master Builders Solutions, MC Bauchemie, Sika and TAM, as well as trade association SYNAD in France, to Cemex, Ha-be, Mapei, Master Builders Solutions, MC Bauchemie, Liesen, Remei and Sika, as well as trade association Deutsche Bauchemie in Germany, and to Chryso, Mapei, Master Builders Solutions, MC Bauchemie and Sika, as well as trade association ANFAH in Spain.
If the Commission's preliminary view is confirmed, the alleged conduct could constitute an infringement of the EU competition rules. Article 101 TFEU prohibits agreements, decisions by associations of undertakings and concerted practices that may affect trade between EU Member States and have as their object or effect the prevention, restriction or distortion of competition within the Single Market.
Following receipt of the SO, the companies and trade associations concerned can now access the Commission's investigation file and respond to the objections in writing. They may also request an oral hearing, allowing them to present their views and arguments before representatives of the Commission and the relevant national competition authorities. The Commission will then have to consider these submissions before deciding whether the alleged conduct constitutes an infringement of EU competition law.
Information Exchanges and Trade Associations
The alleged coordination of future prices is particularly significant from a competition law perspective, as coordination between competitors on pricing is a serious competition law concern. A typical way in which price coordination can arise is through the exchange of commercially sensitive information, particularly information concerning current or future pricing, intended price increases, costs, margins or commercial strategies.
The Commission's 2023 Horizontal Guidelines provide specific guidance in this regard. In particular, paragraphs 377 et seq. identify a potential collusive outcome as one of the main competition concerns arising from the exchange of commercially sensitive information. By artificially increasing transparency between competitors, such exchanges can facilitate coordination of their behavior and restrict competition. Information exchanges may be particularly problematic where they allow an undertaking to signal to competitors the conduct it would like them to adopt, or the conduct it would itself adopt in response to its competitors' conduct.
The Guidelines also recognize that commercially sensitive information may allow competitors to develop a common understanding of the terms of coordination, even without an explicit agreement. This is particularly relevant where information relates to future pricing intentions, as such exchanges may reduce the uncertainty that normally constrains competitors' ability to coordinate their market behavior. Importantly, the Guidelines also address indirect information exchanges, recognizing that exchanges through third parties, including trade organizations, may likewise reduce uncertainty between competitors and facilitate a collusive outcome.
While the Commission has not made a final finding that an unlawful information exchange occurred in the construction chemicals case, its focus on interactions between manufacturers in connection with trade association communications is therefore particularly relevant.
Key Takeaways for Businesses
Companies should exercise caution when engaging with competitors, either directly or through trade associations, industry meetings and working groups. In particular, they should:
- avoid exchanging any price related information such as future pricing intentions, planned price increases, pricing strategies, margins or other competitively sensitive information with competitors;
- ensure that information shared in an industry context is appropriately aggregated, historical or otherwise incapable of revealing an individual competitor's current or future commercial strategy;
- object clearly if discussions move towards pricing or other commercially sensitive topics, and ensure that the objection is recorded; and
- have appropriate competition law protocols and training in place for employees participating in trade associations or interacting with competitors.
Particular care should also be taken when competitors participate in the preparation of joint or industry-wide communications concerning price increases. The fact that the final communication is public does not necessarily eliminate competition law concerns arising from the underlying exchanges between competitors.
