Chemicals firms plead guilty to price-fixing conspiracy

A total of more than $72 million (?41 million) in fines faces Belgian chemicals company Solvay, and Dutch company Akzo Nobel Chemicals International, following the admission that they participated in international price-fixing cartels in the chemicals industry, the US department of industry has announced. These are the first charges to come out of the department’s ongoing antitrust investigations into the hydrogen peroxide and sodium perborate industries.

Akzo Nobel has agreed to pay $32 million for its role in an international conspiracy to fix prices in the hydrogen peroxide market. Solvay has agreed to pay $40.8 million for fixing prices in both the hydrogen peroxide and sodium perborate markets.

According to the US department of industry, Solvay and Akzo Nobel’s criminal activities affected nearly $350 million in US commerce.

The two companies were charged with carrying out the hydrogen peroxide conspiracy by participating in conversations and meetings to discuss prices of hydrogen peroxide to be sold in the US and elsewhere; agreeing to fix prices; and issuing announcements in line with those agreements. In addition, Solvay was charged with agreeing to fix prices of sodium perborate that was sold to Procter & Gamble between June 2000 and December 2001.

’Protecting consumers from international price-fixing cartels is the division’s highest priority,’ said Thomas Barnett, assistant attorney general in charge of the department’s antitrust division. ’These types of cartel are harmful to our economy and to millions of American consumers.’ The charges were the result of ongoing criminal investigations being conducted by the antitrust division’s San Francisco field office and the Federal Bureau of Investigation.

Ready for Reach

The Chemical Industries Association (CIA) has launched a service network to support chemical companies preparing for European chemicals legislation due to come into force next year.

The CIA’s REACHReady service sets out to answer questions relating to the EU registration, evaluation and authorisation of chemicals (Reach) programme. It is also planned to act as a ’matchmaker’ service to match the best provider or consultant for a particular task to a company requiring a given service.

Alongside this, REACHReady will provide a scoping tool to identify whether a substance comes within the scope of Reach, and a ready reckoner to help companies estimate the costs of registering such a substance.

Cognis deals with Golden Hope

German chemicals supplier Cognis and Malaysian plantations business Golden Hope have announced completion of the transfer of Cognis’ global oleochemicals and plastics technology businesses to an existing 50-50 joint venture between the two companies.

Following the signing of a memorandum of understanding in July 2005, and the successful conclusion of the subsequent contract negotiations, agreements relating to the transfer of the businesses to the joint venture were signed in November 2005. Based on approvals obtained from the relevant authorities in Europe and Malaysia the transaction has now been formally concluded.

The businesses added to the joint venture (fatty acids, glycerin, oilfield chemicals, azelaic acid and pelargonic acid, and plastics technology) employ around 750 people, mostly in Germany, the US and Canada, and generate annual revenues (including sales to Cognis) of around €570 million (£392 million).

Linde to take over BOC

UK gas company BOC has agreed a takeover by German industrial group Linde for ?8.2 billion.

The deal will create a world leader in industrial gases and is widely considered the final large consolidation step in the industry.

Linde says the combination will create an opportunity to deliver synergies throughout the group, prior to one-off expenses, of approximately €250 million (?172 million) a year by 2009. These synergies will be predominantly based on joint supply management optimisation and combined procurement volumes and a reduction in selling, general and administrative expenses.

The offer is subject to the satisfaction or waiver of European and US competition authority clearance pre-conditions and the requisite approvals of BOC’s shareholders and the English courts. Given the complementary product portfolios of both companies, Linde is confident that any pre-conditions can be satisfied. Linde currently anticipates this will occur by the end of May 2006.

If the pre-conditions are satisfied by that time, the transaction is expected to be completed in the third quarter of 2006.

China’s energy needs greater than predicted

China has reportedly underestimated the amount of new power generation it will need to meet demand, requiring an additional $180 billion (£103 billion) to be spent by 2020.

International consultancy firm Capgemini forecasts that the country will need another 280 gigawatts (GW) of electricity generation by 2020, as well as the 950GW planned, according to a report in the Financial Times.

Colette Lewiner, head of energy, utilities and chemicals at Capgemini, said: ’The China power market will require, on average, 48GW of new capacity every year, which is equivalent to two-thirds of the UK’s total installed capacity.’

BASF and construction chemicals

German chemicals giant BASF has reached an agreement with speciality chemical firm Degussa, also of Germany, to acquire Degussa’s construction chemicals business. The purchase price for equity is just under €2.2 billion (?1.5 billion). As a result, the transaction value for BASF is €2.7 billion.

The transaction, which still requires approval from the relevant authorities, is expected to close by the middle of 2006.

The global construction chemicals market is valued at around €13 billion and is attractive in view of annual growth of about four to five per cent, relatively stable margins and high potential for innovation, says BASF.  

Union issues Teflon warning

A coalition of environmental pressure groups and the union United Steelworkers (USW) in the US has filed a petition to have perfluorooctanoic acid (PFOA) listed as ’a chemical that is known to the state to cause cancer’ under California’s Safe Drinking Water and Toxic Enforcement Act of 1986.  

PFOA is used to make Teflon cookware and other consumer and industrial products. DuPont is the only industrial producer of PFOA in the US, according to a release from USW. Various stain and grease repellents applied to textiles, carpeting and paper food packaging may also break down into PFOA.  

’PFOA is a highly controversial substance that studies have documented causes liver, pancreatic, and testicular cancer in animals,’ reads the petition. ’Numerous studies have shown that non-occupational exposure to PFOA occurs daily, in people of all ages, from infants to the elderly, and that the chemicals may persist in human blood for years.’