Bid-rigging, price-fixing and market-sharing – these practices were applied by three companies dealing with the delivery of mining products. As a result, mines had to pay for these goods twice as much. Participants to the agreement - Minova Ekochem, A. Weber and Schaum-Chemie Mikołów were fined by the President of UOKiK with a sanction exceeding PLN 18 mln

Under antimonopoly law it is not allowed to enter into competition-restricting agreements, including price-fixing, bid-rigging, or market-sharing. Prohibited practices may result, inter alia, in increasing prices of products and services offered by cartel members. Furthermore, their influence on tender results causes that public funds are not spent effectively – the state budget and all tax payers lose as well.

In December 2011, the President of UOKiK instituted the proceedings against producers of specialist products for coal mining. It revealed that three companies - Minova Ekochem, A. Weber and Schaum-Chemie Mikołów – had entered into a tender collusion, fixed prices and shared the market. The prohibited agreement regarded tenders held by mines and mining companies for the supply of polyurethane adhesives as well as phenolic and urea foams. These products are used for preventing fire and methan hazards underground, e.g. isolation of main gates, filling the space between behind roof bars, rock-mass consolidation, filling slots and isolating crossing beds with hallway excavation, and are sold mainly by way of tenders held by mines and coal companies.

Cooperation with many institutions provided evidence for the existence of cartel. Information obtained from public prosecutor's office gave grounds for taking actions. In the course of explanatory proceedings, UOKiK was cooperating with the Internal Security Agency (pl. Agencja Bezpieczeństwa Wewnętrznego). Also, hearing witnesses provided data vital to this case.

The conducted proceedings revealed that prohibited agreements had been made during meetings following the call for tenders. In most cases, board members and sales and marketing executives were involved. – During these meetings it was fixed which companies would obtain the public procurement, their market share and prices, which would be offered in a tender. Consequently, mines were overcharged for specialist products – comments Małgorzata Krasnodębska-Tomkiel, President of UOKiK.

Bid-rigging and price-fixing

Tenders called by coal companies were divided by them based on particular tasks. Agreement participants were fixing, which of them would win the tender and prices to offer. The undertaking identified as the winner was submitting the cheapest bid, while others demanded more for their services so as to give the impression of fair competition. Alternatively, they did not apply for a contract with a mine. Prices of adhesives and foam, jointly fixed, were so high that companies didn’t even make such calculations, or analyze the price of resources to produce them.

Market-sharing

When fixing the winners of paricular bids, undertakings intended to keep their current market share.  When it comes to polyurethane adhesives, Minova Kochem was, as stated by a witness, initially entitled to 50-60% of deliveries, later approx. 48% (this share didn’t refer to procurement for the LW Bogdanka mine, which was to be fully operated by Minova Ekochem), whereas other colluding parties were supposed to enjoy an equal market share. As far as phenolic foams are concerned, approx. 60% of orders was to be for A. Weber, and the remaining part – to Minova. Schaum Chemie was appointed a leader in the sale of urne foams – the company was given about 50% market share, other cartelists – approx. 25% each.

Results of this agreement

The companies were making arrangements from 2005, or earlier. First tenders, where undertakings were competing with each other, were called in August, 2010, and concerned the delivery of chemicals for Kompania Węglowa in 2011. Since then, the prices offered by undertakings have decreased by about 50%. All leading adhesives and foam producers, who in most tenders were the only bidders, got involved in the collusion. This means that for 5 years or more, mines and coal companies (Kompania Węglowa, Jastrzębska Spółka Węglowa, Lubelski Węgiel Bogdanka and Katowicki Holding Węglowy) were forced to pay approx. double prices for products under the agreement. This affected their cost of operation, and indirectly the price of coal they traded.

Financial sanctions

The President of UOKiK fined collusion participants with a sanction exceeding in total PLN 18 mln*. The decision is not final, it can be appealed against to the court.

Decision concerning the collusion of manufacturers of mining products has already been the ninth judgement in prohibited agreements issued by the President of UOKiK in 2013. Still there are next 38 pending antimonopoly proceedings – 13 concerning bid-rigging.

Additional information for the media:
Małgorzata Cieloch, Spokesperson for UOKiK
Department of International Relations and Communication
Pl. Powstańców Warszawy 1, 00-950 Warszawa
Phone: +48 22 827 28 92, 55 60 314
Fax +48 22 826 11 86
E-mail: [SCODE]bWFsZ29yemF0YS5jaWVsb2NoQHVva2lrLmdvdi5wbA==[ECODE]

*Participants to the agreement were imposed the following fines:

• Minova Ekochem – PLN 13 136 847
• A.Weber - PLN 2 841 943
• Schaum-Chemie Mikołów - PLN 2 170 020