BASF S.E. is suing material companies Celanese Corp., Clariant, Orbia Advance Corp. SAB de CV and Westlake Corp. claiming collusion on the price of ethylene. The Germany-based chemical giant filed a lawsuit with the court in Munich on Jan. 9.
The lawsuit alleges damages amounting to $1.45 billion in relation to infringements of competition law on the ethylene purchasing market.
In 2020, the European Commission fined Switzerland-based Clariant, Mexico-based Orbia, and Irving, Texas-based Celanese in a total of $271 million for colluding to depress ethylene procurement prices, in violation of European Union antitrust laws. Houston-based Westlake was not fined because it revealed the cartel to the commission.
The companies took part in a cartel concerning purchases on the ethylene merchant market between December 2011 and March 2017. They colluded to buy ethylene for the lowest possible price. All four companies acknowledged their involvement in the cartel and agreed to settle the case in 2020. Clariant was fined over $161.5 million, Celanese over $85 million, and Orbia over $22.9 million.
Now, BASF's lawsuit claims the cartel's depression of ethylene procumbent prices caused it massive damages.
Ethylene purchasers usually buy ethylene under supply agreements. As the purchase price of ethylene is very volatile, ethylene supply agreements refer to a pricing formula to reduce the risk of price volatility. This formula includes a so-called "monthly contract price" (MCP), an industry price reference resulting from individual negotiations between ethylene buyers and sellers.
The Commission's investigation found that Celanese, Clariant, Orbia, and Westlake coordinated their price negotiation strategy to influence the MCP to their advantage and to the detriment of ethylene sellers like BASF. They also exchanged price-related information.
The collusion practices, prohibited by EU competition rules, covered the territory of Belgium, France, Germany and the Netherlands.
Reacting to the lawsuit, Clariant said it 'firmly rejects the allegation and will adamantly defend its position in the proceedings'.
The company added in a statement that it has "substantiated economic evidence" that the conduct of the cartel did not produce any effect on the market.
The remaining parties have not yet put out a statement.