EU charges 10 construction chemical firms with cartel price fixing

The European Commission provisionally found that 10 construction chemical groups and three trade bodies colluded to raise prices after the pandemic and Russia's invasion of Ukraine.

The European Commission said Monday it issued a Statement of Objections against 10 construction chemical companies and three trade associations, alleging they operated a cartel to raise prices of chemicals used in cement, concrete and mortar between 2021 and 2022. The charges follow a three-year investigation into coordinated price increases that would breach EU competition rules, the bloc's executive arm said.

"The companies are suspected to have colluded to justify price increases via press releases prepared within trade associations," the commission said in its statement, citing higher raw material costs driven by the pandemic and Russia's full-scale invasion of Ukraine in February 2022 as the backdrop for the alleged coordination.

The companies under investigation include New York-listed Cemex, Swiss-listed Sika, and Chryso, which is owned by Paris-listed Saint-Gobain. Also named were Mapei, Master Builders Solutions, MC Bauchemie, TAM Groupe, Ha-be, Germany's Liesen and Remei. The three trade associations cited are France's SYNAD, Germany's Deutsche Bauchemie and Spain's ANFAH. The companies and trade bodies span France, Germany and Spain, the commission said.

If found guilty, the companies and trade associations face fines of as much as 10 percent of their global annual turnover under EU competition rules. Each entity can request an oral hearing before commission representatives before a final ruling.

Saint-Gobain, which acquired Chryso in 2021, referred to a 2023 statement saying it cooperated with investigators and continued to "see no reason to expect any material financial impact for Saint-Gobain." None of the other companies or trade associations immediately responded to requests for comment.

The case marks one of the European Commission's most significant cartel actions in the construction materials sector in recent years. The last major EU cartel case in building materials involved a 2010 probe into the cement sector that resulted in fines totaling about 330 million euros against several producers. The current investigation targets a different segment — chemical additives that improve the performance of cement and concrete — but underscores the commission's continued focus on price coordination in the construction supply chain.

Sika shares fell 2.15 percent in early afternoon European trade Monday, while Saint-Gobain shares slipped 0.55 percent. Cemex rose 1.05 percent in premarket trading in New York. The divergent moves suggest investors are pricing in varying degrees of exposure to potential fines, with Sika's higher share of revenue from construction chemicals making it more vulnerable to a penalty.

The commission's Statement of Objections does not prejudge the outcome of the investigation. If the companies fail to reach a settlement, a final ruling could take 12 to 18 months, during which the affected businesses face uncertainty over potential penalties and reputational damage in the European construction market.

This article is for informational purposes only and does not constitute investment advice.