Commission fines automotive starter battery manufacturers and association €72 million for participating in a cartel

This article is brought to you in association with the European Commission.

The European Commission has fined three automotive starter battery manufacturers, Exide, FET (including its predecessor Elettra)and Rombat, as well as the trade association EUROBAT, a total of around €72 million for participating in a long-running cartel concerning automotive starter batteries, together with Clarios (formerly JC Autobatterie), in breach of EU antitrust rules. This cartel restricted competition and may have led to higher prices for the manufacturing of cars and trucks in Europe.

Clarios was not fined, as it revealed the cartel to the Commission under the leniency programme. In parallel, the Commission has closed proceedings against automotive starter battery manufacturer Banner and the service provider Kellen.

The infringement

The Commission’s investigation revealed that, for more than 12 years, the four manufacturers, Clarios, Exide, FET and Rombat, together with EUROBAT, entered into anticompetitive agreements and engaged in concerted practices related to the sale of automotive starter batteries to automotive original equipment manufacturers (“OEMs”) in the European Economic Area (“EEA”). Automotive starter batteries are primarily used in vehicles powered by combustion engines, such as passenger cars or trucks. Lead is the most important input material and cost factor for these batteries, and battery producers pay a premium to suppliers to procure lead with the necessary quality.

The Commission found that the four manufacturers, helped by the trade association EUROBAT, agreed to create and publish premiums calculated based on their purchasing price of lead (the so-called EUROBAT premiums) in the industry publication Metal Bulletin. They also agreed to use such premiums in the price negotiations with their respective OEM customers, e.g. manufacturers of cars and trucks, to ensure that the resulting surcharge was kept at a level higher than it would have been without such agreement.

In general, a surcharge is a legitimate tool suppliers use to reflect changes in raw material costs in product prices, allowing them to transfer this cost risk to the customers. However, it is clearly illegal for suppliers to secretly coordinate to introduce and use such a surcharge as an industry-wide standard.

The following table details the duration of each company’s involvement in the infringement:

Today’s decision concludes that the conduct of the four automotive starter battery manufacturers and EUROBAT constitutes a single and continuous infringement, amounting to an infringement by object under  Article 101  of the Treaty on the Functioning of the European Union (‘TFEU’) and Article 53 of the EEA Agreement, which prohibit agreements and other restrictive business practices that may affect trade and prevent or restrict competition within the Single Market.

Fines

The fines were set on the basis of the Commission’s 2006 Guidelines on fines.  

In setting the level of the fine, the Commission considered various elements, including the average of the manufacturers’ EEA annual value of sales of automotive starter batteries to OEMs producing automotive vehicles and to their service network of authorized repairers. It also took into account the duration, the serious nature of the infringement, as well as its geographic scope, and the market shares of the companies concerned on the EEA market.

Clarios (including its parent companies Johnson Controls International PLC and Johnson Controls, Inc.) cooperated with the Commission under the leniency programme (2006 Leniency Notice) and thereforereceived full immunity for revealing the cartel to the Commission. FET (including one of its parent companies Resonac)and Rombat (including its parent company Metair)cooperated with the Commission under the leniency programme and received a fine reduction of 50% and 30% respectively.

The fine imposed on Dofin, which for some time was the parent company of Elettra, is capped to €0 as the company is currently not economically active and has no turnover. The fine imposed on EUROBAT for its facilitating role is set at €125,000 as a lump sum. Fining EUROBAT in addition to its members sends an important signal that trade associations need to make sure they do not facilitate conduct or contacts between their members that infringe competition rules.

Several companies submitted a claim for inability to pay under point 35 of the  Commission’s 2006 Guidelines on fines. The Commission carefully and objectively assessed each applicant’s financial situation and granted a reduction of the fine to one of the companies concerned. In addition, the Commission in its discretion granted several companies the possibility to pay their fine in a number of pre-set annual instalments.

The breakdown of the fines imposed on each company is as follows:

Background

Automotive starter batteries provide an electric current to the starting motor, which starts the engine in cars powered by traditional combustion engines. They also supply power to the electrical equipment of cars.

In all types of automotive starter batteries, lead is the most important input material and cost factor. To be suitable for use in automotive starter batteries, lead must be purer and have certain additives as compared to the lead commonly traded on the London Metal Exchange. Automotive starter battery manufacturers pay a premium to their lead suppliers for the procurement of lead with these qualities.

The case concerns automotive starter batteries sold to car producers in the EEA for use (i) in new cars; and (ii) as replacements (but only if sold via the car producers’ service network of authorised repairers).

The Commission’s investigation started on 26 September 2017 following an application under the Commission’s 2006 Leniency Notice submitted by Johnson Controls International PLC, including its subsidiary Clarios (formerly JC Autobatterie). Resonac (and its subsidiary FET) as well as Metair (and its subsidiary Rombat) submitted leniency applications after the Commission had sent requests for information.

On 30 November 2023, the Commission opened formal proceedings and sent a Statement of Objections (‘SO’) to five automotive starter battery manufacturers,  EUROBAT and the service provider Kellen. Responses to the SO were received between March and April 2024. Following the assessment of the SO responses and the oral hearing, the Commission has decided to close proceedings against the automotive starter battery manufacturer Banner and the service provider Kellen.

Article 101 TFEU and Article 53 of the EEA Agreement prohibit agreements and other restrictive business practices that may affect trade and prevent or restrict competition within the Single Market. The implementation of Article 101 TFEU is defined in Regulation 1/2003.

Fines imposed on companies found in breach of EU antitrust rules are paid into the general EU budget. These proceeds are not earmarked for particular expenses, but Member States’ contributions to the EU budget for the following year are reduced accordingly. The fines therefore help to finance the EU and reduce the burden for taxpayers.

More information on this case will be available under the case number AT.40545 in the public case register on the Commission’s competition website, once confidentiality issues have been resolved. For more information on the Commission’s action against cartels, see its cartels website.

Leniency programme

The Commission’s leniency programme gives companies the opportunity to disclose their participation in a cartel and cooperate with the Commission during an investigation. A successful leniency applicant will either completely avoid a potentially high fine or receive a substantial reduction from it. Further information about the Commission’s leniency programme can be found here.

Inability to pay

According to Point 35 of the Commission’s 2006 Guidelines on fines, in exceptional cases, the Commission may, upon request, take account of the company’s inability to pay in a specific social and economic context. The Commission thoroughly assesses the financial situation of the applicant concerned on the basis of its recent financial statements, projections for current and coming years, as well as ratios measuring among others its financial strength, profitability, solvency and liquidity.

Whistleblower tool

The Commission has set up a tool to make it easier for individuals or companies to alert it about anticompetitive behaviour while maintaining their anonymity. The tool protects whistleblowers’ anonymity through a specifically-designed encrypted messaging system that allows two-way communications. The tool is accessible via this link.

Action for damages

Any person or company affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages. The case law of the Court of Justice of the European Union and Regulation 1/2003 both confirm that in cases before national courts, a Commission decision constitutes binding proof that the behaviour took place and was illegal. Even though the Commission has fined the companies concerned, damages may be awarded by national courts without being reduced on account of the Commission fine.

The Antitrust Damages Directive makes it easier for victims of anti-competitive practices to obtain damages. More information on antitrust damages actions, including a practical guide on how to quantify antitrust harm, is available here.