European construction chemicals firms face cartel investigation

Risk managers in the huge European construction chemicals sector are facing up to a new risk brought by the recent decision by the European Commission to carry out unannounced inspections in partnership with the UK and Turkish anti-trust authorities to investigate a potential cartel. The construction chemicals market is big and growing rapidly in response to a surge in need for improved and upgraded infrastructure, such as bridges, buildings, highways and airports, and rise in demand for infrastructure development. Allied Market Research published a report this week that estimates the sector generated $49.9bn in value in 2022 and is expected to reach $88.1bn by 2032 on the back of annual CAGR of 65 from 2023 to 2032. But leading European players in the sector such as Switzerland-based Sika and France-based Saint-Gobain – both of which confirmed they were targeted by the raids – will not take full advantage of this global boom if they are embroiled in lengthy and reputationally damaging legal and regulatory actions. The Commission said late last month that it carried out the inspections because it has concerns that the inspected companies may have violated EU antitrust rules that prohibit cartels and restrictive business practices (Article 101 of the Treaty on the Functioning of the European Union). The construction chemicals affected by the inspection include chemical additives for cement and chemical admixtures for concrete and mortar. These are ingredients that are added to cement, concrete and mortar to modify and improve their properties and provide them with specific qualities, said the EC. The Commission officials were accompanied by their counterparts from the relevant national competition authorities of the member states where the inspections were carried out. The EC confirmed that the inspections were conducted in coordination with the UK Competition and Markets Authority and the Turkish Competition Authority. The Commission has also been in contact with the United States Department of Justice, Antitrust Division. “Unannounced inspections are a preliminary investigatory step into suspected anticompetitive practices. The fact that the Commission carries out such inspections does not mean the companies are guilty of anti-competitive behaviour, nor does it prejudge the outcome of the investigation itself,” the EC explained. French construction group Saint-Gobain has since confirmed that it was one of the firms targeted by the investigation but stressed that it does not see any financial impact from the probe. “At this stage we see no reason to believe there will be an impact for Saint-Gobain,” the company said in an email to news agency Reuters. It said inspections had taken place at its construction chemicals business unit site in Turkey. Shares in Swiss construction chemicals maker Sika fell as much as 7.4% on the day that the EC announced the antitrust raids at unnamed construction chemicals companies. Sika later confirmed to Reuters that investigations had taken place in connection with a suspicion of price fixing. A spokesperson said that even though the company was not aware of “any culpability”, it was cooperating fully with the authorities.

European construction chemicals firms face cartel investigation

Want to read this article?

Read Next

International SOS warns of ‘burnout epidemic’

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

International SOS warns of ‘burnout epidemic’

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

Want to read this article?

Read Next

International SOS warns of ‘burnout epidemic’

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

Related Articles