Foreign Corporation Fined $12.5 Million for Price Fixing

OTTAWA, July 18, 2000 - The Competition Bureau announced today that the German corporation SGL Carbon Aktiengesellschaft (SGL AG) has pleaded guilty to fixing prices in Canada and will pay a fine of $12.5 million. This is the largest fine ever imposed under section 46 of the Competition Act.

The Superior Court of Quebec convicted SGL AG of implementing pricing directives as part of an international conspiracy to fix prices and allocate markets for graphite electrodes. SGL AG, a leading world producer of graphite electrodes, carries on business in Canada through its subsidiary S.G.L. Canada Inc., a manufacturer of graphite electrodes located in Lachute, Quebec.

Graphite electrodes are used primarily in the production of steel in electric arc furnaces (the steelmaking technology used by all mini-mills) and for steel refining in ladle furnaces. Between 1992 and 1997 operators of electric arc and ladle furnaces in Canada are estimated to have consumed at least $440 million of graphite electrodes. Electrode prices in Canada increased by more than 90 per cent over this period.

In imposing this fine, the court took into consideration the accused's agreement to cooperate with the Bureau's ongoing investigation, its limited ability to pay, and the significant amount paid in restitution to the affected Canadian companies.

"This conspiracy is one that struck at the core of the Canadian steel industry," said Harry Chandler, Deputy Commissioner of Competition, Criminal Matters. "We are committed to defeating such ploys to reap illegal profits at the expense of Canadian businesses and consumers."

SGL AG and the other members of the cartel agreed to restrict their production capacity and to fix the prices they would charge for, and allocate the volumes they would sell of, graphite electrodes in world markets. In each market, one conspirator was designated to fix the price that other conspirators supplying that market would follow.

As a result of the international cartel, which operated from May 1992 until at least June 1997, a regime of uniform pricing existed between the two main suppliers of electrodes to the Canadian market, and alternative supply sources were basically eliminated.

SGL AG is the second company to be convicted in Canada in relation to this international cartel affecting graphite electrodes sold in Canada and elsewhere. In March 1999, UCAR Inc. also pleaded guilty for its role in the graphite electrode cartel and was fined $11 million. The Bureau's investigation into the graphite electrode industry continues.

The document filed before the Superior Court of Quebec, Criminal Division, in Hull is available here (PDF only):

SGL AG
Agreed Statement of Facts (PDF: 175 KB)
Download Adobe Acrobat Reader

For more information please contact:

Cynthia Grant
(819) 994-0349