Honeywell, DuPont Probed by EU Regulators on Car Refrigerant
Stock Chart for Honeywell International Inc (HON)
DuPont Co. (DD), the largest U.S. chemicals company by market value, and Honeywell International Inc. (HON) are being probed by European antitrust regulators over plans to produce a refrigerant for car air-conditioning systems.
The European Union will review agreements between Honeywell and DuPont to develop the low-emission coolant, it said in an e- mailed statement today. Regulators are probing whether Honeywell abused a monopoly position for the refrigerant and if it “engaged in deceptive conduct” when the product was endorsed by a car industry group. They will also check if Honeywell charges “fair and reasonable” licenses to rivals who want to produce it.
Honeywell and DuPont expect growth from the technology they jointly developed to meet EU environmental rules to cut greenhouse gases from air-conditioning systems. DuPont told investors this week that the refrigerant promises “nice growth and some healthy margins.” Honeywell’s specialty chemicals division has said it expects coolants to help it make “extremely solid” profits.
“The commission will examine the case as a matter of priority,” the Brussels-based European Commission said in the statement. “This investigation highlights the importance of ensuring” that agreements involving intellectual property “contribute to innovation rather than holding it back.”
Honeywell is “confident that our practices are consistent with the law” and “is committed to fully cooperating with the commission,” said Sabine Chmielewski, a spokeswoman for the company in Seelze, Germany.
DuPont “will cooperate fully with this inquiry and is confident that the commission will conclude that actions taken by DuPont complied with applicable laws, said Janet Smith, a spokeswoman for Wilmington, Delaware-based DuPont. The refrigerant was developed in response to EU rules, she said.
Arkema SA (AKE), which wants a license to make the product, filed a complaint with EU regulators over the refrigerant in April 2011 and is “satisfied” by the EU’s decision to open an investigation, said Gilles Galinier, a spokesman for the Colombes, France-based company.
EU Competition Commissioner Joaquin Almunia said this month he wanted to make sure that intellectual property rights “are used to reward inventions and motivate innovation and not as tools to foreclose access for expansion in markets.” He is also probing standards in the banking industry.
Rambus, Qualcomm Cases
European Union regulators have had mixed success with antitrust cases over standards. The EU settled a probe of memory-chip designer Rambus Inc. (RMBS) in 2009 into so-called “patent ambush.” The practice involves patent owners hiding their intellectual property so they can demand royalties from other companies forced to use the same technology once it becomes a standard.
The commission dropped a four-year probe into Qualcomm Inc. (QCOM), the biggest maker of chips for mobile phones, started after competitors complained the chipmaker was charging excessive royalties on patents.
The refrigerant developed by Honeywell and DuPont was designed to replace ozone-depleting chlorofluorocarbons, which can’t be included in new cars sold in the 27-nation EU from 2017. Honeywell and DuPont agreed last year on a joint venture to produce the refrigerant from the fourth quarter this year.
The EU antitrust authority is investigating complaints that Honeywell and DuPont may have “entered into anti-competitive arrangements” over the joint development, licensing and production of the refrigerant.
Regulators will also examine whether Honeywell disclosed patents and patent applications when the refrigerant was assessed and endorsed by the Society of Automobile Engineers, an industry group, between 2007 and 2009, and then “failed to grant licenses on fair and reasonable terms.”
The antitrust authority can fine companies up to 10 percent of yearly sales or require them to change the way they do business if it concludes that they harmed competition.
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