Johnson Controls Said to Dodge Penalties as EU Fines Lead Cartel

  • EU to issue fines within weeks for plot to lower lead prices
  • Eco-Bat, Recylex, Campine set to be fined for buyers’ cartel

Johnson Controls Inc. will escape forthcoming European Union antitrust fines after owning up to scheming with smaller rivals to slash the price of the lead they bought from scrap dealers, according to three people familiar with the case.

Eco-Bat Technologies Ltd, Recylex SA and Campine SA are still expected to be fined in the coming weeks for their role in a cartel among companies buying lead recycled from car batteries, said the people, who asked not to be named because the process isn’t public.

The fines will come just months after the EU fined truckmakers nearly 3 billion euros ($3.3 billion) for setting prices for more than a decade. The car industry has been a focus for regulators who are probing how auto suppliers coordinate to shore up their own profits.

Johnson Controls won’t be fined because it was the first company to blow the whistle on the companies’ actions, the people said. Another privately held smaller scrap metal company may also be fined, they said.

Fully Cooperating

Johnson Controls is fully cooperating with the EU’s ongoing probe into procurement practices, said Christian Riedel, a spokesman for the company in Hanover, Germany. He declined to give any further comment.

The European Commission last year sent formal complaints to five lead recycling companies, alleging they illegally agreed to reduce the purchase price for scrap lead-acid batteries, usually from cars, which are recycled to make into new products. The lower prices paid to scrap dealers helped the cartel to make higher profit margins from 2009 to 2012 in Belgium, France, Germany and the Netherlands, the EU said.

Eco-Bat set aside 21 million pounds ($26 million) to cover a fine targeting it and two units, Berzelius Metall GmbH and Societe de Traitement Chimiques des Metaux, it said in its report for the first quarter of 2016. "A number of uncertainties" over the potential fine and related costs may mean that the financial consequences "may be materially in excess of the provision" and add another 10 million pounds to liabilities, it said.

‘Tremendous Uncertainty’

Recylex said it was cooperating with the commission and declined to comment on any forthcoming fines. In its 2015 annual report, it said it didn’t make any provisions for a fine by the end of 2015 "given the tremendous uncertainty concerning the size of any fine," which cannot exceed a cap of 10 percent of the company’s yearly revenue of 38.5 million euros.

Campine NV and Campine Recycling NV said in their 2016 semi-annual report that they expected "a decision before year-end 2016" and haven’t made any provision by June 30. Campine said it "has always acted in line" with EU law and recycling regulations. The company declined to comment further.

Eco-Bat didn’t immediately respond to requests for comment. The commission in Brussels declined to comment.

Johnson Controls became an Irish company after merging with Tyco International Plc in a so-called inversion deal announced in January and completed last month. Johnson Controls’ automotive business is scheduled to spin off into an independent company, known as Adient, on Oct. 31. Once separated, the companies will be known as Adient Plc and Johnson Controls International Plc.

The recycling business will form part of Johnson Controls Power Solutions and remain with Johnson Controls International.

— With assistance by Gaspard Sebag, and Karin Matussek

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