Chile’s national competition authority Fiscalía Nacional Económica (FNE) is suing Indura (Indura), Linde Gas Chile (Linde) and three unnamed individuals, accusing them of running a cartel in the industrial, medical and specialty gas market.
In a statement, FNE states the irregularities occurred between November 2019 and January 2021. FNE is seeking a $31.2m fine for Indura and $114,000 fine for its general manager.
“The lawsuit indicates that both companies engaged in a market sharing cartel through an agreement not to compete for each other’s customers,” it stated.
This alleged cartel affected industrial and medical customers that use gases for their processes, involving a wide range of sectors, such as metallurgical, pulp and paper production, forestry, construction, aquaculture, food, laboratories, mining, oil refinery, steel, glass manufacturing and hospitals, among others, according to the statement.
The allegation states the anticompetitive agreement was reached and implemented by “high-level executives within the companies; the general managers of Indura and Linde, along with the commercial manager of the latter”.
Jorge Grunberg, National Economic Prosecutor, said, “The cartel affected goods that are extremely relevant for multiple areas of our economy and the provision of health services. This case is particularly important for FNE, which is why we urge that severe sanctions be imposed.”
FNE’s investigation alleges that the agreement began in a meeting between the general managers of both companies, on November 11, 2019, in a cafe in Santiago.
After that meeting, Indura and Linde started developing an anticompetitive understanding that allowed them to allocate clients through a “gentlemen’s agreement” or “non-aggression” pact, the statement adds.
FNE says its investigation revealed that to comply with the agreement and not compete for customers served by the other company, “Indura and Linde refrained from participating in contracting processes, offered intentionally high prices to avoid taking deals, abandoned negotiations if customers were interested in their proposals, and withdrew submitted offers if they were awarded”.
According to FNE’s lawsuit, the authority was able to follow the trail of this agreement because, after a complaint, it obtained authorisation to wiretap the telephone lines of Indura and Linde’s executives involved in this infringement.
The evidence gathered from the wiretap allowed FNE to obtain a search and seizure warrant that authorised law enforcement officers to search the accused executives’ homes, dismantling the ongoing cartel, FNE states.
Indura “categorically denies” FNE’s allegations of collusive practices between itself and a competitor industrial gas company.
“Indura prioritised saving lives and worked hard to ensure essential medical oxygen supply to Chile’s stressed health system during the COVID-19 pandemic and beyond. There is no merit to any claim that Indura unduly benefitted in any way,” according to a statement.
“During FNE’s investigation period, Indura conducted its own extensive internal investigation and separately enlisted third-party specialists to conduct independent investigations, including a forensic audit and market analysis, none of which indicated that any collusion occurred. Indura will continue to comply with the legal process and execute our business with integrity and in full compliance with competition laws.”
Air Products acquired a majority stake in Indura in 2012.
Linde cooperation
Regarding Linde and its executives, FNE requested the Competition Tribunal to exempt them from the imposition of fines “for their cooperation and fulfilment of the requirements to access the Leniency Program.”
Additionally, FNE requested the tribunal to grant full immunity from criminal prosecution to Linde’s executives covered by the leniency application.
Linde said it became aware of an investigation initiated by the Chilean National Economic Prosecutor’s Office (FNE), which involved two company executives, on January 26, 2021.
“Linde’s internationally established policies and protocols allowed the company to submit a request to FNE within 24 hours to apply for the leniency mechanism, in order to actively collaborate with the agency’s investigation,” according to a statement.
“Linde immediately initiated an internal audit, suspending the general manager and one of his direct reports to ensure the independence of the process. Once the investigation was concluded, in December 2021, the firm terminated the employment of both executives.”
The statement added that the actions of the former executives did not represent Linde’s values or its way of doing business, which is why the company delivered all the information collected to FNE.
