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FNE accuses Indura and Linde of cartelizing the industrial, medical and specialty gas market, and requests a US$ 31,3 million fine

07 / 05 / 2024

On 29 April 2024, the Fiscalía Nacional Económica (FNE) sued Indura S.A. (Indura), Linde Gas Chile S.A. (Linde) and three individuals before the Competition Tribunal, accusing them of cartelizing the industrial, medical and specialty gas market. According to the FNE, this accused conduct took place, at least, between November 2019 and January 2021.

The lawsuit indicates that both companies engaged in a market sharing cartel through an agreement not to compete for each other’s customers.

This cartel affected industrial and medicinal customers who 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.

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.

Through its action, the FNE is seeking the imposition of a US$ 31,2 million fine on Indura and a US$114,000 fine on its general manager.

Regarding Linde and its executives, the FNE requested the Competition Tribunal to exempt them from the imposition of fines for their cooperation and fulfillment of the requirements to access the Leniency Program. Additionally, the FNE requested the tribunal to grant full immunity from criminal prosecution to Linde’s executives covered by the leniency application.

“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 the FNE, which is why we urge that severe sanctions be imposed” stated the National Economic Prosecutor, Jorge Grunberg, underlining the seriousness of this anti-competitive agreement.

The National Economic Prosecutor also highlighted how this case demonstrates the progress and strength of our institutions, and how the investigative tools granted by the law to the FNE are being used effectively.

“Almost 20 years ago, the FNE accused a cartel in the same market, but the companies were acquitted because there was no direct proof of the agreement. We were  afterwards empowered to wiretap communications, access phone logs, conduct searches and seizures, and implement a Leniency Program. Today, the FNE can satisfactorily affirm that it has dismantled an ongoing cartel, using each and every one of the tools entrusted to us by Congress” added the Prosecutor.

FNE’s investigation

The FNE’s investigation found 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 FNE’s lawsuit even indicates that, in an intercepted communication, executives of one of the companies referred to this agreement as a “peace and love ” situation between Indura and Linde.

The 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 the FNE’s lawsuit, the authority was able to follow the trail of this agreement because, after a complaint, it obtained authorization to wiretap the telephone lines of Indura and Linde’s executives involved in this infringement. The evidence gathered at that stage of the investigation allowed the FNE to obtain a search and seizure warrant that authorized law enforcement officers to search the accused executives’ homes, dismantling the ongoing cartel. After the raids conducted by the FNE, Linde and its executives approached the agency to confess their participation in the cartel and provide the evidence they had.

The companies

Indura is controlled by Air Products and Chemicals, Inc., an American multinational corporation active in the production and supply of industrial and medicinal gases, chemical products, equipment, and engineering services. Air Products operates in more than 50 countries, located in America, Europe, Asia, and Africa.

Linde’s final controller is Linde plc, an Irish multinational company, whose principal businesses are the manufacturing and distribution of industrial and medicinal gases, and engineering services. Linde plc has operations in more than 80 countries, located in America, Europe, Asia, Africa, and Oceania.