The European Commission has confirmed that they conducted spot checks on a number of companies in the lead recycling industry on 26th September. This has fuelled speculation that there are cartel practices related to lead scrap purchasing, having an impact on commodity pricing.
The spot checks form the initial phase of an on-going investigation into suspected cartel practices. A number of companies, including Eco-Bat, JCI and Recylex, have confirmed that they are cooperating with the authorities on this issue. The EC confirmed that the spot checks do not mean that these companies are guilty of anti-competitive behaviour, nor does it indicate the outcome of the long-term investigation.
It is suspected that the anti-competitive practices are less to do with scrap price fixing and more to do with scrap territory fixing, possibly focused in a northwest area of mainland Europe, comprising Germany and the Benelux countries. This is an area where there has been intense competition for scrap lead. It also currently has some of the highest scrap prices seen by the commodity industry in recent years.
It remains to be seen whether these spot checks will develop into a formal investigation, or if the case will be dropped. If a formal investigation is conducted, and companies found guilty of cartel practices, they could face substantial fines. Such breaches of EC policy could result in fines of as much as 10% of a companyâ€™s global turning. This could be a major blow to companies in an already struggling lead recycling market.