Honeywell/DuPont mount antitrust defence

EUROPE: DuPont and Honeywell will mount a defence against the EC’s preliminary view that their co-operation on the development of refrigerant HFO1234yf may have infringed EU antitrust rules.

The reaction follows today’s European Commission preliminary view that the co-operation that Honeywell and DuPont entered into in 2010, to produce the R1234yf for car air conditioning systems “may have limited its availability and technical development, in breach of EU antitrust rules”.

In April 2010, the two refrigerant manufacturers announced that they were to combine forces in the race to produce HFO1234yf ahead of the European ban on R134a for automotive air conditioning systems. Under the proposed manufacturing joint venture, DuPont and Honeywell said they would share financial and technological resources to design, construct and operate a world-scale manufacturing facility for the new refrigerant. The agreement followed an earlier joint development agreement and was said to have been initiated to enable the two refrigerant producers to meet an immediate world-wide demand that, they said, would not be possible individually.

In today’s statement, the European Commission says it has concerns that DuPont and Honeywell’s agreements may have reduced their decision-making independence and hindered competition.

A Honeywell statement maintains the claims are baseless and actually conflict with the EU’s own laws that encourage development collaborations. Thierry FJ Vanlancker, president of DuPont Chemicals & Fluoroproducts, said “DuPont has complied at all times with applicable laws in its development and commercialisation of HFO1234yf, and we plan to defend vigorously against the Commission’s allegations and preliminary conclusions.”

Background

Formal proceedings into the development of R1234yf were initiated by the European Commission in December 2011, following objections by Arkema. In today’s statement of objections, the Commission pursues this investigation regarding the production co-operation between Honeywell and DuPont but not on Honeywell’s conduct during the evaluation of R1234yf between 2007 and 2009.

Article 101 TFEU prohibits anti-competitive agreements and restrictive business practices which may affect trade between EU Member States. The implementation of this provision is defined in the Antitrust Regulation (Council Regulation No 1/2003) which can be applied by the Commission and by the national competition authorities.

A statement of objections is a formal step in Commission investigations into suspected violations of EU antitrust rules. The Commission informs the parties concerned in writing of the objections raised against them. The addressees can examine the documents in the Commission’s investigation file, reply in writing and request an oral hearing to present their comments on the case before representatives of the Commission and national competition authorities.

If, after the parties have exercised their rights of defence, the Commission concludes that there is sufficient evidence of an infringement, it can issue a decision prohibiting the conduct and impose a fine of up to 10% of a company’s annual worldwide turnover.

Reaction

Honeywell says it is confident that its practices are consistent with the law and that the Commission will conclude that it acted in full compliance with European Union competition rules.

“By collaborating on expensive and risky development, Honeywell and DuPont were able to develop 1234yf in time to meet the MAC Directive’s 2017 deadline,” Honeywell said in a statement. 

“Thanks to that swift development, HFO-1234yf is currently being used in nearly 2 million cars around the world, reducing the global warming potential of those cars’ air conditioning systems by more than 99.9%. Honeywell’s and DuPont’s work also ensured a competitive market for HFO-1234yf. Honeywell and DuPont are marketing HFO-1234yf independently and in direct competition with one another.

“Honeywell invested in HFO-1234yf at great risk because there was no guarantee of commercial success. The MAC Directive and far-sighted legislation like it have encouraged Honeywell and other companies to make the investments required to develop new products with far-reaching environmental benefits.”

Responding to the EC’s preliminary view, DuPont’s Thierry FJ Vanlancker said: “This is one step in a long process, and while it may take years to be resolved, we are confident that the Commission will ultimately conclude that actions taken by DuPont complied with applicable laws. We will fight this every step of the way, as it has no basis in law or fact.

“We are disappointed in the European Commission and in the process leading up to this point.  DuPont and Honeywell developed HFO1234yf jointly in response to the European Union’s Mobile Air Conditioning (MAC) Directive. This regulation requires automakers to use a refrigerant with very low global warming potential (low-GWP) for vehicle air-conditioning systems. The regulatory timeframe was short considering the significant challenges of developing and commercialising a refrigerant that meets all the automotive industry’s needs. This short timeframe was a primary reason for DuPont and Honeywell working jointly to develop HFO1234yf.

“Without DuPont and Honeywell’s joint development, HFO-1234yf would not have been successfully developed and brought to market, and there would today be no commercially available solution satisfying the MAC Directive’s criteria.  From the outset, the companies have marketed and sold the refrigerant separately and independently, as competitors in the marketplace. DuPont has invested heavily to develop jointly a solution that greatly reduces potential climate impact.  We have endured a host of regulatory, technical and financial challenges to be able to proudly offer this product to our customers, and we are disappointed the Commission chose to file this statement in the final days of this Commissioner’s tenure, after having looked at these facts for multiple years.

The antitrust proceedings is just one of a number of disputes surrounding the introduction of the controversial refrigerant. As well as being the subject of a number of patent disputes around the world, HFO1234yf has also been rejected by Daimler on the grounds of safety, bringing the German car manufacturer and Germany into direct conflict with the EC for breaching the MAC directive.

Related news items:

R1234yf in 7 million cars by 2016 – October 6, 2014
USA: Refrigerant manufacturer DuPont expects to see the low GWP replacement R1234yf in 7 million car air conditioning systems by the end of next year. Read more…

Industry scorns new R1234yf toxicity claims – April 9, 2014
USA and GERMANY: The bickering over R1234yf continues with German chemists making new toxicity claims and US engineers and Honeywell reaffirming its safety. Read more…