Commission sends formal charges to Honeywell and DuPont regarding cooperation on car air conditioning refrigerant

By Gabriele Accardo

On 21 October 2014 the European Commission issued formal charges to Honeywell and DuPont, based on allegations that the cooperation agreement they entered into in 2010 on the production of a new refrigerant for use in car air-conditioning systems (R-1234yf) may have limited its availability and technical development, in breach of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) which prohibits anticompetitive agreements.

As it may be recalled (see Newsletter 1/2012, p. 5, for additional background), in December 2011, the Commission opened an investigation over the refrigerant R-1234yf, which was chosen under EU law as a more environmentally friendly product. In fact, in 2006, the EU adopted new standards on air conditioning systems in motor vehicles with the aim of reducing harmful emissions and combating global warming (Directive 2006/40/EC or MAC Directive). R-1234yf is currently the only commercially available refrigerant with a sufficiently low global warming potential to comply with the requirements of the MAC Directive, whereas Honeywell and DuPont are the only two suppliers of R-1234yf to carmakers.

The Commission’s provisional finding is that the cooperation between Honeywell and DuPont on production of R-1234yf has reduced their decision-making independence and may have resulted in restrictive effects on competition, notably limitation of the available quantities of the new refrigerant that would have otherwise been brought to the market, as well as a limitation of related technical development.

Interestingly, the Commission appears to have narrowed down the scope of its original investigation which also concerned Honeywell’s allegedly deceptive conduct during the evaluation of R-1234yf between 2007 and 2009, which resulted in that refrigerant being the only one selected in accordance with the requirements of the MAP Directive.

The selection of R-1234yf was the result of a process conducted under the auspices of the Society of Automotive Engineers, which represents the interests of all groups involved in the automotive sector. When the Commission launched the investigation in 2011, it had originally stated that in the context of the standardization process, Honeywell did not disclose its patents and patent applications while the refrigerant was being assessed. Subsequently, the Commission alleged that Honeywell failed to grant licenses on fair, reasonable and non-discriminatory (so called “FRAND”) terms, allegedly in breach of Article 102 TFEU. The preliminary investigation appears to have addressed that concern.