Honeywell, DuPont car refrigerant deal may be illegal — EU

Crain News Service and wire reports

BRUSSELS (Oct. 24, 2014) — U.S. supplier Honeywell International Inc.'s joint venture with chemicals company  E.I. du Pont de Nemours and Co. to produce a new refrigerant for car air conditioning systems to meet new environmental rules may be anti-competitive, the European Commission said, following a near-three year probe.

The Commission said the agreements between the two companies related to the new refrigerant — known as R1234yf — may have blocked rivals keen to participate in its development and production.

The refrigerant, which is designed to meet a European Union (EU) directive aimed at reducing the use of fluorinated greenhouse gases in car A/C systems, has pitted EU regulators against Germany and domestic carmaker Daimler A.G.

Last month the Commission ordered Germany to stop supporting Daimler's refusal to use the refrigerant with a higher “global warming potential” than the Honeywell-Dupont product within two months or face court action and possible fines.

Sales of Daimler cars in France were temporarily blocked in 2013 over their use of an older refrigerant. A French court later overturned the suspension.

The new R1234yf coolant is already used in about 2 million cars globally.

When Honeywell and Dupont announced a joint venture to construct and operate a global manufacturing plant for the new refrigerant, they said they had developed the product jointly but would market and sell it separately.

“The cooperation they entered into in 2010...may have limited its [the R1234yf refrigerant's] availability and technical development, in breach of EU antitrust rules,” the Commission said in a statement on Oct. 21.

It sent a so-called statement of objections or charge sheet setting out its concerns to the companies.

Honeywell rejected the charges, saying it had complied with EU rules.

“The allegations outlined in the statement of objections are baseless and conflict with the EU's own laws that encourage collaboration on development,” the company said in a statement.

DuPont said it was disappointed with the Commission's move and that it would defend its case vigorously. DuPont “will fight this every step of the way, as it has no basis in law or fact,” the company said in an emailed statement. DuPont “complied at all times with applicable laws” in developing and marketing the chemical, it said.

The companies can ask for a closed-door hearing to argue their case. If found guilty, they could face fines of up to 10 percent of their global turnover.

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Reuters and Bloomberg contributed to this report, which appeared on autonews.com, the website of Automotive News, a Detroit-based sister publication of Tire Business.