Complaint against Dow Chemical/Union Carbide merger
European Commission January 21st 2000
Directorate-General for Competition
Directorate B S Merger Task Force
Avenue de Cortenberg 150
Fax (32-2) 296 43 01
Reference: COMP/M.1671 S Dow Chemical/Union Carbide
Observations on notified merger
Dow Chemical and Union Carbide have notified and sought approval for a planned merger, received by the European Commission on 29 October 1999 (OJ 9.11.1999 C 321/3). In its decision of 22 December 1999 to initiate proceedings according to Article 6(1)(c) of Regulation 4064/89 the Commission invited interested third parties to submit their observations on the proposed operation (OJ 8.1.200 C 5/7).
In the interest of victims and family members of victims of the Bhopal Gas Disaster of December 2.3, 1984, who, as victims of crimes with universal jurisdiction have an interest in securing their legitimate claims for damages; in the interest of consumers who are legitimately concerned by whether or not an enterprise, which is active in several EU Member States and established, Ina., in the UK, which is avoiding charges for "grave violations of international law and fundamental rights" through "unlawful, reckless and depraved indifference to human life in the design, operation and maintenance of the Union Carbide of India Ltd." and which is active in a field involving considerable risks, can be presumed to assume its responsibility for possible damaged caused in the future; in the interest of European citizen's who, as the ultimate source and holders of the legislative powers of the EU, have a legitimate interest in whether or not a legal person which by a competent court of law has been declared "a proclaimed absconder" due to its obstructions of justice should be allowed to avail itself of the benefits of European law in order to obtain regulatory approval, and in the interest of a sound application of European competition la and policy, for which we as Members of the European Parliament carry our responsibility as elected representatives, we would like to submit the following observations which we believe should be taken into account in the investigations launched by the Commission pursuant to Article 6 (1) (c) of Regulation 4064/89 as well as in the decision to be taken on the notified merger. In our view they constitute compelling obstacles to an approval of the notified merger, a condition of which must be that the pending claims against Union Carbide are resolved.
The planned merger between Union Carbide and Dow Chemical must obtain regulatory approval from the antitrust authorities of the United States and the Competition authorities of the European Union in order to be effectuated. According to Section 13D of the Securities and Exchange Act of 1934 both companies must disclose if there are any legal cases pending against them. However, Union Carbide and Dow have made brazen misrepresentations to the authorities in the United States in their official filings in which they expressly warrant and represent as follows:
"there are no . . . criminal . . . actions, suits, claims, hearings, investigations or proceedings pending . . . . No investigation or review by any Governmental Entity with respect to it or any of its Subsidiaries is pending . . . ." (see Registration Statement by The Dow Chemical Company and Union Carbide Corporation, as filed with the Securities and Exchange Commission on October 5, 1999, Article V: Representations and Warranties).
As these statements do not correspond to reality and cannot be but intentionally misleading , which we will show below, they constitute a criminal offence under US law. Such misrepresentations are not only in breach of a technical norm but affect the very core of a system, the aim of which is to enable "corporations, shareholders and others to adequately evaluate the possible effects of a change in substantial shareholding". Providing false information is, thus a sufficient ground for refusal or suspension of approval of a merger under US law. Furthermore, as the claims for damages against Union Carbide in pending law suits amount to billions rather than millions of US dollars, the potential effect of damages awarded against the corporation, including possible penalties, amount to billions rather than millions of Euro, the misrepresentations concern circumstances which are vital for a correct assessment of the assets and economic situation of Union Carbide.
The law suits referred to are the following:
A federal class action lawsuit has been filed against Union Carbide for its reckless and racially discriminatory policies which caused the worst environmental disaster in history in Bhopal, India in 1984. This action has been filed in the Southern District of New York federal court (Bano et al. v. Union Carbide et al., 99 Civ. 11329
Charges of criminal negligence and manslaughter have been pending against Union Carbide in the Bhopal District Court since 1991. The Indian Supreme Court mandated the prosecution of the company as an essential condition of approving the $470 million settlement without which the compromise would constitute "a serious miscarriage of justice".
The grounds of the charges are, in brief, the following : The conduct of Union Carbide in the management of its facility in Bhopal resulted in the devastating leak of massive amounts of methyl isocyanate ("MIC") into the city killing thousands and injuring many thousands of its residents. Union Carbides operation of the UCIL facility evinced a complete disregard of any emergency-preparedness or minimal safety precautions, resulting in widespread death, severe permanent physical and psychological trauma, as well as grave risk to life, health and security of tens of thousands of the residents of Bhopal. Union Carbide also faces claims based on the widespread and severe contamination and environmental pollution of soil and drinking water caused by the companys operation of the UCIL facility. These claims are asserted in addition to, and separate and apart from, Plaintiffs claims arising from the Bhopal Disaster which resulted in toxic exposure and injury to the same community of victims of the toxic gas release of December 203, 1984. Charges against Union Carbide include also liability for civil contempt, abuse of judicial mandate and evasion of lawful process, as well as actual and constructive fraud, as a consequence of their total failure to comply with the lawful orders of the courts of both the United States and India. Further, the selective arrangements for safte and emergency facilities constitute discrimination against fundamental human rights, aggravated by gravity and extent of the consequences which recklessly were risked.
The Bhopal District Court has repeatedly served summons and notices to appear for trial through the United States Department of Justice on Carbide's corporate officers. Union Carbide has been served, in its headquarter in Denver, by the US department of Justice, representing the Indian judicial authorities, with letter rogatory. The Court has even served summons on Union Carbide through Interpol which the company has disregarded. In April of 1992, the Chief Judicial Magistrate ruled that the prosecution was being intentionally frustrated by Carbide's continuing obstruction of justice and declared that the company was "a proclaimed absconder" i.e. a fugitive from justice.
The companys has also constantly refused to disclose medical and toxicological research on the chemical to which Bhopal victims were exposed to, claiming that this research constitutes a "trade secret", thus refusing to participate with the knowledge, the privililedged holder of which the corperation is, in the attempts to diminish the damage and suffering caused by its conduct. The arrogant conduct of the corporation is symbolized by the fact that, instead of assuming its responsibilities under law for the Bhopal disaster Union Carbide, in one of its annual report to its shareholders, boasted that the suffering of nearly half a million individuals in Bhopal had cost it a mere 43 cents per share. Indeed, Union Carbide has publicly refused to even apologize to the survivors of the Disaster for its discriminatory and reckless conduct.
With reference to the above said we would like to present the following grounds for declining approval or suspending and conditioning approval, under Regulation (EEC) 4064/89, to the notified merger between Dow Chemical and Union Carbide:
1. Union Carbide is intentionally avoiding serious criminal charges as well as substantial claims for damages. As a proclaimed absconder it should not be able call upon the resources of law and avail itself of the benefits of European law in order to obtain regulatory approval;
2. The effects of a disolution of Union Carbide as a legal entity and person on the criminal proceedings pending against Union Carbide for crimes, including crimes against human rights, as well as on the claims for damages by victims of these crimes, must be examined before aproval is given in order to ensure that proceedings are not obstructed or victims and successors of victims damaged;
3. Before approval can be granted pursuant to Article 8 of Regulation 4064/89 the claims against Union Carbide have to be settled. As long as these substantial claims are pending an assessment of Union Carbide for the purpose of the correct application of Article 2 of Regulation 4064 is not possible, wherefore a decision according to Article 8(1) of the Regulation cannot be made;
We therefore call on the Commission to suspend its decision according to Article 7 of Regulation 4064 and to make the fullfillment of the legal obligations of Union Carbide, resulting from the Bhopal Gaz Disaster of 20 December 1984, an absolute precondition for the approval of the merger between Dow Chemical and Union Carbide.
Paul Lannoye, MEP, Patricia McKenna, MEP,
President of the Greens/EFA the Greens/EFA
in the European Parliament