European Commission imposes record fines on truck producers after cartel settlement
This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.
On 19 July 2016, the European Commission (the "CommissionEU") announced the imposition of record breaking fines totalling €2.93 billion on four major truck producers for their participation in a cartel which coordinated pricing of trucks sold in the European Union (the "") over a 14 year period.
Operation of the cartel – exchange of commercially sensitive information
The Commission has ruled that MAN, Volvo/Renault, Daimler, Iveco and DAF infringed EU antitrust rules through collusion with one another to: (i) coordinate prices at 'gross list level' for medium and heavy trucks (trucks weighing between 6 to 16 tons and over 16 tons respectively); (ii) pass on to customers the costs for the introduction of stricter emission technologies; and (iii) coordinate the timing of their introduction of emission technologies when changing them to comply with Euro VI emissions standards.
According to the Commission's press release the infringement covered the entire EEA and lasted from 1997 until 2011. Commercially sensitive information is believed to have been initially exchanged at meetings held between the companies both on the phone and at corporate events like trade fairs. In 2004, the arrangement changed with exchanges being conducted electronically through the companies' German subsidiaries.
Record fines imposed
The record breaking fines imposed by the Commission were divided as follows:
- Volvo/Renault: € 670,448,000
- Daimler: € 1,008,766,000
- Iveco: € 494,606,000
- DAF: € 752,679,000
As whistleblower of the cartel, MAN was awarded full immunity, avoiding a fine of around € 1.2 billion. Volvo/Renault, Daimler and Iveco benefitted from reductions of 40%, 30% and 10% respectively for their cooperation with the investigation, and all parties received a further 10% reduction for acknowledging their role in the cartel and agreeing to settle the case under the cartel settlement procedure.
Scania is also under investigation in this case but chose not to reach a settlement at this time. It continues to contest the Commission's accusations although recently made a £344 million provision in its accounts in order to cover possible fines.
Potential for damages actions
Any person or company affected by the anti-competitive behaviour of the truck producers, may seek damages in the national courts of the EU Member States. Damages claims against the cartel members are expected to be extremely substantial.
The high fines imposed by the Commission reflect the large volume of sales affected by the cartel, which represents almost the entire truck market in a number of EU Member States. Some reports suggest that manufacturers could have an exposure easily hitting €10 billion. Recent claims against Visa and MasterCard have highlighted the potential for injured parties to obtain damages in respect of competition law infringements. Sainsbury's was recently awarded £68.5m in its case against MasterCard (see here for our overview of that case). Indeed, an action against the truck producers is likely to be a very straightforward case given that evidence of purchase is likely to be very easy to access.
We would expect there to be a large swathe of claims from all over the EU, with claimants ranging from small haulage firms to large manufactures, supermarkets to public sector bodies.
For more information please contact Dervla Broderick or Lucy Cass.
