WELCOME TO CHARLES RUSSELL SPEECHLYS.
We would like to place strictly necessary cookies and performance cookies on your computer to improve our website service.
Otherwise, we'll assume you are OK to continue. Please close this message
On 18 July, the EU Commission announced record fines for five of the six largest manufacturers of trucks for their participation in anti-competitive behaviour which contravened Article 101 of the EU Treaty.
The financial penalties totalled close to €3 billion, which outstripped the EU’s previous record of €1.4bn for a television and computer monitor tubes cartel in 2012. The Commission took into account the widespread impact and duration of the firms’ conduct. The six manufacturers are responsible for the production of around 90% of all trucks in the European Economic Area. The collusion had also spanned some 11 years.
The Commission’s investigation revealed that senior managers of Daimler, DAF, Iveco, MAN, Scania and Volvo/Renault had colluded in relation to prices and in order to delay certain emissions technology. Plans to carry out the collusive conduct had been formed through phone conversations between the rival vehicle makers and at fringe meetings at trade fairs.
The Commission’s probe focused on arrangements which had been put in place to
Part of the collusion identified by the Commission concerned the new emission technologies required by the Euro III to Euro VI environmental standards. This conduct had sought to coordinate the timing and coordination of new technology, as well as making sure that the increased costs of compliance with the newer environmental standards were passed on to consumers. The collusion was not aimed at avoiding or manipulating compliance with the new emission standards but making sure that all sellers respected the principle of customers picking up the tab.
The existence of the cartel was reported by MAN, which was granted an amnesty in fines by the Commission as a result. For the remainder, the fines would have been even higher had the majority of defendants not availed themselves of the Commission’s settlement procedure, which allows cartel participants a reduction in penalties in return for an admission of culpability. Settlement and co-operation with the EU inquiry earned defendants between 10%-20% discounts.
The fine levels were as follows:
Scania, which is owned by Volkswagen, has opted not to settle the charges it faces and the investigation into that company is continuing. Alleged offences regarding emissions technology are particularly sensitive for Scania, given Volkswagen’s alleged irregularities regarding the reporting of cars emission levels.
If this were not bad enough for the cartellists, there is now a strong possibility of them facing follow-on claims from their customers. Those who were purchasing vehicles from the cartel during its operation are likely to have suffered an overcharge resulting directly from the collusion between them. Legally, they will be entitled to compensation for the difference between the inflated, cartel price which they paid and the market rate which they ought to have been charged. Haulier groups are especially likely to sue truck makers following the Commission’s decision. Immunity granted under a leniency policy will not extend to protect businesses against adverse compensation awards.
There are lessons from this case for both suppliers and customers. For suppliers, it obviously pays to put in place a detailed competition compliance program. The facts of this case show the importance of monitoring the conduct of representatives at industry meetings, a convenient forum for competitors’ representatives to converge. A reporting protocol (such as a whistleblowing hotline) will enable employees to flag any suspicions of cartel behaviour quickly. That may give the organisation the option of claiming leniency, which in this case, meant the slate was wiped clean for MAN.
Training employees will not always prevent collusion, but it will at least reduce the probability of it occurring and enhance the chance of it being detected internally and stamped out.
For purchasers, it is important to keep an eye on tell-tale signs that suppliers may be engaged in a cartel. These include the coordination of price rises and introduction of certain technology at the same time. These may be an indication that your business is being unlawfully charged too much. A complaint to a regulator, if well founded and properly made, can put a stop to being ripped off by collusive market behaviour.