European Commission Fines Truck Manufacturers Record €2.93 billion for Cartel Conduct
On 19 July 2016, the European Commission (Commission) imposed fines totaling €2,926,499,000 on four truck producers (39824 – Trucks). The fine is the highest ever imposed on members of a cartel by the EU competition regulator. The case is also noteworthy because it is the first Commission prohibition decision following “Brexit” and could thus become a test case to see whether the UK remains a jurisdiction of choice for follow-on damages actions.
The Trucks Cartel
The Commission found that MAN, Volvo/Renault, Daimler, DAF and others infringed Article 101 of the Treaty on the Functioning of the European Union by colluding for 14 years in the market for the manufacturing of medium (weighing between 6 to 16 tons) and heavy trucks (weighing over 16 tons). The infringement covered the entire EEA and lasted from 1997 until January 2011.
The infringement consisted of the coordination of factory prices of trucks; the coordination of pricing for new emissions technologies that were required to meet stricter emissions standards (from Euro III through to the currently applicable Euro VI); and the coordination of the timing for the introduction of those emissions technologies. In view of the recent Volkswagen emissions scandal, the Commission clarified, in its press release, that the collusion concerning emissions technologies was not aimed at avoiding or manipulating compliance with the new emissions standards.
The fines imposed on the individual companies are as follows:
The fines levied on Daimler and DAF are the highest fines ever imposed on individual companies. Until now, the fine imposed on Saint Gobain in the Carglass cartel was the highest at €715,000,000.
As a whisleblower in this case, MAN received full immunity from fines and avoided a fine of over €1.2 billion. Similarly, Volvo/Renault, Daimler and others received reductions in their fines for their cooperation with the investigation under the Commision’s leniency program (40%, 30% and 10% respectively).
In addition, MAN, Volvo/Renault, Daimler and DAF all received a 10% reduction for settling with the Commission.
The fines are high because of the high value of sales of the cartelised trucks as well as the wide geographic coverage and the long duration of the infringement. It is also probable that the high market share enjoyed by the infringing truck manufacturers (approximately 90%) exacerbated the gravity of the infringement. Once the non-confidential version of the decision is published, it will also be interesting to see how the delaying of the introduction of environmentally-friendlly technologies, which is not Commissioner Vestager’s “idea of competition”, was weaved into the assessment of the gravity of the infringement.
Shortly after the announcement of the fines, and in expectation of the high amount of damages than could potentially be awarded, a number of initiatives have been taken to pursue damages claims. Since the Trucks decision is the first prohibition decision after the UK voted to leave the EU, claimants face interesting jurisdictional choices in light of the possible consequences of “Brexit”. This includes the loss of the binding effect of Commission decisions on UK courts and the non-implementation of the Directive on Antitrust Damages Actions.
Scania’s co-infringers acknowledged their involvement in the cartel and settled with the Commission. Scania, on the other hand, chose not to settle and has thus forgone a 10% fine reduction. Therefore, Scania’s conduct will continue to be investigated under the full antitrust procedure (the Trucks case is therefore a hybrid settlement case). Scania is reportedly contesting the geographic coverage of the agreement on pricing and its involvement in the delaying of the introduction of emissions technologies.Under the full antitrust procedure Scania may, if successful, receive a lower fine than it would have received had it settled pursuant to the settlement procedure. . However, as the Timab case has shown (T-456/10), withdrawal from the settlement procedure does not always guarantee a better outcome for the withdrawing company and it will be interesting to see whether Scania’s strategic choice to drop the settlement procedure will pay off.
Scania’s strategic choice may perhaps appear intriguing for some, considering that both MAN, an immunity recipient, and Scania form part of the same “undertaking” as Volkswagen AG. However, MAN’s immunity application does not protect Scania. It is not known whether MAN applied for immunity before Volkswagen AG became its majority shareholder. However, even if Scania was identified in MAN’s immunity application, the Commission is not obliged to extend to one sister company the benefits of a leniency application afforded to another sister company (See case T-411/10). Scania, in any case, would not have been able to benefit from MAN’s immunity application unless it had cooperated with the Commission regarding its own participation in the cartel (or unless the above-mentioned judgment (T-411/10) is overturned on this point by the Court of Justice).
The Trucks case will in no doubt serve as a serious warning to would-be cartelists not only in terms of fines but also in terms of civil damages claims. This case clearly shows that a cartel is costly for companies.
Moreover, it will be interesting to see the outcome of the continuing investigation into Scania. This is because a withdrawal from the settlement procedure does not necessarily result in a better outcome for the withdrawing company.
Furthermore, given legal uncertainties arising out of the Brexit vote, it will be of great interest to monitor the jurisdictional choices that will be made by damages claimants.