David Flint and Rebecca Ferguson give an overview of the EU’s attempts to crackdown on cartels.

Earlier this year, the EU Commission announced that it was placing a renewed focus on stamping out cartel behaviour in EU markets. Since then, the EU has introduced many measures and policies aimed at uncovering and punishing cartel behaviour. The EU had previously issued its biggest cartel fine to date totalling €2.9 billion against five truck manufacturers involved in a price-fixing cartel – MAN, Daimler, Volvo, Iveco and DAF; with Scania the only company not to agree a settlement, leading to their being hit now with a fine of €880 million after a five year investigation.

Background

Truck manufacturer MAN (part of the Volkswagen group) made use of the cartel leniency policy and by exposing the cartel behaviour, they were immune from a €1.2 billion fine. MAN exposed a 14 year long cartel (from 1997-2011) that affected 9 out of 10 trucks sold in the EU. The companies had all colluded to fix prices and co-ordinate the passing on of costs of new emissions technology to customers, allowing them to protect profits. It was also shown by the Commission that the companies had colluded over when to introduce new emissions technology to meet new EU standards.

Decision

Cartels are one of the most serious breaches of competition law and competition authorities across the EU have renewed focus on uncovering and punishing this type of anti-competitive behaviour. By offering a leniency programme and reduced fines for companies who co-operate during investigations, the Commission is trying to destabilise cartels and create a mistrust that enhances the likelihood of the cartel being uncovered.

MAN reported the cartel in 2011 and was spared a fine of €1.2 billion. Four of the other companies – Daimler, Volvo, Iveco and DAF all admitted their participation in the cartel and co-operated with the Commission investigation to receive reductions in fines from 10-50%.

The fines levied against the companies were heavily reduced but still totalled over €2.9 billion – Daimler received a fine of €1billion, DAF - €753 million, Volvo - €670 million and Iveco - €495 million. This week, Scania, who were the only company not to admit participation in the cartel and negotiate a settlement, were fined €880 million for their role in the cartel. By not admitting fault and settling with the Commission, Scania were not able to have their fine reduced.

Conclusion

The Commission has been focusing recently on the automotive industry and has investigated 9 cartels and fined manufacturers over €6 billion – with investigations still ongoing. Cartels are a major focus of European Competition Law at present due to the detrimental impact they have on customers and consumers.

Scania has already made it known that it will appeal the decision to the European General Court.

It remains to be seen how many truck buyers will launch private damages actions against the companies, which could lead to further penalisation as the companies would be liable to pay damages to the buyers who were victims of the cartel. Currently, the Road Haulage Association (RHA) in the UK are pursuing the truck manufacturers for £3.9 billion in compensation in a case before the UK’s Competition Appeal Tribunal (CAT) – this amounts to around £6,000 for each of the 650,000 lorries sold in the UK between 1997 and 2011 whose prices are alleged to have been impacted by the cartel.