Tuesday, July 19, 2016

Billions in Antitrust Fines for European Truck Makers Who Cheated Road Haulage Operators

Collusion on Prices of Lorries in Cartel Which Operated for 14 Years
Shipping News Feature
EUROPE – The European Commission (EC) has found that several well-known truck manufacturers broke EU antitrust rules having colluded for around 14 years to fix the prices of their vehicles. The conspirators also agreed to pass on the costs of producing trucks complying with stricter emission rules. The Commission has imposed a record fine totalling over €2.9 billion on four heavy and medium duty truck producers, Volvo/Renault, Daimler, Iveco, and DAF. MAN managed to evade financial penalty having informed the EC of the existence of the cartel and received full leniency. Commissioner for competition, Margrethe Vestager, said:

“We have today put down a marker by imposing record fines for a serious infringement. In all there are over 30 million trucks on European roads, which account for around three quarters of inland transport of goods in Europe, and play a vital role for the European economy. It is not acceptable that MAN, Volvo/Renault, Daimler, Iveco and DAF, which together account for around 9 out of every 10 medium and heavy trucks produced in Europe, were part of a cartel instead of competing with each other. For 14 years they colluded on the pricing, and on passing on the costs for meeting environmental standards to customers. This is also a clear message to companies that cartels are not accepted."

Road haulage is an essential part of the European transport sector and its competitiveness is contingent on the prices of the vehicles used by licensed operators. The commission's decision relates specifically to the market for the manufacturing of medium, 6 to 16 tonne vehicles and heavy trucks weighing over 16 tonnes. The Commission's investigation revealed that MAN, Volvo/Renault, Daimler, Iveco and DAF had engaged in a cartel relating to:

  • coordinating prices at ‘gross list’ level for medium and heavy trucks in the European Economic Area (EEA). The ‘gross list’ price level relates to the factory price of trucks, as set by each manufacturer. Generally, these gross list prices are the basis for pricing in the trucks industry. The final price paid by buyers is then based on further adjustments, done at national and local level, to these gross list prices.
  • the timing for the introduction of emission technologies for medium and heavy trucks to comply with the increasingly strict European emissions standards (from Euro III through to the currently applicable Euro VI)
  • the passing on to customers of the costs for the emissions technologies required to comply with the increasingly strict European emissions standards (from Euro III through to the currently applicable Euro VI).

The infringements covered the entire European Economic Area (EEA) and lasted from 1997 until 2011, when the Commission carried out unannounced inspections of the firms, covered in our story at the time and predicted here a full four months earlier in 2010. Between 1997 and 2004, meetings were held at senior manager level, sometimes at the margins of trade fairs or other events and these conspiracies were compounded by phone conversations. From 2004 onwards, the cartel was organised via the truck producers' German subsidiaries, with participants generally exchanging information electronically.

Over the 14 years the discussions between the companies covered the same topics, namely the respective gross list price increases, timing for the introduction of new emissions technologies and the passing on to customers of the costs for the emissions technologies.

The decision follows the sending of a Statement of Objections to the trucks producers in November 2014. In the context of this investigation, proceedings were also opened with regard to Scania. Scania is not covered by this settlement decision and therefore the investigation will continue under the standard (non-settlement) cartel procedure for this company.

The collusion identified by the Commission concerned the new emission technologies required by the Euro III to Euro VI environmental standards, specifically coordination on timing and coordination on passing on of costs of emission technologies for trucks compliant with newly introduced emissions standards. The collusion was not aimed at avoiding or manipulating compliance with the new emission standards and the investigation did not reveal any links between this cartel and allegations or practices on circumventing the anti-pollution system of certain vehicles.

Under the Commission's 2006 Leniency Notice, MAN received full immunity for revealing the existence of the cartel, thereby avoiding a fine of around €1.2 billion. For their cooperation with the investigation, Volvo/Renault, Daimler and Iveco benefited from reductions of their fines. The reductions reflect the timing of their cooperation and the extent to which the evidence they provided helped the Commission to prove the existence of the cartel.

Under the Commission's 2008 Settlement Notice, the Commission applied a reduction of 10% to the fines imposed in view of the parties' acknowledgment of their participation in the cartel and of their liability in this respect. The total fines imposed are as follows:


Reduction under the Leniency Notice

Reduction under the Settlement Notice

Fine (€)


























Generally, the age of the cases will have ensured that manufacturers have made provision for the settlement of the huge fines. Volvo, for example, has made provisions in 2014 and 2016 totalling €650 million and stated the outstanding €20 million will be covered by an additional provision which will produce a negative impact on operating income in the third quarter of 2016. On hearing the judgement Martin Lundstedt, Volvo President and CEO observed:

“The Commission case was already more than five years under way. Without the settlement we would have been facing many more years of proceedings, with an uncertain outcome. We are now able to look forward and focus on our business. We strive to be a world leading business because we compete with the best products and services and the best employees. While we regret what has happened, we are convinced that these events have not impacted our customers. The Volvo Group has always competed for every single transaction. We have taken these events very seriously from the outset and our full cooperation with the Commission resulted in a very substantial reduction in the fine.”

Photo: Daimler, holder of the iconic Mercedes Benz name, has to stump up over a billion Euros.