Lawsuit looming for truck manufacturers after their cartel is exposed
07 July 2017
A number of truck manufacturers are facing a joint action lawsuit following the revelation that they have been working together to form a cartel, affecting values in the industry.
MAN, Volvo/Renault, Daimler, Iveco and DAF broke EU antitrust rules and were fined a total of €2.9 billion in July 2016, with MAN escaping any part in this through its exposure of the cartel to the Commission. At the time, all companies acknowledged their involvement and agreed to settle the case.
Now, in Britain, road hauliers are being encouraged to join a legal action against the manufacturers involved. Lawyers estimate that the claim will be valued at hundreds of millions of pounds with claimant businesses joining the action from across Europe.
The London office of Hausfeld, a US law firm, is leading the action and has obtained third-party funding to finance the claim. A joint statement from the lawyers and Burford Capital, which is providing the money, said the funding package would support claimants suing in the wake of the European Commission's ruling a year ago.
According to Hausfeld and Burford, any business across the European Economic Area that purchased or leased medium-duty or heavy-duty trucks from any of the five companies can claim compensation. They say the claim would be for any loss suffered as a result of the higher prices that they had to pay for trucks as a result of price fixing, together with interest since the date of purchase.
In addition, the Road Haulage Association (RHA) is also encouraging fleet businesses to join its mass claim. The industry body estimates that around 650,000 trucks were sold in the UK between 1997 and 2011 - the 14-year period that the cartel was deemed by the European Commission to have been in operation.
According to the group, an average compensation claim of £6,000 (€6,800) could be attainable per truck, giving a potential lawsuit amount of £3.9 billion (€4.4 billion). The second-hand truck market is also said to have been affected by the cartel.
The UK claim is being paid for by Therium Capital Management, a specialist litigation funder, which is understood to have amassed a multimillion-pound amount to see the claim through to its conclusion. Backhouse Jones, a solicitors, and Exchange Chambers, the barristers, will lead the claim on behalf of the RHA.
According to a report by the European Commission, the manufacturers coordinated their prices at a ‘gross list’ level, discussed the timing for the introduction of emissions technologies to comply with Euro 3 and Euro 4 regulations, and passed on the costs of emission technologies to their customers. These actions took place over a period of 14 years, in which time thousands of fleet companies have been affected.
At the time, 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 nine 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.’
The existence of cartels is not new to the automotive market. In June 2017, a number of vehicle lighting manufacturers were fined by the EU Commission for taking part in a collusion, one of many in the parts market to have come to light in recent years.
This includes a cartel in the bearings market, which was uncovered in 2014. Now, vehicle manufacturer Daimler is looking to sue SKF, a parts manufacturer involved in the fixing scandal, to recover costs it believes it overpaid as part of the price fixing.
A statement released by SKF states: ‘We have been informed of the initiation of a lawsuit, with a claim for damages, by Daimler AG against SKF GmbH, as a consequence of the settlement decision by the European Commission for violation of European competition rules. Daimler has filed the lawsuit with the Landgericht Nürnberg-Fürth in Germany. Daimler requests payment from SKF in the amount of at least €59 million plus interest and reimbursement of costs. SKF strongly believes that the activities sanctioned by the European Commission have not caused any damage to its business partners.’
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