The European Commission has hit Swedish automotive manufacturer Scania with a substantial €880 million fine for breach of EU antitrust rules.
Scania was found to have colluded with five other major truck manufacturers in one of the most significant cartel cases in recent years. It brings to a close the case which began back in 2011 and the fine, which is the second highest individual cartel fine ever imposed, is indicative of how seriously the Commission continues to treat breaches of competition law.
The original Commission investigation began when MAN blew the whistle on the cartel's activities. Along with MAN, DAF, Daimler, Iveco and Volvo/Renault, Scania had been engaged in price collusion of medium and heavy trucks for a total of 14 years. After receiving a statement of objections in 2014 the other manufacturers settled with the Commission, receiving €2.9 billion in fines in a decision that was previously covered on this blog. MAN avoided a penalty under the Commission's whistle blower immunity rules. Scania did not settle the case and so a full investigation was carried out under the standard cartel procedure
The Commission investigation found that Scania and the other five manufacturers had held meetings at senior management level, often on the fringes of trade fairs, as well as talking on the phone and exchanging information electronically. Ultimately it was found that the cartel had colluded on:
Prices at "gross list" level for trucks in the EEA. The "gross list" price level relates to the factory price of trucks, as set by each manufacturer.
The timing for the introduction of new emission technologies to comply with the increasingly strict European emissions standards, as well as passing the costs of these new technologies on to customers.
The case is noteworthy for the scale of the collusion which lasted for 14 years and covered the entire EEA. The Commission pointed out that members of the cartel produce 9 in 10 of all medium and heavy trucks sold in Europe, accounting for around three quarters of inland goods transport.
Fines and immunity
By blowing the whistle under the Commission's 2006 Leniency Notice MAN avoided a fine in the region of €1.2 billion. Whistle blowing is heavily incentivised by giving full immunity to the first cartel participant to confess. The rationale is that cartels will be destabilised where the members cannot trust each other to keep silent. This blog discussed recent efforts by the UK Competition and Markets Authority aimed at encouraging individuals to speak up on anti-competitive arrangements.
For cooperating with the Commission's investigation DAF, Daimler, Iveco and Volvo/Renault received a reduction in their fine. The manufacturers were also eligible for additional reduction of 10% for acknowledging their breaches of competition law under the Commission's 2008 Settlement Notice. By declining to cooperate with the Commission or agree settlement Scania did not receive any reduction. In setting the substantial fine the Commission took into account "the serious nature of the infringement, the high combined market share of all participating companies, the geographic scope and the duration of the cartel".
The investigation is a good reminder that that trade fairs and trade association meetings are a risk-area for businesses. While it might seem that 'talking shop' with fellow business people at a trade fair is normal, it can lead to information exchanges that cross the line into competition law breaches. This blog covered the CMA fines given to the Association of Model Agents and five of its members for colluding on pricing.
For Scania the finemay not be the end of this episode. Any individual or business that considers it has been affected by this anti-competitive behaviour will be able to sue them in their national courts for damages. In these proceedings the decision of the Commission is held as binding proof of the anti-competitive behaviour.
This latest fine against Scania means the total fines imposed in the trucks cartel case, over €8 billion, are now more than double those imposed in the next largest cartel case in the cathode ray tube sector. The size of the fine seems to have been motivated by the scale and duration of the collusion and perhaps also by the importance of the road haulage sector to the wider European economy.