Price Fixing

A Juggernaut Fight

  • Why it matters

    Why it matters

    Truck makers including Daimler, MAN and others are potentially facing long and costly law-suits from freight forwarders in the wake of the European Commission’s record billion-euro fine for price fixing.

  • Facts

    Facts

    • The E.U. Commission in July fined European truck makers nearly €3 billion for price fixing and delaying the introduction of new technologies against emissions.
    • Freight transporters are getting ready to sue for damages.
    • A law firm representing some of the forwarders sees total damages of €7.2 billion.
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    Audio

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Freight transporters are preparing to sue truck manufacturers for several billions over price fixing. Source: Patrick Seeger / Dpa.

Freight forwarding is a tough enough industry as it is: The cost of fuel, drivers and tolls, not to mention cut-throat competition, allow trucking companies to just barely turn a profit at best.

So when the E.U. Commission condemned truck manufacturers for price fixing in July, it gave freight carriers something to feel angry about. The record €2.9 billion ($3.2 billion) fine sent a clear message: Truck manufacturers cheated their clients using inflated prices.

Freight transporters are now readying a counter-attack and want to see their financial losses covered. Lawsuits against truck makers have already been filed in Ireland and Turkey, and now the industry also wants to see some action in Germany.

The first compensatory lawsuits could be filed by the middle of next year, Christopher Rother of the Berlin-based Hausfeld law firm told Handelsblatt.

Hausfeld has been mandated by around 1,000 companies to date with a total of 75,000 affected trucks, Mr. Rother said. That number is now set to rise. A dedicated website has been set up to collect smaller shippers’ claims. By the end of the year there will likely be several thousand plaintiffs, Mr. Rother said.

“The cartel lasted for 14 years, and involved high-priced goods. Whoever causes large damages has to expect high compensation claims.”

Thomas Funke, Antitrust lawyer, Osborne Clarke

Hausfeld cooperates with the Hamburg-based IT service provider Financialright, which is already bundling claims of Volkswagen customers affected by the ‘dieselgate’ emissions cheating scandal.

The plaintiffs’ lawyers already smell blood. In the 14 years that the cartel existed , approximately ten million trucks were sold throughout Europe, according to the European Commission. The number of companies affected is lower, however, because forwarders each operate a number of trucks, large players over 1,000.

Hausfeld attorney Mr. Rother estimates the price fixing resulted in a whopping €100 billion ($109.5 billion) total loss for trucking companies – about €10, 000 per truck. There’s a slim chance cartel members will be made to pay anything close to this in damages, according to the lawyer’s experience. But it still could be painful.

Besides Daimler and Volvo, Iveco, MAN and DAF were also involved in the affair, according to the E.U. Commission. Cartel proceedings against Scania are still underway. The Swedish subsidiary of VW rejects the accusations.

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The companies declined to comment on the current proceedings. A spokesman for MAN merely said there is no evidence of customers suffering any financial damage. MAN’s reticence is likely due to the fact that the company itself reported the cartel to the authorities.

“The core price-fixing allegations relate to the coordination of gross list prices,” wrote MAN general counsel Martin Gstaltmeyr to a customer in a letter. “But in practice, these played no role in specific purchase negotiations. We can’t assume any damages in your case,” continued the letter, which Handelsblatt has seen. According to industry circles, Daimler, the world’s leading truck manufacturer, wants to at least examine to what extent customers’ claims may exist.

It is difficult to predict how high damages might ultimately be. “The cartel lasted for 14 years, and involved high-priced goods. Whoever causes large damages has to expect high compensation claims,” said antitrust lawyer Thomas Funke of the Cologne-based Osborne Clarke law firm.

János Morlin of the Rössner firm in Munich, which currently represents about 70 potential claimants, puts the damage per truck at roughly 15 percent of its purchase price. On this basis, the customers’ financial damage would be as high as €7.2 billion ($7.9 billion). “But we will consult economic opinions before filing any claims,” Mr. Morlin said.

The writing is on the wall for the truck manufacturers involved in the cartel: They should brace themselves for a slew of lengthy, expensive trials.

 

Martin Murphy specializes in the automotive, defense and steel industries. Volker Votsmeier is an editor with Handelsblatt’s investigative reporting team. To contact the authors: murphy@handelsblatt.com, votsmeier@handelsblatt.com.

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