Price-Fixing Investigation

Regulators Probe Truck Makers

Produzierte Mercedes-Benz Lkw Zugmaschinen stehen am 06.06.2014 auf einem Parkplatz im Werk Wörth (Rheinland-Pfalz) der Daimler AG (Luftbild). Foto: Uli Deck/dpa +++(c) dpa - Bildfunk+++
The industry is waiting for a decision by the cartel office.
  • Why it matters

    Why it matters

    • The collusion that allegedly began in 1999 and continued until 2011 was first exposed when truck maker MAN went to the authorities, so at least one German manufacturer can expect leniency from E.U. regulators.
    •  
  • Facts

    Facts

    • Truck makers DAF, Iveco, Volvo and Germany’s Daimler and Volkswagen (via MAN and Scania subsidiaries) are under suspicion.
    • E.U. investigators conducted raids on the truck makers’ corporate offices.
    • Industry sources have no doubt the truck makers will be penalized by regulators, and the manufacturers will likely be sued by customers who say they suffered damages from the companies’ actions.
  • Audio

    Audio

  • Pdf

German vehicle manufacturers are not just having trouble with the German Federal Cartel Office in Bonn. The biggest and most difficult antitrust proceedings have been initiated by the European Commission against Europe’s truck manufacturers.

Threatened are Germany’s Daimler and Volkswagen subsidiaries MAN and Scania. And because the truck manufacturers are said to have colluded on their prices, a fine amounting to billions is being threatened from the European Union’s executive branch in Brussels for the violations.

“The lawsuit is moving forward,” said a spokesperson for Margrethe Vestager, the European commissioner for competition, on Tuesday.

Industry sources say there is overwhelming evidence and there is no doubt the truck makers will penalized.

When Brussels will present the findings of the investigation hasn’t been determined yet, the spokesperson added. Industry sources say they expect a decision this summer.

The European Commission has been conducting investigations against the most important truck makers: Daimler, the VW units, DAF, Iveco (Fiat Group)  and Volvo. Offices of the companies under suspicion have been searched by investigators, and thousands of pages of documents have been analyzed.

Fines totaling far more than €1.4 billion ($1.55 billion) could result. If fines eclipse the €1.4 billion figure, the penalty would be a record amount for such an antitrust case. The European Union can impose penalties equal to 10 percent of the sales of a cartel participant. In practice, however, the E.U. authorities usually keep below that level.

Industry sources have no doubt the truck makers will penalized. The evidence is said to be overwhelming, according to those involved. Ms. Vestager is accusing the truck manufacturers of having agreed to fix prices and delivery schedules, primarily for major customers, for several years until 2011.

To prevent competition among themselves, the truck makers pledged a kind of grandfather policy to each other. If a particular manufacturer’s regular customer was unable to get the trucks sought, the customer wouldn’t have any luck getting them from the competition either.

The parties concerned had to closely coordinate their meetings to be able to come to the arrangement. Apparently, they had opportunities to do that. Meetings between executives and marketing staffs are said to be documented by investigators, including talks held during association events.

When the Brussels competition watchdogs send notifications of fines, companies in the trucking business who were affected by the alleged cartel could sue the truck manufacturers and demand compensation. In addition, changes to the Act Against Restraints of Competition (GWB) that take effect by the end of the year will make it easier for the affected trucking firms to sue for damages.

The first steps in the damage lawsuits are in progress, according to Cologne-based lawyer Thomas Funke, who specializes in competition law. Previous antitrust lawsuits indicate the truck makers agreed to raised their prices by between 10 to 18 percent, he says.

In previous cases, the claims for damages were occasionally at the level of the fines. This could prove to be a heavy burden for the truck manufacturing industry. Although demand is recovering in Europe, the producers of commercial vehicles are struggling with a slump in orders in America, Asia and Eastern Europe. Moreover, problems exist in South America, above all in Brazil.

Playing a special role in the lawsuit is the Volkswagen subsidiary MAN. The Munich-based truck manufacturer is the chief witness for the European Commission. It was MAN officials who first drew investigators’ attention by voluntarily implicating themselves. So that VW subsidiary is likely to be spared a fine in contrast to its sister company, Scania, but not from customers’ damage claims. A number of the manufacturers have already set aside money for the expected fines.

 

Stefan Menzel is the managing editor of Handelsblatt’s website and closely follows the car industry. To reach the author: menzel@handelsblatt.com

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!