EU slaps record $3.2B fine on truck cartel

BRUSSELS, Belgium (UPDATED) – The European Union (EU) slapped its biggest ever fine of nearly 3 billion euros ($3.2 billion) on Europe’s top truckmakers on Tuesday, July 19, accusing them of colluding to fix prices and dodge the costs of stricter pollution rules.

Senior managers from Daimler, DAF, Iveco, MAN, and Volvo/Renault hatched the plan in a “cozy” Brussels hotel and kept it going for 14 years, the European Commission said.

“We are imposing the highest fine ever for a single cartel, but there are good reasons for this,” Competition Commissioner Margrethe Vestager told a press conference.

“In particular this cartel involves a very large market and continued for a very long time.”

Germany’s MAN tipped off the European Commission about the collusion at the highest level, triggering an investigation that began with raids on large truck manufacturers in 2011.

The 5 manufacturers account for 9 out of every 10 trucks sold in Europe, meaning that the case had a major bearing on the operation of the free market in the EU, Vestager said.

“Our investigations showed that a meeting in Brussels was the start of this long-lasting truck cartel,” said Vestager, a former Danish finance minister.

“The first meeting… was organized right here in January 1997 in what seems to be a cozy hotel and it was the beginning of a 14-year collusion,” she said.

“Senior managers” ran the cartel until 2004, sometimes meeting quietly on the sidelines of trade fairs, and after that it was organized at a lower level, mostly by email.

The commission’s previous record of a 1.5-billion-euro ($1.7 billion) fine dates back to 2012 when 7 TV and computer screen makers, including LG Electronics and Philips, were found guilty of running a decade-long price-fixing scheme.

Pollution costs ‘dodge’

The charge sheet includes accusations of price-fixing, but also alleges the existence of a secret agreement by the companies to delay and then pass on the costs of anti-pollution technology to consumers.

This accusation is particularly embarrassing in the wake of revelations last year of pollution test cheating by Volkswagen that has rocked the auto industry. The commission said its investigation found no connection to the Volkswagen case.

“Unfortunately, none of the 2.93 billion euro settlement fine has actually been dedicated towards remediation of environmental damage, unlike the partial VW Dieselgate settlement in the US,” said Jos Dings, of Transport & Environment, an environmentalist lobby in Brussels.

Germany’s Daimler received the biggest fine of 1 billion euros, followed by DAF of the Netherlands at just above 750 million euros.

The fines were in fact reduced from original estimations due to the companies’ cooperation and “take into consideration turnover of companies, length, and size of the market,” Vestager said.

A 6th company, Sweden’s Scania, has refused the commission’s settlement and an investigation is ongoing, she added.

MAN received full immunity for blowing the whistle on its fellow companies.

In a statement, the company said it held “a clear belief in free and fair competition (and) does not tolerate any unfair business practices or illegal conduct.”

Heavily-fined Daimler meanwhile said it “takes its responsibilities very seriously in terms of competition law and has taken all appropriate measures to ensure that all employees act in accordance with applicable law.”

Dutch company DAF said the hit was lower than it expected and that it was in “excellent financial condition.”

The huge fine comes less than a week after Vestager filed new anti-trust charges against US internet giant Google.

Coming down hard on the 5 European companies will also counter accusations by Washington that Vestager unfairly targets US firms. – Rappler.com