14 years of price fixing

It started with a meeting in a ‘cosy hotel’ in Brussels back in 1997. Truck CEOs had come together to discuss something that would guarantee their companies’ profits for the years to come. This meeting marked the beginning of a cartel that would last for the next fourteen (!) years. MAN, Volvo/Renault, Daimler, Scania, Iveco and DAF all participated and jointly fixed prices and delayed the introduction of emission technologies.
In 2016 the Commission punished truckmakers with a record €2.93 billion fine.

Long story short…

It took many years for the authorities to find out but finally in 2011 the Commission raided the truckmakers’ offices after it had received a tip from a whistle-blower – MAN. Finalising the investigation into the “huge and complex” trucks cartel took another 5 years but when the verdict was reached it was singularly damning:

“The European Commission has found that MAN, Volvo/Renault, Daimler, Iveco, and DAF broke EU antitrust rules. These truck makers colluded for 14 years on truck pricing and on passing on the costs of compliance with stricter emission rules. The Commission has imposed a record fine of € 2 926 499 000.”

Source: http://europa.eu/rapid/press-release_IP-16-2582_en.htm

Is this the end of the cartel case?

Only partially. First of all, the cartel settlement does not cover Scania. So the Commission will continue its investigation and procedures against Scania who might have to pay a (possibly greater) fine at a later stage.

Secondly, the cartel fine penalises truck makers for having broken the EU’s competition rules but does not compensate hauliers for the damage they have suffered. Haulage industries all over the continent are assessing how they can get compensation from the truck makers. There already are reports of follow-on claims, potentially worth billions of Euros, against the five truck makers.

Is the cartel fine excessive?

No, the €2.93 billion settlement fine on truck makers is a record in absolute terms, but it is still possible that the industry has profited from the cartel given the enormous profits they have made because of the cartel. Given typical annual truck sales of 350,000 in the EU, over the 1997-2011 years truck makers sold approximately five million trucks. Excluding trucks sold by Scania and MAN and trucks under 6 tonnes, the companies fined today sold an estimated 3.5 million vehicles over the period. The €2.93 billion fine hence represents around €850 per vehicle.

The compliance costs for Euro III-VI (from a Euro II baseline) averaged around €3,500 per truck over the period. It follows that if the industry colluders only agreed to a relatively modest degree of overpricing for compliance costs, the cartel has been profitable in retrospect – even taking the fine into account. For comparison, Euro VI trucks were initially sold [1] with an industry-wide €10,000 premium, not €2,000, which was the additional estimated cost of EURO VI technology.

What should be done with the cartel fine?

An interesting question is what should happen to the cartel fine. Should it just flow into the EU’s coffers (or worse, into the coffers of EU governments where the truck makers have their HQs?). We don’t think so.

The EU should use the money to the benefit of the damaged parties which are in this case the environment and the hauliers. So we propose the fine should be directed towards research and development of cleaner, more energy-efficient vehicles (the US supertruck programme could be an inspiration), or the accelerated electrification of transport.

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Record fine
trucks sold per year
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trucks sold over the period 1997-2011
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Average compliance cost

Contact our experts:

William Todts

Director, Freight and Climate
+32 (0)495 799 505

Stef Cornelis

Safer and Cleaner Trucks Officer
+32 (0)484 27 71 91 s

Pierre Dornier

Communications Officer
+32 491 865 263

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