Global competition law circles have recently been shaken by the European Commission's record-setting fine of EUR 2.93 billion for collusion on the automotive market, imposed against Volvo, Daimler, Iveco and DAF trucks. The sanctions in question varied amongst the accused parties, with Daimler facing the largest penalty in the amount of more than EUR 1 billion on its own. Iveco's fine was set at EUR 494 million, DAF's at EUR 752 million, and Volvo's fine has been set at EUR 670 million.
The entire case was concluded under the EU settlement programme, which allows for a 10 percent reduction to be granted to parties that acknowledged the conduct which they were accused of, without contesting the findings of the European Commission's investigation. A single manufacturer – Scania – opted not to settle, and a full investigation continues into this company's affairs, while MAN – another company that participated in the collusion – received full immunity for revealing the existence of the cartel, in accordance with the European Commission's leniency programme. A majority of cartel cases in EU practice have been investigated and concluded based on information obtained from whistle-blowers. Leniency is a common incentive for cooperation with antitrust authorities - following their EU counterparts, a majority of jurisdictions in Western Balkans sport similar leniency regimes and have been eager to use them in similar fashion. Predictability, as well as consistent enforcement and fining policy have proven to be key in developing effective leniency regimes and shutting down cartels.
In order to provide some background info on the case, it should be noted that the Commission's investigation was originally initiated with dawn raids in 2011, following which the manufacturers received formal cartel charges in 2014. The truck cartel investigation had represented one of the first major acts by Margarethe Vestager as the Competition Commissioner. The investigation determined that the truck producers were colluding for 14 years (1997-2011), sometimes arranging their collaboration on meetings of senior managers at trade fairs or through phone conversations, and later on via truck producers' German subsidiaries, where information was exchanged via e-mails. The European Commission concluded that the companies devised their market behaviour through the following three activities:
1. Coordinating prices at "gross list" levels for medium and heavy trucks in the EEA
Here the "gross list" price level pertains to the trucks' factory price, as set by each manufacturer. Generally speaking, these gross list prices are the basis for pricing in the trucks industry, and they precede the final price which is decided thanks to further adjustments to these gross list prices on national and local levels.
2. The timing for the introduction of new emissions technologies
For the purpose of having medium and heavy trucks comply with the increasingly strict European emissions standards (from Euro III through to the currently applicable Euro VI).
3. The passing on to customers of the costs for the emissions technologies.
The companies' have agreed that neither would absorb the cost of introducing emission-curbing technologies, but would pass-on the costs to customers. This enabled them to raise their prices without fear that of competitive undercutting.
In the aftermath of other previously publicised happenings concerning vehicle emission measurement, these latest fines clearly show that environmental standards have been challenging for the automotive industry from a compliance standpoint. However, prohibitions on cartelisation and coordinated market behaviour have long been a staple of European Commission's commercial law. Similar rules are applicable in the Western Balkans, as well.
While explaining the case, Vestager stressed the fact that MAN, Volvo, Daimler, Iveco and DAF account for 9 out of every 10 (medium and heavy) trucks produced in Europe, and that instead of competing with each other they were part of a cartel, in turn hurting the overall European economy.
It is clear that the global trends of increasing fines for competition law infringements are not slowing down, with fines in the billions- once considered audacious- becoming less and less of a rarity. In the Western Balkans, practice has differed from jurisdiction to jurisdiction, depending on the experiences, cases and track record of each authority, with some enforcers consistently issuing multi-million euro fines, and others preferring symbolic penalties, settlements without monetary fines or stressing competition advocacy activities. However, since the legal framework has been modelled after the relevant EU rules and practice, the national enforcers, both in member states and in accession countries, are taking their cues from the European Commission. Therefore, both increased reliance on the leniency mechanism and a stricter fining policy for would-be cartelists can be expected to become a consistent sight everywhere in the region.
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