RHA to seek compensation from ‘cartel’ truck makers
Having sought legal advice regarding the recent price-fixing findings by the European Commission (EC) involving several of Europe’s major truck producers, the Road Haulage Association (RHA) has said it will “honour its commitment to members” by pursuing those manufacturers for compensation.
The decision follows the EC’s imposition of a record fine totalling more than €2.9 billion on four of the truck producers involved.
The Commission’s investigation, which included unannounced inspections, concluded that MAN, Volvo/Renault, Daimler, Iveco and DAF broke EU antitrust rules – and that the truck producers had “colluded for 14 years” between 1997 and 2011 “on truck pricing and on passing on the costs of compliance with stricter emission rules”.
“As the representative body with sole responsibility for UK road freight operators, we consider ourselves duty-bound to acknowledge and act upon our members’ wishes,” said Richard Burnett, chief executive of the RHA.
“They have made it clear that they feel aggrieved at the news of a truck pricing cartel and are looking to us to represent them.”
Earlier in the summer, the RHA’s board of directors, which comprises individuals from member companies elected by the membership, met to discuss the situation following what the association called “widespread anger” among hauliers.
“Their unanimous decision was that the association should progress compensation claims on behalf of its members,” said Mr Burnett.
RHA national chairman Jim French, director of PD Portcentric Logistics, added: “The process for such a large number of interested parties is complex but we have been in discussions with our legal advisors so that we can progress the matter further.
He emphasised that the Road Haulage Association would “not, itself, be benefiting from any financial action”.
Mr French added: “We are keen to maintain the amicable and close working relationship we have always enjoyed with the truck manufacturers, as they have with their customers. We would seek to act in a way which resolves the interests of our members as swiftly and as appropriately as possible.”
The RHA is not the only organisation being approached by disgruntled fleet operators seeking representation. Global law firm Hausfeld reports that it is receiving “dozens of enquiries… on a daily basis”, and says it is in touch with “hundreds of operators” across the continent ranging from large corporates to smaller firms.
Anna Morfey, a partner at Hausfeld, suggested to Transport Operator that in total, the damages cartelists could pay out may exceed €100 billion.
“A study commissioned by the EC in 2009 found that customers are on average overcharged by 18 per cent during a cartel,” she told us.
“Based on the estimated average price of a truck, that could be around €8,000 per truck – or, for a fleet of 100 trucks, €800,000. Interest can be claimed on top of that figure.”
Ms Morfey pointed out that, during the 14-year period identified by the EC, “many fleet operators will have renewed their fleets, often several times. The figures quickly mount up, giving rise to a very substantial claim.”
She continued: “In circum-stances where, as here, there is an important supplier-customer relationship involved, it is usually important for both sides to resolve the claim and allow the business relationship to continue.
“So we initially approach the cartelists or their lawyers to see if an out-of-court settlement can be agreed. How long those dialogues take will vary, but with incentive on both sides to resolve the claims, they can be dealt with in as little as a few months.
“Whereas large corporates may have the leverage (and prefer) to engage bilaterally with the cartelists, smaller firms are better off grouping together in order to get that bargaining power against the large truck manufacturers, as well as to share costs. So we are engaging with many firms on the basis of bringing a group claim.”
Hausfeld was, however, also prepared to take the route of formal litigation should it prove necessary to receive a good outcome for its clients, Ms Morfey told us.
“Litigation obviously is a longer path, and could take around three years. The EC’s decision is legally binding in court, so the cartelists’ liability is already established. The issues to be determined, therefore, are loss and causation.”
New EU rules due to come into force from the end of this year, which introduce a presumption of loss in cartel cases, would help put claimants “in a very strong position”, she added.
Hausfeld is currently in the process of gathering information from fleet operators as to what vehicles were bought, from whom, when, and at what price.
“We have engaged expert economists and forensic accountants who are working with that information to calculate the level of overcharge each operator is likely to have suffered,” said Ms Morfey.
“Once we have that, we are in a good position to open discussions with the cartelists.”
In its July statement on the cartel findings, shortly after the last issue of Transport Operator distributed, the EC described how it had concluded the cartel had operated.
It declared that between 1997 and 2004, the firms held meetings “at senior manager level, sometimes at the margins of trade fairs or other events. This was complemented by phone conversations.
“From 2004 onwards, the cartel was organised via the truck producers’ German subsidiaries, with participants generally exchanging inform-ation electronically.”
Of the aforementioned companies, MAN was not subject to a fine, since it “revealed the existence of the cartel to the Commission,” the EC said.
“All companies ack-nowledged their involvement and agreed to settle the case,” it added.
The decision follows a Statement of Objections issued to the truck producers in 2014.
“In the context of this investigation, proceedings were also opened with regard to Scania,” said the EC.
“Scania is not covered by this settlement decision, and therefore the investigation will continue under the standard (non-settlement) cartel pro-cedure for this company.”
The EC decision relates specifically to medium (6-16 tonne) and heavy (16+ tonne) trucks. According to the Commission, MAN, Volvo/Renault, Daimler, Iveco and DAF had engaged in a cartel relating to three key areas.
The first was the coordination of prices at “gross list” level within the European Economic Area. This related to the factory price of trucks, as set by each manufacturer.
“Generally, these gross list prices are the basis for pricing in the trucks industry,” said the Commission.
“The final price paid by buyers is then based on further adjustments, done at national and local level, to these gross list prices.”
The second area in which the companies were said to have engaged in a cartel was: “the timing for the introduction of emission technologies for medium and heavy trucks to comply with the increasingly strict European emissions standards (from Euro 3 through to the currently applicable Euro 6)”; and the third was the passing onto customers of the costs for these technologies.
However, the EC emphasised that “the collusion was not aimed at avoiding or manipulating compliance with the new emission standards,” in contrast to the emissions scandal that affected some diesel passenger cars and light commercials last year.
Commenting in July, the EC’s commissioner for competition, Margrethe Vestager, said: “It is not acceptable that MAN, Volvo/Renault, Daimler, Iveco and DAF, which together account for around nine out of every ten medium and heavy trucks produced in Europe, were part of a cartel instead of competing with each other.
She said the EC was sending “a clear message to companies that cartels are not accepted”.
For revealing the existence of the cartel, MAN avoided a fine of around €1.2 billion, the EC said. The other companies saw a 10 per cent reduction in their fines in view of their “acknowledgment of their participation in the cartel and of their liability in this respect”.
Meanwhile, Volvo/Renault, Daimler and Iveco had their fines further reduced for “cooperation with the investigation”.
Daimler was fined over €1 billion; DAF more than €752 million; Volvo/Renault over €670 million; and Iveco more than €494 million.
