EU Nails Truck Manufacturers For Price Fixing & Emissions

19 July 2016

The Wall Street Journal and other media outlets are reporting that the European Union has fined five truck makers with its highest-ever cartel fine of around €3 billion (around $3.32 billion) for colluding on prices and the implementation of emissions technologies.

The European Commission, the bloc’s antitrust regulator, said Volkswagen AG ’s  MAN SE,  Volvo AB,  Daimler AG,  Paccar Inc. ’s DAF and  CNH Industrial NV ’s Iveco colluded for 14 ears, between 1997 and 2011, on the factory prices of medium and heavy trucks.

The Wall Street Journal report said the commission said the truck manufacturers coordinated on when to implement new emissions technologies and agreed to pass the extra costs of complying with the stricter environmental standards onto customers, the EU said.

Daimler faces the largest fine of around €1 billion, followed by DAF with penalties of €753 million. Volvo’s fine is around €670 million and Iveco around €500 million. MAN hasn’t been fined, avoiding a penalty of around €1.2 billion, because it revealed the cartel to the commission, the EU said. Reportedly, part of the settlement with the European Commission cut potential fines by at least 10 percent in exchange for promising not to challenge the decision in court, on top of other discounts for cooperating with regulators.

The truck makers acknowledge their involvement and agreed to settle the case, the EU said.

At a news conference, EU Competition Chief Margrethe Vestager divulged more details about how senior managers at the companies founded the cartel in January 1997 when they met in “a cozy hotel” in Brussels.  She said the truck makers met regularly to manage the cartel, sometimes at the margins of trade fairs and other events.

The companies then changed their approach in 2004, Vestager said. For the remaining duration of the cartel, the collusion was organized by the truck makers’ subsidiaries in Germany, she said, adding lower-level managers also exchanged their information by email.

The commission sent the truck makers a formal charge-sheet in November 2014, several years after opening its investigation and raiding the companies’ premises. The EU at the time also opened proceedings against Scania, another Volkswagen company, but said this week that the company didn’t participate in the settlement decision and the investigation into the firm would therefore continue.  Scania said it fully cooperated with the commission, but didn’t agree to a settlement because it doesn’t accept the EU’s accusations, Wall Street Journal reported.

Once again, announcements like this brings back memories for the brings back memories of a similar controversy involving on-highway diesel engines in the late 1990s.

In October, 1998 seven diesel engine manufacturers signed an agreement with the U.S. Environmental Protection Agency (EPA) — known thereafter as the Consent Decree — to pay $1.0 billion in fines, fund clean fuel projects and pay production costs to produce new cleaner engines. In addition, the next stage of emissions regulations were enacted two years before their scheduled implementation dates.

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