Top truckmakers operated cartel for 14 years, says EU

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Financial Times / December 23, 2014

Europe’s biggest truckmakers operated a cartel over 14 years going back to 1997 that held up the progress of emissions-reducing technology, according to leaked documents seen by the Financial Times.

EU officials carried out raids on several truckmakers in 2011, kicking off an anti-trust investigation that led to a charge sheet being sent last month to the main manufacturers.

A “statement of objections” document states the scale and longevity of collusion alleged to have taken place between January 1997 and January 2011. It involved DAF, Daimler, Iveco, Scania, Volvo, which also owns and Renault trucks, and MAN, the whistleblower in the case.

“All competitors participated directly and throughout the full duration in all the constituent elements of the cartel,” the document said.

Officials had previously indicated only that the alleged cartel was “very old”, involved a “large number” of companies and peaked about a decade ago.

The document also states the truckmakers “agreed the timing and price increase levels for the introduction of new emission technologies” to comply with tougher Euro 3 rules on nitrogen oxide and other emissions in 2000.

EU regulations are essential to driving down these pollutants, which can cause respiratory problems. Each wave of standards brings in advanced technology that allows truckmakers to command a higher price for their vehicles and, according to some in the industry, maintain a high barrier of entry.

The six truckmakers have a market share of close to 100 percent and there are no US or Asian rivals present in Europe.

Details of the alleged cartel surfaced after truckmakers won a partial delay on new weight and dimension measures for heavy trucks, arguing that long lead times needed to be taken into account.

Manufacturers have set aside cash to deal with any potential fines, which could be up to 10 percent of annual sales.

Daimler last week said that, having reviewed the statement of objections, it would increase an undisclosed provision made in 2011 to €600m (US$731 million).

Volvo last month said it had made a provision of SKr3.7bn (US$473 million) related to the antitrust inquiry.

“Settlements will be extremely difficult here,” said Margrethe Vestager, Europe’s new competition commissioner, speaking at a press conference to announce the “statement of objections” last month. “If the case is proven, we have a very serious infringement of our antitrust rules.”

The truckmakers said they were unable to comment on the investigation, which is still under way.

Emissions and fuel economy are sensitive issues in road transport. While truckmakers have been meeting regulations on harmful pollutants, critics say they have made limited advances in fuel economy and carbon dioxide emissions, even though this represents a third of the cost consideration for haulers.

According to a European Commission strategy document published in May, CO2 emissions from heavy goods trucks rose by about 36 percent between 1990 and 2010. This was a result of greater freight demand and what the commission called “stable” fuel consumption, despite the potential for a 35 percent improvement in fuel performance using the latest technologies.

The six truckmakers contacted by the Financial Times rejected those claims, saying that advances had been made even while reducing nitrogen oxides and other pollutants, which requires special filters and exhaust recovery systems that sap fuel economy.

Acea, the European automotive manufacturers’ trade body, said: “European commercial vehicle manufacturers are world leaders in fuel efficiency, with fuel consumption down 60 percent since 1965.” It added that truckmakers were on track to further reduce fuel consumption from new vehicles by 20 percent between 2005 and 2020.

Heavy trucks are tested for emissions compliance. But unlike passenger cars, trucks are not tested for their fuel economy performance, nor is their efficiency advertised in the same way. The industry is developing a simulation tool, known as Vecto, that uses real-world emissions data and allows customers to compare models.