Volvo makes additional provision in connection with EU investigation

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Volvo Group Press Release  /  June 25, 2016

The Volvo Group has decided to make an additional provision of EUR 250 million (SEK 2.3 billion) in connection with the ongoing investigation, in which the Commission’s preliminary standpoint is that Volvo and other companies in the truck industry may have violated EU antitrust laws in the period prior to January 18, 2011. The provision will have an impact on operating income in the second quarter of 2016.

In January 2011, the Volvo Group and a number of other companies in the truck industry became part of an investigation by the European Commission regarding a possible violation of EU antitrust rules.

In the fourth quarter of 2014, the Volvo Group made an initial provision of EUR 400 million (SEK 3.8 billion) since it was likely that the Group’s financial results and cash flow would be adversely impacted by the Commission’s investigation.

At the same time, Volvo announced that the company would reassess the size of the provision on a continuous basis as the Commission’s investigation continued.

The provision made by the Volvo Group total EUR 650 million (SEK 6.1 billion, US$716.6 million) and is based on the company’s best assessment of the financial impact of the investigation at the present time.

The investigation is ongoing and the Volvo Group is cooperating fully with the authorities involved.

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Truck Maker Volvo Raises Provision for Possible EU Antitrust Fines

The Wall Street Journal  /  June 25, 2016

Swedish company sets aside another €250 million, raising total amount to €650 million

Swedish truck maker Volvo AB said Saturday it had increased by more than 60% a provision for possible fines in connection with a European Union antitrust probe.

Volvo said it had set aside €250 million (about $278 million) on top of the initial €400 million provision it made in late 2014, adding it would book the additional amount against second-quarter earnings.

The first provision was made in late 2014, shortly after the European Commission, the bloc’s top competition regulator, issued formal charges against a number of heavy-truck makers, including Volvo. The Commission has said it suspected Volvo and the other companies of participating in an illegal cartel.

Volvo said the probe targets possible antitrust violations prior to January 2011. At the time, the Commission made a series of unannounced inspections of European firms in the trucks sector.

Volvo said the total provision of €650 million is based on the company’s best assessment of the financial impact of the investigation at the present time.