Truckmakers Get Record $3.24 Billion EU Fine for Cartel

[kscarbel2]

Bloomberg  /  July 19, 2016

Truckmakers, including Daimler AG and Paccar Inc.’s DAF Trucks, agreed to pay European Union regulators a record 2.93 billion euros ($3.24 billion) in fines for fixing truck prices over 14 years.

Daimler got the largest penalty of 1.01 billion euros and DAF will pay 752.7 million euros as part of a settlement with the European Commission that cut potential fines by at least 10 percent.

VolvoAB and its Renault trucks brand face a 670.4 million euro fine/

CNH Industrial NV’S Iveco will pay a 494.6 million euro fine.

Fines are high because "this cartel concerns a very large market and continued for a very long time," EU Competition Commissioner Margrethe Vestager told reporters in Brussels Tuesday. The companies’ actions fixed the prices for around nine out of every 10 medium and heavy truck sold in Europe, she said.

The auto industry is the focus of investigations by competition authorities across the world. The fines exceed an initial 1.7 billion-euro penalty for banks after the Libor scandal.

Volkswagen’s Scania unit refused to settle the case and may face a possible fine in the future, the commission said. Scania said in a statement that the company fully cooperated with the EU and can’t comment on what will happen next in the probe.

“The company doesn’t share the Commission’s view on the findings of the investigation,” said Susanna Berlin, investor relations manager at Scania.

MAN SE, also owned by Volkswagen, escaped fines for being the first to inform the EU of the cartel.

Starting in 1997, the companies set the factory price of trucks and coordinated the timing and the passing-on of costs for new emissions technologies, the EU said. They didn’t avoid or manipulate compliance with pollution standards.

Huge fines for cartels are the Brussels-based commission’s ultimate weapon to punish companies that cheat by fixing prices. The regulator -- which is still probing banks over foreign-exchange manipulation -- doled out massive penalties in 2013 for companies accused of rigging benchmark interest rates.

The settlement includes a 10 percent reduction for promising not to challenge the EU in the courts, on top of other discounts for cooperating with regulators. Truckmakers may still face lawsuits from customers seeking damages for overcharging.

"Daimler regrets these occurrences" and said the fine would be covered by its provision, according to an e-mailed statement. Paccar said the DAF fine is less than it had set aside.

CNH Industrial declined to comment. DAF and Volvo had no immediate comment.

MAN doesn’t tolerate "any unfair business practices or illegal conduct," it said in a statement. It avoided a potential 1.2 billion euro fine for being the first company to assist regulators in the probe, the EU said.

Daimler raised provisions for possible related costs by 600 million euros in 2014. Volvo set aside 650 million euros. Paccar has made a provision of 850 million euros for its DAF Trucks unit and CNH Industrial NV allocated $502 million for a possible fine for Iveco.

[grayhair]

Cost of doing business in EU I suppose.  Where does the revenue come from to pay these fines?  From shareholders equity in the companies and increased truck prices for future purchasers.  I'm interested to know how the fines monies are distributed after they have been collected.      

[41chevy]

4 hours ago, grayhair said:

Cost of doing business in EU I suppose.  Where does the revenue come from to pay these fines?  From shareholders equity in the companies and increased truck prices for future purchasers.  I'm interested to know how the fines monies are distributed after they have been collected.      

Laid off workers, lower wages/benefits, increased costs of trucks and parts. I'm sure the EU Regulators will use the windfall wisely just like our politicians would. . .         Paul

[kscarbel2]

As we know now from the global Volkswagen diesel emissions scandal, the European Commission (EC) is corrupt from the word go. They now have zero credibility. The EC and EU member countries quietly allowed Volkswagen (and others) to cheat.

Leif Östling, who headed Scania at that time, has told the EC to go pound sand.

----------------------------------------------------------------------------------------------------------------------------------------------------------

Ex-Scania CEO Leif Östling completely rejects cartel accusation

Dagens Industri  /  June 30, 2016

A battle is whipping up between the European Commission and respected truckmaking head Leif Östling.

Leif Östling, Scania's former president and one of Sweden's foremost industrialists, categorically denies that Scania ever participated in a cartel with other European truckmakers.

The former Scania CEO says the truckmaker has proof that it was not involved in any illegal cooperation.

-----------------------------------------------------------------------------------------------------------

Background

Leif Östling started his career at the Scania Truck Division of the Saab-Scania Group as a trainee in 1972.

He became became head of long-term planning in 1977.

In 1981 was appointed head of Sales and Marketing at Scania Nederland B.V, becoming managing director at the unit in 1983.

In 1989, Östling was appointed head of the Scania Truck Division.

One year later, he as selected to become executive vice president of Saab-Scania AB.

When Scania and Saab were separated in 1994, Leif Östling was appointed President and

CEO of Scania AB. Owing to his superb leadership, his tenure ran through August 2012.

.

[kscarbel2]

Volvo: "The cartel is not profitable"

Dagens Industri  /  July 19, 2016

The EU Commission is punishing Volvo and four other truckmakers with a massive fine of approximately SEK 28 billion.

Although Volvo recognizes its 14 year long participation in a truck pricing cartel, CEO Martin Lundstedt says the coordination of truck prices [by European truckmakers] did not affect profitability.

In that case, why did Volvo participate in the cartel? He finds it hard to explain.

[TeamsterGrrrl]

Given that the "guilty parties" own 3 of the 4 surviving US class 8 truck makers and have licensed engine designs to the 4th, the Justice Department ought be looking into this. 

[41chevy]

"Starting in 1997, the companies set the factory price of trucks and coordinated the timing and the passing-on of costs for new emissions technologies, the EU said. They didn’t avoid or manipulate compliance with pollution standards.  (Like VW did who alerted the EU)

Huge fines for cartels are the Brussels-based commission’s ultimate weapon to punish companies that cheat by fixing prices. The regulator -- which is still probing banks over foreign-exchange manipulation -- doled out massive penalties in 2013 for companies accused of rigging benchmark interest rates.

The settlement includes a 10 percent reduction for promising not to challenge the EU in the courts, on top of other discounts for cooperating with regulators." 

 

Passing on the cost of new emission technologies is one of their crimes? I don't see any manufacturer eating compliance costs. 

10% reduction and other discounts too? What a deal.

[TeamsterGrrrl]

In Search of an Honest Automaker…

Sorry Diogenes, but ethics ain’t improved much during the last couple millenia since you went on a fruitless search for an honest man. In the latest charges against VW in the growing DieselGate scandal, the Attorney Generals of New York and a couple other states allege that the “cheat code” was more than just a hack to get VW past U.S. Emissions standards ’til they could get new models designed around Diesel Exhaust Fluid (DEF) tanks into production and wasn’t just vestigially present but inactive in the rest of VW’s diesels for going on a decade. Turns out that the cheat was on in pretty much every VW TDI diesel sold in the U.S. since late 2008, and maybe longer in the rest of the world. VW is probably the largest volume builder of diesel cars in the world and has a big chunk of the light commercial vehicle biz too… Which means that VW may very well have been the biggest producer of NOX and other emissions for the last decade. Sorry VW, this is no longer an insignificant small market half million car “oops”.

Apparently there’s no more honesty to be found in the heavy truck biz…The EU’s antitrust regulators and prosecutors just came down hard on their market’s heavy truck makers, hitting Daimler, IVECO, Paccar, Volkswagon, and  Volvo with a few billion in fines for using the tightening emissions standards as an excuse to collude in price fixing. Knowing what the hardware to meet the new standards in 2007 and 2010 in the USA cost, I was somewhat taken aback when the big truck makers uniformly seemed to jack prices by $7500 for the 2007 models and yet another $7500 for the 2010 models. No surprise, given that the guilty parties in the EU are also 3 or the 4 surviving U.S. heavy truck makers.

In the corporate world Diogene’s search has been taken over by Ethisphere, a non profit that rates companies and even nonprofits on their ethical behavior or lack of the same. Participation is voluntary, but I would guess every Fortune 500 company with a chance of winnin’ their awards is applying for them… So how come only one automaker, Ford, has made Ethisphere’s awards list for several years now, while Cummins of engine fame has been a regular honoree for over a decade now? No surprise, Ford has given up trying to fool us with a half dozen upmarket variations on the same vehicle and they knew better than too even try to get a diesel car certified in the USA. Cummins is big in natural gas and pays the worlds best architects to design public buildings in their hometown of Columbus, Indiana. The lone truck only maker to merit Ethisphere honors is Oshkosh, who makes mostly military trucks but is known for underbidding Navistar by so much on a lucrative contract that losing Navistar protested that Oshkosh’s prices were too low. Locomotive and just about everything else electrical builder GE earned honors too, as did Deere in the tractor biz.

So how come VW didn’t make Ethisphere’s honor roll? And Toyota, GM, Honda, BMW, Daimler, Suburu, Isuzu, Paccar, Fiat Chrysler, ad nauseum?

(from the www.gearheadgrrrl.com blog)

 

 

 

[fjh]

Where does the money come from to pay these fines you ask?

Bought any Mack Volvo parts lately?  

You're paying now!  

[TeamsterGrrrl]

Same with VW... Got a 2013 TDI that VW has offered to buyback and have 'til end of 2018 to accept the deal. Will need to do some services by then, checked and dealer has jacked the price of 40k mile service to $800! Stupid "stealers"... They need us customers to survive, but instead of rewarding our loyalty they're taking it out of our hide!

[kscarbel2]

Goteborgs-Posten  /  July 221, 2016

Recently, Europe's truckmakers were fine 28 billion kronor for price fixing.

Among them, Volvo AB received a fine of 6.4 billion kronor.

The cartel took place from 1997 to 2011 when Mr. Leif Johansson was CEO of Volvo Group, writes Dagens Industri.

Given the price fixing revelation, Swedish ethics researcher Hans De Geer is now raising the question of how Mr. Johansson can rightfully remains in his current positions as chairman of both telecoms group Ericsson and drugmaker Astra Zeneca.

“One can certainly, in the light of the EC’s ruling, question the appropriateness of it. Ultimately it is about trust in large companies' way of acting in the market,” says De Geer.

According to Volvo Group's current President Martin Lundstedt, the European Commission has stated that Johansson did not know his company was participating in the price-fixing cartel.

Hans De Geer thinks, however, that management always has a responsibility.

Leif Johansson has refused to comment.

.

[kscarbel2]

Scania contests the European Commission’s view, but still makes provision

Scania Press Release  /  July 22, 2016

As previously communicated, Scania, along with a number of other truck manufacturers has been investigated by the European Commission concerning inappropriate exchange of information during the period 1997-2011.

In light of the European Commission’s Statement of Objections and recent developments in the investigation, Scania is now, in accordance with relevant accounting principles and a prudent approach, making a provision in order to cover possible fines.

Scania has fully cooperated with the European Commission during the investigation. However, Scania contests the Commission’s view that the company has entered into a pan-European agreement with other manufacturers with regard to pricing.

Also, the company has not delayed the introduction of new engines compliant with EU-legislation for exhaust emissions.

The company will fully exercise its rights of defence in the ongoing investigation.

The provision of SEK 3.8 billion will have an impact on operating income in the second quarter of 2016. Scania will publish its Interim Report for the period January-June 2016 on 28 July 2016.

[kscarbel2]

RHA calls for patience over Cartel compensation

Commercial Motor  /  November 3, 2016

The Road Haulage Association (RHA) said operators should not expect immediate results from its pursuit of compensation from truck manufacturers that acted as a cartel and co-ordinated factory prices between 1997 and 2011.

Giving details for the first time about the nature of the action, the RHA said it has applied to act on behalf of UK hauliers as a representative bringing collective proceedings to the Competition Appeal Tribunal under the Consumer Rights Act 2015.

Speaking exclusively to Commercialmotor.com, RHA chief executive Richard Burnett said that since the European Commission (EC) had issued a €2.9bn (£2.61bn) fine it had been “exploring and understanding more about the approach we needed to take as an association” in regards to seeking compensation, and it was only now that it was ready to discuss the matter further.

Burnett said: “It will be a long, drawn-out process and it’s fair to say that hauliers are not going to get an immediate pay-out; or indeed that there will be a guarantee of any pay-out at all. However, it would appear that based on the high-level evidence received that the prospects for compensation look encouraging.

“We understand there is an enormous amount of detail behind this and working through this detail will take 
the largest amount of time.”

He said it could be in excess of two years before operators saw any form of compensation, depending on how the case progressed through the Competition Appeal Tribunal, settlement discussions or a trial.

The RHA is seeking legal counsel from competition law experts Exchange Chambers.

Barrister David Went told 
Commercialmotor.com that it would appoint an economist who was a specialist in competition law to see how co-ordinating on gross list prices has filtered down to hauliers via dealers.

“We need to understand that and see what harm has been suffered. That is vital,” he said.

On 19 July the EC issued a record €2.9bn fine to five major truck manufacturers after it was found that they co-ordinated truck pricing and colluded on passing on the costs of compliance with emissions rules in the late 1990s and early 2000s.

MAN, Volvo Group (comprising Volvo Trucks and Renault Trucks), Mercedes-Benz parent Daimler, Iveco and Daf were all found to have broken EU competition rules. MAN avoided a fine, having alerted the EC to the cartel. Daf, Daimler, Iveco and Volvo Group all received reductions in fines for co-operating with the investigation. Scania remains under investigation.

[kscarbel2]

Truckmakers face £3.9bn UK legal claim over price fixing

The Financial Times  /  June 14, 2017

UK’s Road Haulage Association (RHA) seeks compensation after cartel of five groups found guilty

British lorry drivers are to bring legal action demanding £3.9bn in compensation against a Europe-wide cartel of truckmakers that fixed prices for 14 years.

In July last year Brussels found five truckmakers — Iveco, DAF, Volvo/Renault, Daimler and MAN — guilty of colluding to raise prices together and fined them €2.93bn. A sixth, Scania, is still being investigated after refusing to co-operate with the European Commission’s probe.

On Wednesday the UK’s Road Haulage Association, which represents lorry drivers, will announce plans to bring a case to the UK’s Competition Appeal Tribunal against all six companies to demand compensation. The tribunal is a government-backed agency, led by judges, that rules on competition issues and has the power to levy fines.

In the case, the RHA is seeking £6,000 compensation per vehicle, reflecting higher prices charged by the manufacturers while the cartel was operating. With an estimated 650,000 lorries sold between 1997 and 2011 in the UK, the total bill for the truck groups could rise to as high as £3.9bn if every truck owner takes part in the action.

Between them the six companies control almost the entire European truck market, and are expected to face additional legal action from the continent’s 600,000 hauliers, most of which are small businesses.

Richard Burnett, chief executive of the RHA, said: “UK truck owners affected by the truck cartel have potentially paid too much for their lorries over a 14-year period and we’re determined to get a fair deal for them.”

He said members were “angry about the truck pricing cartel and want us to represent them” in the case.

The commission began the investigation in 2011 after a tip-off from a whistleblower at MAN, which is owned by Volkswagen.

As a result, MAN escapes a fine that would have been €1.2bn, even though it was found guilty of colluding with the other companies.

In its findings last summer, the commission said its ruling was “binding proof that the behaviour took place and was illegal” that could be used by “any person or firm affected by anti-competitive behaviour” in a legal claim in their own country.

It added: “Even though the commission has fined the companies concerned, damages may be awarded without being reduced on account of the commission fine.”

The RHA on Wednesday will say it has secured funding for its case from Therium Capital Management, a company that specialises in funding one side of a lawsuit. Previous cases backed by the group include a class-action type lawsuit by Lloyds Banking Group shareholders.

[kscarbel2]

VW’s Scania Fined $1.03 Billion by EU for Price Fixing

Bloomberg  /  September 27, 2017

Volkswagen AG’s tarnished reputation suffered another blow after its Scania unit was slapped with a 880.5 million euro ($1.03 billion) fine for fixing truck prices, a year after other members of the cartel reached a record settlement with the European Union.

The European Commission, the EU’s antitrust regulator in Brussels, said Scania colluded for 14 years with five other truck manufacturers on truck pricing and on how to pass on the costs of new technologies to meet stricter emission rules.

VW now faces compensation claims from truck buyers who paid too much, and the company may be dragged into other EU cartel probes over alleged collusion with Daimler and BMW AG on technology standards. Those risks are dwarfed by the damages from the diesel-cheating scandal, which totals 22.6 billion euros so far, with European investigations and lawsuits still pending.

Scania, which denies any wrongdoing, already set aside 3.8 billion Swedish kronor ($470 million) last year to cover a potential penalty after the other truckmakers were fined nearly 3 billion euros for working together on sales. It said it will challenge the fine at the EU courts.

While the fine “is slightly above expectations,” the risk of hefty compensation awards in the future “seems remote as it’ll be difficult to prove the actual damage," Christian Ludwig, an analyst at Bankhaus Lampe in Germany, said in a phone interview.

VW shares slipped by 0.7 percent at 4:45 p.m in Frankfurt trading, reversing earlier gains.

Second-Highest

The other truckmakers settled with the EU, winning a discount on their fine and denying them a chance to sue regulators. The Scania fine is the EU’s second-highest ever for one company in a price-fixing case, topped only by a 1.01 billion-euro penalty for Daimler AG in last year’s decision.

"This cartel affected very substantial numbers of road haulers in Europe, since Scania and the other truck manufacturers in the cartel produce more than nine out of every 10 medium and heavy trucks sold in Europe," EU Competition Commissioner Margrethe Vestager said in a statement on Wednesday.

The fine casts another cloud over Volkswagen as the automaker seeks to emerge from the two-year-old diesel-cheating scandal. The financial burdens and management distraction are particularly unwelcome as the manufacturer seeks to navigate disruption from a shift to an era of self-driving electric cars.

Truck Emissions

The truck cartel fixed factory prices for trucks between 1997 and 2011 and also coordinated when producers would introduce technology to curb emissions from trucks and how they’d pass on the costs of that technology to customers, the EU said. 

Scania will appeal the decision, spokeswoman Karin Hallstan said in a statement.

https://www.scania.com/group/en/scania-appeals-against-decision-of-the-european-commission-regarding-eu-antitrust-rules/

The company “strongly contests all the findings and allegations made by the European Commission,” she said. “Scania also emphasizes that it has cooperated fully” by providing EU regulators with requested data and explanations throughout the entire investigation period.

Senior managers initially met at the margins of trade fairs or other events and sometimes held calls to coordinate behavior, starting with a Brussels meet-up in January 1997. From 2004, the truckmakers’ German units swapped information electronically.

The 2016 settlement included a 10 percent reduction for promising not to challenge the EU in court, as well as other discounts for cooperating with regulators. The companies involved now face potential court claims from customers seeking compensation for being overcharged which could total as much as $84 billion, according to Bloomberg Intelligence.

[Paccar subsidiary] DAF also had to pay 752.7 million euros last year. Despite the settlement, penalties were high because the cartel covered a large market and lasted a long time, the EU said.

MAN SE, also owned by Volkswagen, wasn’t fined because it was first to provide evidence of the cartel to regulators.

[kscarbel2]

Truckmakers Face Nearly $1 Billion in Claims in Cartel Suit

Bloomberg  /  October 24, 2019

Daimler AG, Volvo AB and other truckmakers should be ordered to pay 867 million euro ($965 million) over a price-fixing cartel, according to lawyers in Germany for companies that were overcharged.

The case was brought by Financialright GmbH on behalf of more than 3,200 companies that say they paid too much for their trucks because prices were fixed. Lawyers for the truckmakers argued that the suit should be dismissed because of the way Financialright acquired the claims. After two hours of arguments, the Munich court scheduled a ruling for Jan. 24.

Financialright’s case also targets Volkswagen AG’s MAN unit, Paccar Inc.’s DAF and CNH Industrial NV’S Iveco. The suit was structured to make up for the lack of U.S.-style class actions in Germany. Financialright is cooperating with BGL, a German association of logistics companies, and Burford Capital, which is financing the litigation.

The plaintiff is relying on findings by the European Union, which targeted the truckmakers in an antitrust probe. The EU investigation revealed they fixed prices of medium- and heavy-duty vehicles over 14 years and led to large fines in 2016 and 2017. Since then, a number of big customers have sued the manufacturers for compensation in various EU countries.

Volvo, Daimler, VW’s MAN and Scania divisions, Paccar’s DAF and CNH Industrial’s Iveco are facing price-fixing claims across Europe that could amount to as much as $25 billion, according to Bloomberg Intelligence litigation analyst Aitor Ortiz.

Daimler, already facing a “considerable” number of damage claims, expects to see more and will take necessary steps to defend itself, the company said in an upbeat quarterly earnings report Thursday.

Decisions are expected next year in Germany, Spain and the Netherlands, while the U.K.’s Competition Appeal Tribunal -- which is holding hearings in December on whether to establish two class-action cases for about $7 billion in claims each -- could issue its first ruling in the first half of 2021, Ortiz said in a note.

The Munich suit, covering 85,000 trucks and seeking 603 million euros in damages plus 264 million euros in interest, isn’t the only one Financialright has put together. A second one, covering 3,817 companies and seeking 417 million euros plus 124 million euros in interest, has already been filed, according to Martin Bulheller, a spokesman for BGL. By now, companies from 26 countries have joined and a third lawsuit is being prepared, he said.

[kscarbel2]

Daimler, Volvo Win Dismissal of $950 Million Cartel Suit

Transport Topics  /  February 7, 2020

Daimler AG, Volvo AB and other truck makers won dismissal of a 867 million-euro ($950 million) lawsuit claiming customers were overcharged in a price-fixing cartel.

The way the plaintiff in the case acquired the claims was invalid so the pooled cases can’t proceed, presiding judge Gesa Lutz said when delivering the ruling in Munich on February 7. The action also targeted Volkswagen’s MAN unit, Paccar’s DAF and CNH Industrial’s Iveco.

The case was brought by Financialright GmbH on behalf of more than 3,200 companies that say they paid too much for their vehicles because prices were fixed. Lawyers for the truck makers had asked to dismiss the suit, arguing that buying the claims violated the law.

The ruling is a setback for the purchase model invented to make up for Germany’s lack of U.S.-style class actions. Financialright is cooperating with BGL, a German association of logistics companies, and Burford Capital, which is financing the litigation. They have also filed a second group case in Munich.

“We made an offer to the justice system and the defendants to handle these claims swiftly and efficiently,” said Jan-Eike Andresen, Financialright’s founder. “We will now consider all options, including bringing the cases individually.”

The court criticized how, under the Financialright model, all claims would be treated the same, regardless of their individual chances. This would allow customers with poorer cases to profit disproportionately from a potential settlement at the expense of holders of better-founded claims.

It also took issue with the litigation being financed by a “foreign” company owned by a listed corporation. As a publicly traded company is under scrutiny by analysts and the press, it may take decisions that are not motivated by the interest of the claimants.

“Since the plaintiff is dependent on litigation funding, there’s a concrete risk that undue criteria will influence on how the case is led which aren’t in the interest of the customers,” the court wrote.

[kscarbel2]

https://www.bloomberg.com/news/articles/2024-03-28/daimler-truck-and-volvo-face-retrial-in-560-million-cartel-suit?srnd=markets-vp