wednesday, 20 july of 2016

EU Fines Truck Makers Over $3 Billion for Participation in Cartel

The European Union on Tuesday hit five truck makers with its highest-ever cartel fine of about €3 billion (about $3.32 billion) for colluding on prices and the implementation of emissions technologies, confirming an earlier report by The Wall Street Journal.

“We have today put down a marker by imposing record fines for a serious infringement,” said EU Competition Chief Margrethe Vestager, adding it was “a clear message to companies that cartels are not accepted.”

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 years, between 1997 and 2011, on the factory prices of medium and heavy trucks.

They also 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 has to pay around €670 million and Iveco about €500 million. MAN hasn’t been fined, avoiding a penalty of about €1.2 billion, because it disclosed the cartel to the commission, the EU said.

All the companies except MAN had set aside hundreds of millions of dollars in provisions in preparation for the decision.

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

“The settlement ends the EU antitrust investigation. Daimler regrets these occurrences and took appropriate action some time ago,” the company said in a statement.

Volvo said the €650 million previously set aside largely covers the cost of the fine but that an additional provision of €20 million to pay the full penalty would impact operating profit in the third quarter.

“While we regret what has happened, we are convinced that these events have not impacted our customers,” Volvo Chief Executive Martin Lundstedt said in a statement.

MAN acknowledged in a statement it had escaped the fine by informing the commission of the cartel.

In a statement, Paccar said it didn’t believe “the exchange of factory list prices among manufacturers had (any) effect on truck sales prices negotiated between DAF’s independent dealers and its customers.” CNH, owner of Iveco, declined to comment.

At a news conference Tuesday, Ms. 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, Ms. 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 on Tuesday said the company didn’t participate in the settlement decision and the investigation into the firm would therefore continues.

Scania said it fully cooperated with the commission, but didn’t agree to a settlement because it doesn’t accept the EU’s accusations.

“We don’t share the view that Scania has entered into a pan-European pricing agreement,” said Susanna Berlin, a spokeswoman for Scania, adding the company didn’t participate in delaying the introduction of new emissions technologies.

Despite admitting to wrongdoing, the companies that agreed to the settlement with the EU can always appeal the decision in court, particularly with respect to the size of the fines.

(Published by The Wall Street Journal - July 19, 2016)

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