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Monday, 30 May 2016

EU set to impose record cartel fine on truckmakers - reports that a cartel of truck manufacturers is likely to face the biggest financial penalty ever imposed by the Commission. The cartel has been found to have fixed prices and - topically - delayed introducing new technology to deal with emissions. DAF, Daimler, Iveco, Scania, MAN and Volvo/Renault were originally accused in 2014 of operating the cartel between 1997 and 2011, and the report tells us that four of the companies have made provisions amounting to $2.6 billion. They could be ordered to pay up to ten per cent of global turnover, which would be about four times as much.

The investigation, which included raids on the participants' offices and in one instance a threat of criminal proceedings in the UK, began in 2011, showing just how long it takes for a matter like this to be brought to a conclusion.

The Commission has not yet reached a final decision on the penalty, but it is expected to be finalised this year and "possibly" within weeks. The size of the penalty reflects the wide-ranging impact of collusion - increase the cost of road haulage and you increase the cost of just about everything.

Cartels are by definition secretive and therefore hard to detect, so competition rules (including the EU's, and the UK's) have special dispensation for "whistleblowers" who may enjoy complete immunity from penalties. In this case the whistleblower was MAN, so it should not need to make financial provision to cover the penalty. Scania has reportedly made no provision either, on the grounds that it cannot estimate the impact. Two of the companies are reported to be asking for leniency on the grounds that the penalty could be enough to cause serious financial problems - and generally it is in no-one's interest to hit a major employer so hard that it has to close down. That is one of the arguments for criminal penalties for individual employees involved in setting up cartels, as we have in the UK.

The penalty will not, in any event, be the end of the story. "Follow-up" damages are likely to add to the pain. The road haulage industry has self-evidently suffered damage as a result of the cartel's activities, notwithstanding that it will have been able to pass on a proportion of the extra costs, and when the Commission's decision is made public it will pave the way for claims from hauliers. quotes Jack Semple, director of policy at the Road Haulage Association, as saying:

We will be waiting with very keen interest to see what the commission says. If we see record damages then there will be consequences for that.
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