European truck cartel’s €2.93 billion in fines may just be the beginning

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The European Commission on Tuesday announced its decision finding truck makers MAN, Volvo/Renault, Daimler, Iveco, and DAF liable for violating EU antitrust rules.  The companies acknowledged that for 14 years they colluded in setting truck prices, settling the case for a record total of €2.93 billion.  Competition commissioner Margrethe Vestager reported that the five-company cartel “account[s] for around 9 out of every 10 medium and heavy trucks produced in Europe.”  Vestager also said that the unprecedented fines send a “clear message to companies that cartels are not accepted.”

The EC’s announcement sent another clear message: that a defecting cartel member who reveals the existence of the cartel stands to be rewarded handsomely.  MAN disclosed the wrongdoing to the EC in 2011, and under the Commission’s 2006 Leniency Notice, was granted immunity from a fine that otherwise would have amounted to €1.2 billion.  MAN’s fine would have been larger than those of any of the other four companies, which ranged from €494 million to €1 billion.  (According to the EC’s guidance, fine amounts are set with reference to “value of the sales of goods or services to which the infringement relates.”)

None of the companies—including MAN—are yet out of the woods.  The EC’s announcement noted that “[a]ny person or firm affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages. . . .  [I]n cases before national courts, a Commission decision constitutes binding proof that the behaviour took place and was illegal.  Even though the Commission has fined the companies concerned, damages may be awarded without being reduced on account of the Commission fine.”

The regulation to which the Commission refers for the proposition that its decisions are binding in later litigation states (at Article 16) that “[w]hen national courts rule on agreements, decisions or practices under Article 81 or Article 82 of the Treaty which are already the subject of a Commission decision, they cannot take decisions running counter to the decision adopted by the Commission.”  In a 2004 notice, the Commission explained further that “[w]here the Commission reaches a decision in a particular case before the national court, the latter cannot take a decision running counter to that of the Commission.  The binding effect of the Commission’s decision is of course without prejudice to the interpretation of Community law by the Court of Justice. Therefore, if the national court doubts the legality of the Commission’s decision, it cannot avoid the binding effects of that decision without a ruling to the contrary by the Court of Justice.”  The EC cited the European Court of Justice’s 1987 Foto-Frost case, which discusses “the rule that national courts may not themselves declare Community acts invalid.”  In sum, the EC explains that “[w]hen the European Commission finds a breach of the competition rules, victims of that infringement can directly rely on the Commission’s decision as binding proof in civil proceedings for damages.”

Plaintiffs’ attorneys were quick to seize upon the EC’s invitation.  Litigation funder Claims Funding Europe and Netherlands law firm BarentsKrans announced their intention to file proceedings against the cartel on behalf of truck buyers.  And Global Competition Review reported [subscription required] on Wednesday that the Hausfeld law firm has already brought a €100 billion claim.  If plaintiffs can demonstrate damages of this magnitude, the fact that the EC settlements constitute “binding proof” in private litigation could turn out to be more expensive than the fines themselves.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

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