Wednesday, December 3, 2014

Now EU Antitrust Spotlight Moves Away from Freight and Logistics Sector to More Suspected Cartels

European Commission Steers Toward Truck Manufacturers with Ongoing Investigation and Towage Companies also Examined
Shipping News Feature

EUROPE – After some years of activity chasing down freight and logistics collaborators, and nearly four years after visiting the offices of a number of well-known companies in the truck manufacturing sector, the European Commission has informed several heavy and medium duty truck producers that it suspects them of having participated in a cartel in breach of EU antitrust rules. Though the EU’s watchdog did not name the companies it believes were involved in the cartel, Volvo, Daimler, and Paccar have confirmed that they received notices from the European Commission with Volvo anticipating a hefty fine.

The Commission said that it has concerns that certain heavy and medium duty truck producers may have agreed or coordinated their pricing behaviour in the European Economic Area (EEA). Such behaviour, if established, would breach Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the Agreement on the EEA, which prohibit cartels and restrictive business practices.

The Volvo Group has decided to make a provision of €400 million, which the Swedish company says will impact operating income negatively in the fourth quarter 2014. However, the group has noted that proceedings are still at an early stage and there are a number of uncertainties associated with the final outcome of the Commission’s investigation as well as the amount of a potential fine. The Volvo Group will re-assess the size of the provision regularly following the development of the proceedings.

Paccar confirmed through an SEC filing its receipt of the Statement of Objections, which named DAF Trucks, its subsidiary DAF Trucks Deutschland and Paccar, the parent company, as part of the antitrust case, but unlike Volvo, made no mention of a provision. Iveco, Renault Trucks, and Volkswagen subsidiaries, MAN and Scania, have been linked to the investigation having had their offices raided as well in 2011, but the aforementioned companies have yet to release a statement verifying any further involvement in the case.

If the Commission concludes that there is sufficient evidence of an infringement, it can issue a decision prohibiting the conduct and impose a fine of up to 10% of a company's annual worldwide turnover. As we mentioned in our last article about this case (in January 2011) the wheels of the European Commission turn slowly so it is unlikely we will hear the last of the matter for quite some time to come.

The news comes as half a dozen or so towage companies are reported to have been raided by Dutch and German antitrust squads in the past week or so. At the time of writing only the Boskalis group’s salvage and towing subsidiary, Smit, based in the Netherlands, has confirmed it is one of the companies involved in the investigation which is trying to uncover illegal collaboration in the industry.