Monday, October 28, 2019

Road Haulage Group Class Action Against Truck Makers Vaults First Legal Hurdle

Multi Billion Euro Truck Fines for Cartel Price Fixing Could Finally Cost Far More
Shipping News Feature

UK – EUROPE – The eye watering €3.8 billion in fines levied on six truck manufacturers for an illegal price fixing cartel are certain not to be the end of the affair. The cases being brought as class actions on behalf of anyone who paid over the odds for vehicles is now proceeding apace as the latest information from one such, the Road Haulage Association (RHA), makes clear.

The RHA case, lodged with the Competition Appeal Tribunal (CAT), has had agreement that the Association’s funding arrangements and the provisions of its insurance documents are fit for purpose, clearing a way for the collective claim to proceed for judgement.

The truck manufacturers, which the Tribunal confirmed had already been found to have participated in the cartel between 1997 and 2011, had tried to persuade the Tribunal that the RHA’s funding arrangement was contrary to legislation outlawing certain funding practices in the claims management field and that the Association did not have sufficient funding in place to bring the claim, and that the RHA did not have adequate legal insurance.

The truck makers’ case has been rejected by the Tribunal and, following the judgement Richard Burnett, CEO of the RHA said that a very important milestone in what may prove to be a lengthy journey to recover compensation rightfully owed to truck operators had been passed.

The RHA boss said it is delighted that the Tribunal has recognised the ability of the RHA as a ‘well-established trade association’ to bring this collective claim, while at the same time rejecting outright attempts by the truck manufacturers to stifle the RHA’s claim at the outset. He continued:

”We are fully committed to seeing this process through to the end and it is a real achievement to have had such a clear victory at this early stage in the proceedings.”

The European Truck manufacturers (DAF, Daimler/Mercedes, Iveco, MAN, Scania, and Volvo/Renault) were found guilty of violating EU competition rules by the European Commission in 2016 and 2017 for the manufacturers, at senior level, fixing truck prices, agreeing the costs that truck purchasers should be charged for emissions technologies (Euro 3, 4, 5, and 6), and delaying the introduction of more fuel-efficient emission technologies, all over the 14 year period.

The Competition Appeal Tribunal in its 28 October 2019 judgment confirmed that the truck manufacturers had already been found to have participated in a cartel and that the cartel was long in duration, involved many manufacturers, and was extensive in scope. Indeed, the Tribunal pointed to the European Commission’s comment that the cartel participants accounted for 90% of all medium and heavy trucks sold in the EEA over the 14-year period of the cartel.

The RHA launched its collective claim in July 2018. The RHA cannot bring the collective claim as of right but must first apply to the Competition Appeal Tribunal for a collective proceedings order (CPO). That order will entitle the RHA to bring the collective claim on behalf of the UK’s road haulage industry. There are two parts to the process of applying for a CPO. First, it is necessary to persuade the Tribunal that the class representative can be authorised to bring the collective claim (the authorisation), this includes examination of the funding and insurance arrangements the proposed class representative has put in place. Second, it is necessary to persuade the Tribunal that the claims proposed for inclusion in the collective proceedings are eligible to be brought in collective proceedings (the certification element).

The Tribunal has now ruled in favour of the RHA on the first part of the RHA’s CPO application. The second part of the CPO application process is being delayed because another CPO application is on appeal to the Supreme Court and the Supreme Court’s judgment in that other case may impact on how the Tribunal approaches the RHA’s CPO application. The Supreme Court will hear the appeal in the other case in May 2020 and give judgment a few months afterwards. The RHA would therefore expect the second part of its CPO application to be heard by the Tribunal around October 2020 with judgment following a few months afterwards.

The RHA’s proposed collective claim covers all trucks over 6 tonnes of any make and not just the makes of trucks owned by the cartel members. The RHA is claiming for trucks sold both during the cartel period (1997 to 2011) and afterwards to the present day. The claim also covers new and second-hand trucks. The RHA’s claim relates not only to trucks purchased or leased in the United Kingdom but also to trucks purchased or leased in other European countries provided the operator belongs to a group of companies that purchased or leased trucks registered in the United Kingdom.

Whatever the eventual outcome it is extremely unlikely that all the matters involved will be settled for several years, a fact accepted by the RHA which says however that it is confident that compensation will be awarded to all wronged parties in due course.

The RHA case is being considered with a parallel class action by UK Trucks Claim Limited, an operation set up specifically to handle this matter, but with what appears to be a lesser remit than the RHA case as it does not cover second-hand trucks, trucks purchased and leased to the current day, trucks purchased and leased outside the UK, and additional fuel costs caused by the cartel.

Full details of the Case Conference held in December 2018 make interesting reading and can be viewed here.