Truck operators, including waste disposal and waste management companies, are set to benefit financially from a group claim being brought by the Road Haulage Association (RHA) against the European truck manufacturers that engaged in a price-fixing cartel. The RHA updates…
The claim, which will be free to join, will be open to RHA members and non-members alike who purchase or lease trucks.
The group claim relates to a July 2016 decision by the European Commission, which found that European truck manufacturers had engaged in price fixing and other cartel activities over a 14-year period between 1997 and 2011 in relation to trucks over six tonnes.
The European Commission fined the manufacturers €2.926bn (£2.61bn) – the highest fine by far ever imposed for a cartel. DAF, Daimler/Mercedes, Iveco, MAN and Volvo/Renault admitted their guilt and confirmed that they had participated in the following activities at senior manager level:
- aligned gross list truck prices across Europe (including the UK) at the start of the cartel
- fixed gross (and sometimes net) list truck prices
- reduced rebates when the Euro was introduced
- agreed the cost that operators should pay for EURO 3, 4, 5, and 6 technologies
- delayed the introduction of more fuel efficient EURO technologies.
The cartel was a serious violation of EU competition rules and the Commission’s decision proves liability before the UK courts. Scania chose not to settle the case with the European Commission and the investigation into them continues. That does not, however, prevent Scania trucks being included in the group claim for compensation.
The RHA will be seeking to reclaim for operators the difference between what the trucks should have cost in a competitive market as compared with the cartel prices, as well as for any other increases in operators’ costs resulting from the cartel.
As the trade association in the UK dedicated to the road haulage sector, the RHA announced in August 2016 its intention to bring a group claim for compensation before the Competition Appeal Tribunal in London. As mentioned, the claim will not be limited to RHA members but will extend to all transport operators across all sectors (including waste disposal and management) that choose to sign up.
The claim will cover new and second-hand trucks from six tonnes upwards, regardless of whether they were purchased outright, purchased on finance, or leased. The relevant period is 1997 to 2011 but with a potential further claim period before prices returned to competitive levels.
The RHA will be seeking to reclaim for operators the difference between what the trucks should have cost in a competitive market as compared with the cartel prices, as well as for any other increases in operators’ costs resulting from the cartel. Based on the significant due diligence carried out to date, the RHA believes that the amount of compensation per truck will be material and is likely to exceed £6,000 per truck on average (including interest).
The RHA has put in place third-party funding and insurance to ensure that the case can be brought (a) without any cost to the RHA or to truck purchasers signing up to the claim; and (b) without any risk of needing to pay the defendants’ costs in the event the case is unsuccessful. In return for funding the case, the funder will be seeking a percentage cut of any damages awarded.
Given the scope of the RHA’s group claim, the RHA has been able to negotiate very favourable terms with the funder. Assuming a large number of claimants sign up to the RHA’s group claim – which is anticipated – and the level of damages is in line with current thinking, truck purchasers will retain between 85 percent and 95 percent of the damages owed to them. If the case settles early, there is a further discount on the percentage return to the funder, resulting in an increased amount recovered by operators.
The RHA does not intend itself to profit from acting as representative, maximising the level of compensation that will be returned to those affected by the cartel.
The RHA has appointed a first-rate legal team to work on this matter. It includes Backhouse Jones, the UK’s leading transport law firm, and specialist competition law barristers from Brick Court Chambers in London and Exchange Chambers in Manchester. The RHA is in the process of signing operators up to its group claim, as well as preparing its application to the Competition Appeal Tribunal.
Truck operators that are interested in finding out more about the RHA’s group claim can do so at www.truckcartellegalaction.com. It is possible to register for updates on the website, as well as to formally sign up to the RHA’s group claim.