Truckmakers get record $3.24bn EU fine

Bloomberg

Truckmakers, including Daimler AG and Paccar Inc.’s DAF Trucks, agreed to pay European Union regulators a record €2.93bn ($3.24 bn) in fines for fixing truck prices over 14 years.
Daimler got the largest penalty of €1.01 billion and DAF will pay €752.7 million as part of a settlement with the European Commission that cut potential fines by at least 10 percent. Volvo AB and its Renault trucks brand face a €670.4 million fine and CNH Industrial NV’S Iveco will pay a €494.6 million fine.
Fines are high because “this cartel concerns a very large market and continued for a very long time,” EU Competition Commissioner Margrethe Vestager told reporters in Brussels on Tuesday. The companies’ actions fixed the prices for around nine out of every 10 medium and heavy truck sold in Europe, she said.
The auto industry is the focus of investigations by competition authorities across the world. The fines exceed an initial €1.7 billion penalty for banks after the Libor scandal.
Volkswagen’s Scania unit refused to settle the case and may face a possible fine in the future, the commission said.
Scania said in a statement that the company fully cooperated with the EU and can’t comment on what will happen next in the probe.
“The company doesn’t share the Commission’s view on the findings of the investigation,” said Susanna Berlin, investor relations manager at Scania.
MAN SE, also owned by Volkswagen, escaped fines for being the first to inform the EU of the cartel.
Starting in 1997, the companies set the factory price of trucks and coordinated the timing and the passing-on of costs for new emissions technologies, the EU said. They didn’t avoid or manipulate compliance with pollution standards.
Huge fines for cartels are the Brussels-based commission’s ultimate weapon to punish companies that cheat by fixing prices. The regulator — which is still probing banks over foreign-exchange manipulation — doled out massive penalties in 2013 for companies accused of rigging benchmark interest rates.
The settlement includes a 10 percent reduction for promising not to challenge the EU in the courts, on top of other discounts for cooperating with regulators. Truckmakers may still face lawsuits from customers seeking damages for overcharging.
“Daimler regrets these occurrences” and said the fine would be covered by its provision, according to a statement. Paccar said the DAF fine is less than it had set aside.
CNH Industrial declined to comment. DAF and Volvo had no immediate comment.
MAN doesn’t tolerate “any unfair business practices or illegal conduct,” it said in a statement. It avoided a potential €1.2 billion fine for being the first company to assist regulators in the probe, the EU said.
Daimler raised provisions for possible related costs by €600 million in 2014. Volvo set aside €650 million. Paccar has made a provision of €850 million for its DAF Trucks unit and CNH Industrial NV allocated $502 million for a possible fine for Iveco.