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Record Penalty for the German Car Industry: the EU Continues to Fight Cartels


Mykola Aleksyuk, Attorney at Law

Source: European Pravda

In October this year, in less than a week, the European Commission inspectors have the Munich headquarters of the BMW concern, as well as the headquarters of Audi (Ingolstadt), Volkswagen (Wolfsburg) and Daimler (Stuttgart).

It is suspected that since the 1990s, the management of BMW, Volkswagen, Audi, Porsche and Mercedes companies have been coordinating a number of issues related, in particular, to the selection of suppliers, the control of diesel engine emissions, the size of fuel tanks and, in general, the trends in development of the automotive technologies. At the rough estimates, the maximum amount of the potential penalty for concerted actions of German automakers may reach EUR 50 billion.

To calculate the amount of penalty the companies’ financial indicators are being used, namely, the aggregate amounts of turnover in 2016.

This time Daimler was the first to inform the European Commission about the likelihood of cartel existence, obviously hoping for exemption from liability in the event of its exposure. The BMW and Volkswagen concerns, in turn, have also expressed an intention to cooperate with the EC inspectors.

And although the fact of inspection is not a testimony to violations, the tendency of the European Commission to consider cartel collusion cases in the car industry testifies to the high chances of their detection.

These days the issues of antimonopoly compliance (the system used to prevent competition law violations) is becoming more and more relevant, given the regulatory enforcement of the European Commission in the field of the protection of economic competition: the penalties for law violations become higher and the inspections more careful and detailed.

In this context the surveys of the car industry market are quite indicative.

Last year the European Commission had already exposed a cartel of truck manufacturers and fined Volvo/Renault, Daimler, Iveco, DAF and Scania for a total amount of approximately EUR 3.8 billion.

It was proved during the investigation that the aforementioned companies agreed the basic prices for trucks sold in the European market, as well as the terms for transition to the Euro IV environmental standard. At the same time, the MAN automaker was exempted from liability since the company was first to alert the European Commission to the cartel and closely cooperated during the investigation.

The above-mentioned penalty remains the highest in the nearly 50-year history of the European Commission’s fight against cartels (the first decision in the cartel case was delivered in 1969), but not the only in the car industry – in recent years a number of companies were fined for following unlawful concerted practices in the markets in automobile glass, engine coolers, bearings and lighting systems.

And it seems that the European regulator shows no sign of letting up.

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