Food and beverage hit by truck cartel

Trefor Griffith Trefor Griffith

More than two years since Europe’s largest truck manufacturers were fined a record €3.8 billion (£3.4 billion) for participating in a 14-year price-fixing cartel, claims to compensate the victims are starting to gather momentum.

The food and beverage industry – from retailers to wholesalers and suppliers – could be owed hundreds of millions of pounds after significantly overpaying for the use of trucks between 1997 and 2011.

Who was part of the truck cartel?

In July 2016, DAF, Daimler, Iveco and Volvo/Renault were handed a €2.93 billion (£2.46 billion) fine by the European Commission for colluding on prices and passing on the costs of new emissions-reducing technology. MAN Truck & Bus Company escaped a penalty for blowing the whistle on the cartel. Following further investigation by the European Commission, Scania was later fined €880 million for its part in breaching anti-trust rules.

The cartel’s reach was wide, producing 9 out of 10 of the medium and heavy trucks used in the UK and across mainland Europe, according to the European Commission.

“These trucks account for around three quarters of inland transport of goods in Europe and play a vital role in the European economy,” said European competition commissioner Margrethe Vestager. “Instead of colluding on pricing, the truck manufacturers should have been competing against each other.”

However, the fines imposed on the cartel members do not compensate the victims, who are entitled to recover losses caused by the unlawful conduct of the truck manufacturers.

Claims from supermarkets and other retailers, large food suppliers manufacturing numerous brands together with alcoholic and soft drinks producers could run into the hundreds of millions of pounds. Companies – in the UK and across the European Economic Area – that used trucks in their businesses over the cartel years could be entitled to compensation worth approximately £7,800 per truck, based on current estimates by London Economics.

Whether the trucks were purchased new, second-hand, leased or provided by a third party company, claimants can seek the difference between what they paid and what they should have paid had the cartel not existed. Those businesses who used hauliers also have a claim, as the hauliers are expected to have passed on the overcharge by way of higher freight rates.

The estimated overcharge of 10-15% suffered by customers was not just restricted to trucks purchased directly from the cartelists. The cartel is expected to have raised the price of trucks across the whole market.

How can you bring a claim?

There are different options available. Companies such as Veolia and Royal Mail have chosen to bring individual legal actions. The Road Haulage Association and the Freight Transport Association have applied to the UK Competition Courts for permission to bring a class action in the UK and are awaiting approval.

We are part of a leading consortium who are bringing a bespoke group claim against the cartelists in the English courts specifically designed for claimants in the retail industry. We have chosen to focus on the end users of trucks only to ensure each company can claim maximum damages. We are targeting the larger retailer who are better suited to smaller group actions such as ours than wider class actions. And, importantly, our claim is fully funded meaning that claimants do not pay the costs of litigation in return for sharing a percentage of their recoveries, transferring the risks away from the claimants.

The consortium is also made up of leading litigation and competition law firm Collyer Bristow, one of the top two competition chambers in the UK, Monckton Chambers, specialist economists, London Economics and global litigation funder, Vannin Capital.

In order to demonstrate the potential reward for each claimant, we will perform a forensic examination of available company records to formulate an estimated individual claim value at no cost with no commitment to join the group. Data from other sources such as co-claimants (subject to confidentiality preferences), the defendants and market data will be used to build an accurate picture of how much each claimant was overcharged.

What is the value of bringing a claim?

Companies increasingly see litigation as an asset class, particularly with the availability and ease of litigation funding. Lucrative claims can now be pursued without an impact on cash flow or EBITDA. Cash injections from successful claims and money that would have otherwise been spent on litigation then becomes available for companies to invest in profit maximising drivers such as digital innovation.

Any damages paid out by cartelists to claimants also serves as a reminder of the harm price-fixing has on the overall economy. “There needs to be trust and integrity in the marketplace and cartels undermine that,” Nick Wood, partner at Grant Thornton commented, who is heading up the consortium. “We are here to help rebalance that by getting money back to the companies that it belongs to.”

If you are interested to learn more, please contact Nick Wood or visit the group’s dedicated website.

Trusted traders in the food and drink industry Find out more

Sign up to get the latest food and beverage updates by email