Chris Owen considers the current position of the various follow on damage claims relating to the trucks cartel, including an application for an opt-out class action.
Background to the Commission Decision
On 19 July 2016, the European Commission fined European truck manufacturers in excess of €2.9bn for price fixing and other cartel activities for conduct in the period 17 January 1997 until 18 January 2011.
The Decision was addressed to entities within the MAN, Daimler, Iveco, Volvo/Renault and DAF groups, following the settlement procedure in which all of these addressees had been willing participants.
MAN was the immunity applicant, seeking leniency by an application made on 20 September 2010. Thereafter, Volvo/Renault, Daimler and Iveco each sought reduction of fines through the provision of information to the Commission (in the case of Daimler and Iveco, such reductions being sought on the same day, a matter of hours apart).
Scania did not participate in the settlement procedure and the Commission’s investigation continued against that group under the standard cartel procedure. This resulted in a later adverse decision against Scania, on 27 September 2017.
Level of fine
MAN was granted full immunity from fines. Volvo/Renault was granted a 40% reduction, Daimler 30% and Iveco a 10% reduction. (To that extent, Iveco’s notification on the same day as Daimler, but at a later time, proved to be costly). No reductions were applied to DAF or Scania.
The amounts of the fines levied on each corporate group were as follows:
- MAN: No fine imposed (immunity applicant)
- Renault/Volvo: €670.448m (representing a 40% reduction on full fine)
- Daimler: €1,008.766m (representing a 30% reduction on full fine)
- Iveco: €494.606m (representing a 10% reduction on full fine)
- DAF: €752.697m (no reduction)
- Scania: €880.523m (no reduction)
Follow on claims
Given the significant cartel period (14 years) and the likely losses suffered by purchasers or leasees of medium and heavy trucks, a raft of follow on damage claims are expected. These may well be brought in a number of European Courts, but England is likely to be a preferred venue, given its favourable regime for competition damage claims.
Since 2017, the Road Haulage Association (RHA) has publicised its intentions to launch an opt-in class action for both members and non-members of the RHA who have suffered loss. A legal team has been established and litigation funding secured.
However, perhaps to its surprise, a separate group action has stolen a march on the RHA’s proposed claim. On 18 May 2018, UK Trucks Claim Limited (UKTC) filed a notice of application to seek to commence collective proceedings under s.47B Competition Act 1998 in the Competition Appeal Tribunal (CAT), the specialist UK Court set up to hear competition claims.
UKTC is a company limited by guarantee, established as an SPV to bring the claim. The application seeks permission for certification to bring an opt-out claim, or in the alternative an opt-in claim.
The Consumer Rights Act 2015 introduced, for the first time in English law, a new opt-out class action regime for competition claims. Despite the fanfare which accompanied the new regime, only two claims have been brought (until now). Both of these failed at the first hurdle - to obtain certification by the CAT through a collective proceedings order (see my previous article for further details about these two claims). Note, however, that the certification decision in the Merricks claim is being appealed to the Court of Appeal this autumn.
One of the issues to emerge from the failed certification of these two claims was the extent of expert evidence required by the CAT at the certification stage. This has been criticised by some as making an application for certification too difficult and costly. It will be interesting to see whether a more relaxed approach is adopted by the CAT in relation to the level of expert evidence required for UKTC’s application.
Other issues to watch
Several other interesting points emerge from the UKTC application:
This is the first occasion on which a SPV has been established for the purposes of bringing an opt-out claim. In both the two previous claims, individuals have been selected as the class representative. Although the claimants are seeking to rely on paragraph 6.30 of the Tribunal’s Guide to Proceedings 2015 as a basis for such a vehicle being permissible, when the Consumer Rights Bill was passing through Parliament there was some concern about the use of vehicles in this regard, particularly where the vehicle is under the clear control of the law firm and/or litigation funder. How the CAT approaches this issue is likely to offer future claimants, firms and funders guidance about the use of SPVs in opt-out claims.
Second, the UKTC class has been framed simplistically yet broadly. It includes any individual who between 17 January 1997 and 18 January 2011 acquired one or more new medium or heavy trucks registered in the UK. Although it is likely to prove easier to establish who is in this class (as compared, say, to the Merricks litigation) it will be interesting to see what the CAT has to say about this broad class covering a 14 year period.
Third, it will be interesting to see whether the UKTC’s application has any impact on the RHA’s proposed action. If the UKTC claim is certified as an opt-out claim, it will mean that many, if not all, of those claimants who have potentially signed up to the RHA’s opt-in claim will already be included within the UKTC certified class. This is likely to present some difficulties in terms of the RHA’s claim proceeding (it would be possible for the RHA claimants to opt-out but this will be an administrative burden. More significantly, the RHA claim would itself then need to be certified, which would not be assured if an opt-out claim was already proceeding).
Conversely, if the UKTC claim is certified as an opt-in claim, it will be interesting whether the RHA’s claimants elect to switch and join into that action instead. Alternatively, there may be two applications for opt-in claims. If so, this could mean that the CAT will need to elect whether to certify one, both or neither. In that situation, the RHA claimants may well look to define their claimant class in a different manner to increase the prospects of certification.
Finally, some claimants may prefer to “go it alone”. One advantage of doing so is to provide greater control over the litigation. The Royal Mail Group has already adopted such an approach, having initially issued a claim in the High Court. That claim has since been transferred to the CAT (pursuant to an order of Mr Justice Roth). As matters stand, that claim is progressing at a faster pace than any of the potential group actions. The interplay between the individually brought actions and class claims will be something to monitor closely.
The next big thing?
Given the level of damages potentially available, it seems likely that follow on claims in the trucks cartel is likely to become the next Mastercard/Visa MIF litigation. Expect to see a large number of claims being issued by businesses who own, operate or lease trucks. We are actively following developments and will provide further updates periodically.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.