Ground Breaking Legal Action for Truck Cartel Case
Backhouse Jones, in conjunction with Addleshaw Goddard, have lodged a ground-breaking legal action with the Competition Appeal Tribunal (CAT) on behalf of the Road Haulage Association (RHA). The application, lodged on 17 July 2018, signals the start of a claim against European truck manufacturers found to be colluding in a 14-year price fixing cartel (the “Trucks Cartel”) between 1997 and 2011. The application seeks compensation in excess of £1 billion for thousands of road haulage operators who have suffered loss as a result of the illegal cartel activities.
The submission of the application is the first formal step in the RHA seeking to be appointed class representative on behalf of road haulage operators who suffered loss because of the Trucks Cartel. The RHA will be asking the Tribunal for what’s called a “collective proceedings order” which will authorise the RHA as class representative and define the class of businesses that can opt in to the claim. As the claim is being brought on an opt-in basis, businesses wanting to be part of the claim will need to opt in once the Tribunal has authorised the RHA to be class representative.”Steven Meyerhoff, Director at Backhouse Jones (legal representatives for the RHA)
The legal action, which is open to RHA members and non-members alike, currently has over 7,700 road haulage operators signed up with a further 1,300 who have registered an interest. It is anticipated that the number of claimants signing up will increase significantly over the coming months and this can be done by visiting www.truckcartellegalaction.com
Early indications suggest that UK transport operators which opt into the claim could be entitled to damages of £6,000 for every 6-tonne and above vehicle they bought or leased between 1997 and 2011. The claim is fully funded by Therium Capital Management Limited and has the benefit of After the Event Insurance, allowing claimants to participate in the collective proceedings without contributing to their own funds.
Mark Molyneux, partner at Addleshaw Goddard said: “This is a significant claim and we expect the overall value is likely to exceed £1 billion. This was a lengthy infringement of competition law that we know has affected around 600,000 purchasers of trucks in the UK between 1997 and 2011. We know cartel activity is extremely damaging to customers and truck purchasers should be entitled to be compensated for the loss that they have a suffered as a result of this activity. We hope that the CAT will agree that this is exactly the right type of claim that should be permitted under the new regime and allow the RHA to bring a collective claim on behalf truck purchasers.”
David Went, barrister at Exchange Chambers comments: “This is the first case in which anyone has tried to use the new regime that allows a representative to bring a collective claim on behalf of businesses impacted by a competition law infringement. The claim being brought by the RHA on behalf of the haulage sector is precisely the type of claim envisaged under the new rules. There have been two previous attempts to use the new regime but they were both opt-out collective actions on behalf of consumers. We don’t think that the RHA’s claim will face the same difficulties that beset those claims not least because it is possible to link the overall claim value back to the amount of loss actually suffered at the level of each individual claimant.”
Background to the “Trucks Cartel”
The RHA’s claim for compensation is based on the European Commission’s decision in July 2016 to fine European truck manufacturers MAN, Daimler/Mercedes, Iveco, Volvo/Renault and DAF, €2.93 billion after they admitted operating the Trucks Cartel. The Commission found that the Trucks Cartel operated between 17 January 1997 and 18 January 2011 (the “Cartel Period”) and related to trucks of six tonnes and over.
The illegal activities included:
- fixing gross list prices;
- agreeing the costs that truck purchasers would be charged for emissions technologies (Euro III, IV, V and VI); and
- delaying the introduction of those emissions technologies.
While Scania was not party to the original decision, having denied its involvement in the Trucks Cartel, the Commission subsequently found it guilty and imposed a fine of €880 million. Scania has appealed this decision, which will be heard by the European Courts in due course.
Opt-In Collective Proceedings
The RHA is using the collective proceedings regime before the CAT. The regime was introduced relatively recently in October 2015 by the Consumer Rights Act 2015 to cater for group actions in the area of competition law. This regime allows an industry body, such as the RHA, to make an application to become class representative on behalf of businesses or consumers affected by competition law violations. The core notion of collective proceedings is that they group together similar claims that raise common issues (i.e., the same, similar, or related issues of fact or law).
As a not-for-profit organisation and the only trade association dedicated to road haulage in the UK, the RHA believes it is well placed to be appointed class representative and expects the CAT to hear its application later this year. If the CAT were to grant the RHA’s application, this will be the first time an application to use the new collective claim regime will have been successful.
The claim has been issued against DAF, Iveco, and MAN, although the claim covers all makes of trucks, including trucks manufactured by companies that were not part of the Trucks Cartel.
As part of the application, the RHA has proposed a class of persons entitled to opt in to the legal action. The class comprises any person who between 17 January 1997 and the date of a notice to be published later during the proposed collective proceedings purchased or leased for road haulage operations (both hire and reward and own-account) new or pre-owned trucks either (a) registered in the UK or (b) registered in EEA Member States other than the UK provided the person belongs to a group of companies which also purchased or leased such trucks registered in the United Kingdom.
As the RHA has proposed to bring collective proceedings on an opt-in basis, road haulage operators wishing to join the legal action are required to sign up to the claim. This can be done by visiting the RHA’s website at www.truckcartelleaglaction.com. The RHA currently has over 3,850 operators signed up to the claim and a further 740 operators who have registered interest and are in the process of signing up. It is anticipated that the number of claimants signing up will increase significantly over the coming months.
The RHA has secured third-party litigation funding on competitive terms so that there is no cost to operators who sign up. If the claim is successful, the funders will take a fee from the compensation awarded to compensate them for the risk of providing the capital investment. The RHA has also taken out litigation insurance to protect both itself and operators signing up to the claim in case the claim or aspects of it are unsuccessful.