Saturday 23 February 2013

OFT truck ruling raises questions

The announcement on Thursday 21 February 2013 that Mercedes-Benz and three of its commercial vehicle dealers have been ordered to pay fines totalling £2.6 million having admitted breaching competition law raises several questions.

For example, how will the companies react to publication of the OFT’s announcement? Have the firms affected agreed how they will trade in future? Have the companies involved introduced new modus operandi? Have they taken steps to avoid a repeat of the infringements? Have any staff within the companies been reprimanded or disciplined for their actions? And how will other van and truck manufacturing companies operating in the UK react to the events?

These and other questions arise because of the OFT’s announcement concerning three admitted infringements of competition law involving the distribution of Mercedes-Benz vans and trucks between January 2008 and January 2010.

The dealers involved are mainly active in areas in the North of England and parts of Wales and Scotland. The OFT's actions have been taken to show that it has teeth.

The nature of the infringements varies but all contain at least some element of market sharing, price coordination or exchange of commercially-sensitive information. Not every party was involved in every infringement and the conduct, products and duration vary from infringement to infringement.

The agreed fines however include a 15 per cent reduction from the total penalties of £3.07 million the OFT could otherwise have expected to impose, to ”reflect the companies’ admissions and agreements to a streamlined administrative procedure”.

According to the OFT this means “that the cases can be brought to a conclusion more quickly and more efficiently and that the wider deterrence effects of the OFT’s intervention can be felt sooner than would be the case. For the settling parties, it also means that they can draw a line under the matter and move on”.

And, provided it continues to cooperation with the OFT, a further dealer, Northside, which comprises Northside Truck & Van Limited and it ultimate parent S.A.H. Limited, which has also admitted infringing competition law, will avoid a penalty, having been the first company to come forward after the investigation commenced to “provide valuable evidence of collusion in return for immunity from penalty under the OFT’s leniency policy”.

The OFT entered into settlement agreements with the following companies and for the following amounts:
Mercedes-Benz UK Limited, its parent Daimler UK Ltd and its ultimate parent Daimler AG (Mercedes); £1,492,646.
Road Range Limited (Road Range); £115,774.
Ciceley Commercials Limited and it ultimate parent Ciceley Limited (Ciceley); £659,765.
Enza Motors Limited, its parent Holdings Limited and its ultimate parent Enza Group Limited (Enza); £347,196.