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VW's Scania Unit Fined $1.03 Billion by EU for Price Fixing

Sept. 27, 2017
EU said Scania colluded for 14 years with five other truck manufacturers on truck pricing and on how to pass on the costs of new technologies to meet stricter emission rules.

Volkswagen AG’s tarnished reputation suffered another blow after its Scania unit was slapped with an 880.5 million euro (US$1.03 billion) fine for fixing truck prices, a year after other members of the cartel reached a record settlement with the European Union.

The European Commission, the EU’s antitrust regulator in Brussels, said Scania colluded for 14 years with five other truck manufacturers on truck pricing and on how to pass on the costs of new technologies to meet stricter emission rules.

VW now faces compensation claims from truck buyers who paid too much, and the company may be dragged into other EU cartel probes over alleged collusion with Daimler and BMW AG on technology standards. Those risks are dwarfed by the damages from the diesel-cheating scandal, which totals 22.6 billion euros so far, with European investigations and lawsuits still pending.

Scania, which denies any wrongdoing, already set aside 3.8 billion Swedish kronor (US$470 million) last year to cover a potential penalty after the other truckmakers were fined nearly 3 billion euros for working together on sales. It said it will challenge the fine at the EU courts.

While the fine “is slightly above expectations,” the risk of hefty compensation awards in the future “seems remote as it’ll be difficult to prove the actual damage," said Christian Ludwig, an analyst at Bankhaus Lampe in Germany.


The other truckmakers settled with the EU, winning a discount on their fine and denying them a chance to sue regulators. The Scania fine is the EU’s second-highest ever for one company in a price-fixing case, topped only by a 1.01 billion-euro penalty for Daimler AG in last year’s decision.

"This cartel affected very substantial numbers of road haulers in Europe since Scania and the other truck manufacturers in the cartel produce more than nine out of every 10 medium and heavy trucks sold in Europe," EU Competition Commissioner Margrethe Vestager said on Sept. 27.

The fine casts another cloud over Volkswagen as the automaker seeks to emerge from the two-year-old diesel-cheating scandal. The financial burdens and management distraction are particularly unwelcome as the manufacturer seeks to navigate disruption from a shift to an era of self-driving electric cars.

Truck Emissions

The truck cartel fixed factory prices for trucks between 1997 and 2011 and also coordinated when producers would introduce technology to curb emissions from trucks and how they’d pass on the costs of that technology to customers, the EU said.

Scania will appeal the decision, spokeswoman Karin Hallstan said.

The company “strongly contests all the findings and allegations made by the European Commission,” she said. “Scania also emphasizes that it has cooperated fully” by providing EU regulators with requested data and explanations throughout the entire investigation period.

Senior managers initially met at the margins of trade fairs or other events and sometimes held calls to coordinate behavior, starting with a Brussels meet-up in January 1997. From 2004, the truckmakers’ German units swapped information electronically.

The 2016 settlement included a 10 percent reduction for promising not to challenge the EU in court, as well as other discounts for cooperating with regulators. The companies involved now face potential court claims from customers seeking compensation for being overcharged which could total as much as $84 billion, according to Bloomberg Intelligence.

DAF also had to pay 752.7 million euros last year. Despite the settlement, penalties were high because the cartel covered a large market and lasted a long time, the EU said. MAN SE, also owned by Volkswagen, wasn’t fined because it was first to provide evidence of the cartel to regulators.

By Aoife White

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