John Schmidt, partner at law firm Arnold & Porter, examines the repercussions of ongoing cartel investigations in the logistics and packaging sectors.
Buyers and those involved in logistics management and packaging need to be closely watching two cartel investigations by the European Commission (EC) into trucks and metal packaging cartels.
Such restrictive agreements that raise prices are unlawful, and where you have been overcharged because of such a cartel agreement, you can claim for any loss you have suffered.
Exchanging Information
The trucks cartel case is relevant to anyone operating their own trucks fleet (owned or leased) or operating an outsourced logistics model.
In July 2016, the EC fined truck manufacturers for illegally exchanging information on their list prices and other anti-competitive behaviour. These were the EC’s largest ever cartel fines, totalling more than €3 billion.
The EC imposed the fine after it found that truck manufacturers Volvo/Renault, Daimler, Iveco, MAN, and DAF had colluded in exchanging price information for large and medium trucks between 1997 and 2011.
It also found they had also colluded on the timing of introducing low-emission technology, and on passing on the cost of that technology to customers. The EC fined Scania separately in September 2017 because, unlike the other companies involved, Scania did not agree on a settlement with the EC.
Claims against members of the trucks cartel are being brought in the UK, Germany and the Netherlands for the repayment of losses that were caused by their illegal conduct.
Metal Packaging
Earlier this year, the EC also launched an investigation into an alleged metal packaging cartel. It suspects that several major manufacturers of the tin and aluminium cans used for food, as well as manufacturers of vacuum seals for jars, colluded to fix the price for these packings artificially high.
The investigation is still ongoing. Companies who have confirmed being involved in the investigation are: Ardagh, Crown and Silgan.
The investigation started when the EC dawn raided several metal packaging companies and associations at the end of April. This came after the German competition authority had raided some companies over the same issue in March 2015.
The EC took over the investigation from the German authorities in part because it appeared that the behaviour under investigation was more widespread than originally thought.
If its suspicions prove right, anyone who has been overcharged for tins will be able to claim for repayment of such overcharge.
The time period during which you can make claims for overpayment is still unclear, due to the ongoing investigation, but it can be expected to cover a number of years before the raids in Germany in 2015.
Typically, such an investigation will take several years to conclude, unless the targets of the investigation agree to a settlement.
However, anyone who thinks they may have incurred losses due to being overcharged for tins needs to assess the situation early to ensure they do not run into limitation issues, particularly where purchases on which a potential claim would be based were made in different countries across the EU.
Impact On the Industry
If you are considering making a claim in relation to either cartel, you first need to establish whether you have made significant purchases of trucks and metal packaging, leading to losses sufficiently large to make a claim worth your while.
For a ballpark estimation of your potential losses, take your overall purchases of either trucks or metal packaging and assume an overcharge of between 10% and 25%.
The trucks cartel ran for around 14 years, so trucks purchased from 1997 to 2011 should be taken into account. If you are working on average annual purchases you should use a multiplier of 14. You may need to adjust for any changes in volumes during this period (if significant), but this will give you a headline amount (excluding interest).
In metal packaging the period under investigation is unclear, but you could assume a multiplier of, say 3-4, given that the EC’s press release speaks of several years. That will give you a very general ballpark figure (also excluding interest).
Once you have established the size of any potential losses, the next step is to consider whether any claim is worth pursuing, and whether you would want to seek third party funding for such a claim. Funding allows you to shift the risk and cost of litigation in exchange of which the funders will usually take a percentage of the winnings.
There is a lively third party funding community and competition cases are of particular interest to funders. If you have a potential portfolio of cases or even only two cases, that could also be attractive to funders as it diversifies the risk of any individual case.
Further Analysis
Of course, the legal analysis will be more complex and involved, but the above roadmap will give you the tools for an initial analysis.
In trucks, where the EC has already made the decision that infringement occurred, time is of the essence, as the limitation clock has started ticking across Europe.
And even though the metal packaging case is still ongoing, there is usually an advantage in concluding the analysis early and advancing any potential claim speedily.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by John Schmidt. Click subscribe to sign up to ESM: The European Supermarket Magazine.
