Royal Mail and BT awarded £20m in lorry cartel ruling

Royal Mail and BT awarded £20m in lorry cartel ruling

9 Feb    Finance News, News

Europe’s market-leading lorry manufacturer must pay Royal Mail and BT about £20 million as part of a landmark cartel damages ruling that could pave the way for further compensation orders.

Competition experts predicted that DAF, a company based in Eindhoven in the Netherlands, will pay Royal Mail alone more than £17 million after the competition appeal tribunal in London ruled that both British companies should be awarded damages.

Lawyers said it was the first time that the tribunal had made an order for “follow-on” damages against one of the defendant companies in an earlier European Commission finding that they were involved in a cartel.

It is expected that after the amount that DAF was determined to have overcharged as part of its cartel involvement is combined with an interest figure, the Dutch company will pay Royal Mail about £17.5 million in compensation. That figure is based on evidence before the tribunal that Royal Mail’s “value of commerce” — the company’s total expenditure on trucks bought from DAF during the period of its EU law infringement — was more than £260 million.

BT is in line for lower compensation — possibly about £3 million — as the tribunal assessed that company’s value of commerce figure to be nearly £45 million.

The figures are estimated as the tribunal has instructed the parties to attempt to arrive at a compensation deal. If they cannot, the case will return for a further hearing. The tribunal’s ruling is the latest ramification of a 2016 ruling by the Brussels commission, which found that five truck manufacturers — DAF, MAN, Daimler, Iveco and Volvo/Renault — had breached EU cartel laws.

That ruling found that the companies had struck unlawful “collusive arrangements on pricing and gross price increases . . . for medium and heavy trucks” between 1997 and 2011.

The hearing before the London tribunal was, said the three judges in their ruling, “the first of many such claims arising out of the infringement to go to trial in the UK”.

Both Royal Mail and BT argued that they had bought or leased large volumes of lorries from DAF during the infringement period, when prices and lease payments were higher than they would have been if the companies had not formed an unlawful cartel.

The two companies claimed damages relating to the overcharging and for other consequential losses.

Competition law experts predicted that the tribunal’s ruling would open the doors to future claims. “The value of the overcharge found by the tribunal is quite high given that the value of relevant trucks can range from £60,000 to £300,000 over the period,” said Suzanne Rab, a barrister at Serle Court chambers in London.

Rab added that the ruling was “likely to embolden other trucks cartel claimants whose claims remain to be heard and fuel the growing momentum of competition damages claims in the UK”.

According to figures published last year, DAF is the market-leading truck manufacturer in six European countries. It claimed to have a more than 31 per cent share of the UK market, and also to be top of the sales table in its home country as well as in Belgium, Poland, Hungary and Bulgaria.

Although based in the Netherlands, the company is a division of Paccar, a US multinational that is headquartered near Seattle.

Last year DAF also sold more than 7,500 trucks outside the EU and UK, claiming that it had record sales in Israel, Colombia, Ecuador and Australia.

Reacting to the latest ruling, a Royal Mail spokesman said the company was “very pleased with the tribunal’s judgment in what is a clear and emphatic win. It has taken us more than six years to get this outcome. We await confirmation of the final damages to be awarded”.

A spokesman for DAF in the Netherlands said that the company would not comment on the tribunal ruling.

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