Truckmakers may still gain from cartel – even after record fine

The case shows that between 1997 and 2011, or four generations of engine standards, Europe’s truckmakers had colluded to the detriment of the health of Europeans, the environment, and their customers. They did so by fixing prices and jointly agreeing the pace of introduction for emission reduction technologies, which even then underperformed in real driving conditions.

Jos Dings, executive director at Transport & Environment, said: “This is a big fine, but not at all extreme if you look at the enormous scale of this cartel – all trucks sold in Europe over 14 years. After this verdict truckmakers need to change, but so too do regulators by creating competition on environmental performance. Introducing fuel economy standards is one key way of doing that.”

The collusion took place between 1997 and 2011, when the industry was working to comply with Euro standards III to VI. Euro standards regulate air pollutants like particulates and NOx, not CO2 or fuel consumption.

Given typical annual truck sales of 350,000 in the EU, over the 1997-2011 years truckmakers sold approximately five million trucks. Excluding trucks sold by Scania and MAN and trucks under 6 tonnes, the companies fined today sold an estimated 3.5 million vehicles over the period. The €2.93 billion fine hence represents around €850 per vehicle.

The compliance costs for Euro III-VI (from a Euro II baseline) have been estimated at $426, $4,197, $4,657 and $6,937 respectively, averaging around €3,500 per truck over the period. It follows that if the industry colluders only agreed to a relatively modest degree of overpricing for compliance costs, the cartel has been profitable in retrospect – even taking the fine into account. For comparison, Euro VI trucks were initially sold [1] with an industry-wide €10,000 premium, not the €2,000 additional costs ($6,937 – $4,657) cited above.

The case bears a sad resemblance to the Dieselgate scandal for cars that emerged 10 months ago. First, the real-world performance of trucks certified on Euro III-V standards has disappointed. Real-world Euro IV NOx emissions (6.5g/kWh) were, on average, almost twice as high as the legal limit (3.5g/kWh). It was only the introduction of Euro VI in 2013 and the associated real-world checks with portable emissions measurement systems (PEMS) that finally brought NOx from trucks into line.

But more fundamentally, today’s verdict shows that both of the strategies the automotive industry deployed to deal with emission standards – evasion by carmakers, collusion by truckmakers – are not just immoral but simply illegal.

Jos Dings concluded:“Unfortunately none of the €2.93 billion settlement fine has actually been dedicated towards remediation of environmental damage, unlike the partial VW Dieselgate settlement in the US. The fine could have well been directed towards research and development of cleaner, more energy efficient vehicles, or the accelerated electrification of transport.”

Notes to editors:

[1] Hemmingfire.com, 2013. “The [cost increase] figure being bandied around is an increase of approximately £10,500 per vehicle. (…) It is interesting that all manufacturers are quoting a similar figure and it will be interesting to see at launch who breaks first.”

On its website, MAN explains Euro VI trucks will cost €10,000 extra compared to Euro V.