Car makers, industry bodies fined over £77m for breaking competition law
Ten car manufacturers in the UK, along with two trade bodies, have been fined more than £77 million, after they were found to have illegally agreed not to compete against one another when advertising what percentage of their cars can be recycled.
An investigation by the Competition and Markets Authority (CMA) also discovered that the manufacturers illegally colluded to avoid paying third parties to recycle their customers’ scrap cars.
Mercedes-Benz, which was involved in the scandal, has been deemed exempt from paying a financial penalty as it alerted the CMA to its participation via the authority’s leniency policy.
The 10 car makers (BMW, Ford, Jaguar Land Rover, Peugeot Citroen, Mitsubishi, Nissan, Renault, Toyota, Vauxhall and Volkswagen), and the two trade associations (the ACEA and the SMMT) all admitted their involvement in the illegal behaviour.
The SMMT, Stellantis (the current owner of Peugeot Citroen, Vauxhall and Opel) and Mitsubishi approached the CMA for leniency and, as a result, have received a percentage reduction to their fines.
The fines total £77,688,917, with Ford receiving the biggest hit of £18,541,929.
The European Commission (EC) launched a parallel probe alongside the CMA in March 2022. The EC issued its own decision imposing fines of €458 million for breaches of EU law.
Lucilia Falsarella Pereira, senior director of competition enforcement at the CMA, said: “Agreeing with competitors the prices you’ll pay for a service or colluding to restrict competition is illegal and this can extend to how you advertise your products.
“This kind of collusion can limit consumers’ ability to make informed choices and lower the incentive for companies to invest in new initiatives.”
Advertising claims
The CMA found that all manufacturers illegally agreed that they would not advertise if their vehicles went above the minimum recyclability requirement of 85 per cent (even if the actual percentage was higher).
With the exception of Renault, the manufacturers also agreed not to share information with their customers about the percentage of recycled material used in their vehicles.
Most manufacturers took part in this practice from May 2002 to September 2017, with Jaguar Land Rover joining in September 2008.
Buyers’ cartel
Vehicle manufacturers must offer their customers a free service for recycling their old or written-off vehicles having no or negative market value (known in the industry as ‘end-of-life vehicles’ or ELVs), and this service is regularly outsourced to third parties.
The CMA’s investigation revealed that certain manufacturers were involved in what is known as a ‘buyers’ cartel’ in relation to this service.
From April 2004 to May 2018, eight manufacturers – BMW, Ford, Mercedes-Benz, Peugeot Citroen, Renault, Toyota, Vauxhall and Volkswagen – agreed amongst themselves that they would not pay companies to handle the recycling of their customers’ ELVs.
This effectively meant the companies providing this service were unable to negotiate a price with manufacturers.
Other companies and bodies later joined the unlawful agreement, including the European Automobile Manufacturers’ Association (ACEA), the Society of Motor Manufacturers & Traders (SMMT), Nissan and Mitsubishi in 2006, and Jaguar Land Rover in 2016.