AutomotiveBit: ACM fines price fixing arrangements in relation to forklift-truck batteries
The Dutch Competition Authority (ACM) has imposed fines (totaling over EUR 16 million) on five importers of batteries for forklift-trucks and their trade association BMWT for fixing prices. The participants infringed the cartel prohibition by agreeing to levy a lead surcharge on these batteries between 2004 and 2013.
The lead surcharge
In 2003 there was a sharp increase in the price of lead resulting in higher battery prices being charged by manufacturers of these batteries. Driven by this price increase and strong competition between importers, the five importers and BMWT agreed to impose a so called ‘lead surcharge’ on their batteries.
The lead surcharge was calculated by adding (to the battery price) the difference between:
- the market price of the specific lead used in the battery (as indicated by the London Metal Exchange) on the one hand; and
- the price already paid for the lead in the battery on the other hand.
The importers deemed it of importance that this surcharge was passed on to the customer in a transparent manner. As such, the lead surcharge was separately stated on the invoice and varied between 10% and 30% of the battery price during the cartel. In addition, it was agreed that the parties would not grant any rebates as to this price component.
In its decision, the ACM notes that BMWT facilitated the cartel (for example) by providing meeting rooms, allowing discussions about lead surcharges in its work group and handing out lists with lead surcharges applied by one of its members to other members. BMWT was fined for this anticompetitive behavior.
During the investigations, the ACM also discovered that BMWT conducted surveys asking members of certain (other) work groups about current and future service fees. BMWT collected the answers to these surveys, provided lists of fees to members who subsequently discussed these lists in their work groups. The ACM did not fine BMWT for this behaviour as it found insufficient evidence that customers take these service fees into account when selecting a product. The cartel prohibition only prohibits practices that prevent, restrict or distort competition.
All five importers and BMWT choose to settle the procedure with the ACM. In a settlement, companies acknowledge their participation in a cartel infringement and their liability for it. In exchange, settling parties benefit from quicker and less detailed decisions and a 10% reduction in fines. Two other importers did not settle the case with the ACM and the ACM will deal with these cases under its normal decision-making procedure.
If a company is the first to report a cartel to the ACM and fully cooperates with the ACM during the investigations, the ACM could grant such company a full immunity for fines. In the case at hand, ACM granted full immunity to one importer. Thereby, this importer escaped a fine of approximately EUR 16 million.
Trade associations and competition law
Although trade associations could play a key role when it comes to enhancing the quality of products, innovation and standard setting in a sector, the cartel prohibition applies in full between its members. Trade associations should therefore exercise caution when providing services to members that (potentially) compete in order to prevent the creation and/or the facilitation of cartels. In particular, a trade association should be aware not to exchange sensitive information between (potential) competitors. If a trade association infringes the cartel prohibition, the maximum fine imposed by the ACM could run up to 40% of the turnover (80% in case of recidivism) of its members in the preceding year.
Our EU competition team has experience with advising trade associations with their compliance programs and providing these with practical tips & tricks in order to prevent such infringements.
Would you like more information? Contact your regular Loyens & Loeff advisor, Robin Struijlaart or Mark Brabers.
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