February 14, 2023

CAT rules in favor of claimants in truck manufacturer infringement trial

The UK Competition Appeal Tribunal (“CAT”) recently ruled in favor of claimants Royal Mail Group Limited and three BT Group companies – BT Group PLC, British Telecommunications PLC, and BT Fleet Limited – awarding them approximately £40 million in damages plus interest (compound on the part of Royal Mail) incurred from the purchase or lease of large volumes of trucks from companies in the DAF Group (“Respondents”).  In 2016, the European Commission imposed a record €2.9 billion in fines upon five truck manufacturers, including DAF, after finding that they infringed Article 101 of the Treaty on the Functioning of the EU and Article 53 of the Agreement on the European Economic Area (“EEA”) between 1997 and 2011 for exchanging information on truck pricing and on passing on the costs of compliance with stricter emission rules.  The CAT trial was held to determine several follow-on issues related to the Commission’s decision, including whether the infringement actually caused the overcharges claimed by the claimants; which party had the most plausible theory of harm; how the overcharges would be calculated if causation was established; the value of commerce (the amount to which the overcharge percentage is to be applied); and the calculation of interest.

At trial, DAF asserted a few mitigating defenses, including a claim that any overcharges related to the sale of new trucks should be offset by the resulting increase in used truck prices which claimants benefited from when they sold used trucks.  DAF also alleged that any overcharges would have decreased the price of the truck’s bodies and trailers, which were manufactured by third-parties – decreases that DAF claimed would have benefited the claimants and should be offset against the overcharge.  DAF additionally argued that claimants mitigated their losses by passing on increased costs of other products to their customers such as postage stamps or telephone line rentals – allegations that the claimants denied.

At the conclusion of the 25-day trial, the CAT ultimately ruled that the claimants were overcharged as a result of DAF’s infringement after finding that all of DAF’s mitigating defenses failed.  The CAT further determined that the claimants were overcharged 5 percent for every truck bought from DAF during the relevant period as well as the expert calculations to be used to determine the claimants’ financial losses and the tax adjustments that should be made.  To assist with the financial loss calculations, the tribunal determined that Royal Mail’s value of commerce was more than £260 million, while the BT Group companies’ value of commerce was found to be nearly £45 million.  The Tribunal additionally held that Royal Mail was entitled to compound interest based on a combination of Royal Mail’s cost of debt finance and its returns on short term investments over the relevant finance period, whereas the BT Group was entitled to simple interest at base rate plus 2 percent.

CAT Judgment Summary | CAT Judgment | European Commission Press Release (July 2016)