Daimler’s Spanish unit can be liable for cartel damages, EU court adviser says

Daimler AG sign is pictured at the IAA truck show in Hanover, Germany

Daimler’s Spanish unit can be liable for damages sought by companies affected by the German carmaker’s role in a truck cartel fined by EU antitrust regulators five years ago, an adviser to Europe’s top court said on Thursday.

Should the court follow the non-binding opinion in the coming months, it could pave the way for companies to sue subsidiaries of other cartel members and other illegal price-fixing groups.

The European Commission in 2016 handed out a then record 2.9 billion euro fine to the cartel which included Daimler, Swedish company Volvo, Iveco, which is part of Italian truck and tractor maker CNH Industrial, and DAF Trucks, owned by U.S. company Paccar.

Daimler’s fine was the biggest at 1.01 billion euros ($1.2 billion) while Volkswagen-owned MAN avoided a penalty for alerting the EU competition watchdog to the cartel.

Spanish company Sumal SL subsequently asked for 22,000 euros in damages from Mercedes Benz Trucks España SL, a Daimler subsidiary, saying the sum was the premium paid to the company for buying Daimler trucks. It said prices would have been lower without the cartel.

A Spanish court then asked the Luxembourg-based Court of Justice of the European Union (CJEU), Europe’s highest, for guidance.

“A national court can order a subsidiary company to pay compensation for the harm caused by the anti-competitive conduct of its parent company in a case where the Commission has imposed a fine solely on that parent company,” Giovanni Pitruzzella, advocate general at the Luxembourg-based Court of Justice of the European Union (CJEU) said in a non-binding opinion.

“For that to be the case, the two companies must have operated on the market as a single undertaking and the subsidiary must have contributed to the achievement of the objective and the materialisation of the effects of that conduct,” he said.

The court follows its advisers’ recommendations in around four out of five cases. The Commission said the cartel, which ran for 14 years, fixed prices and coordinated the timing of introducing new emission technologies in 1997 and passing on the costs of those new technologies.

Was it worth reading? Let us know.