Car manufacturers and industry bodies have reached a settlement with the CMA after admitting to breaking competition law in relation to vehicle recycling, and related advertising claims.
Following an investigation by the Competition and Markets Authority (CMA), 10 manufacturers and 2 trade bodies have admitted their involvement in the illegal behaviour and agreed to pay fines totalling over £77 million.
Mercedes-Benz, which was also involved in these agreements, is exempt from paying a financial penalty as it alerted the CMA to its participation via the authority’s leniency policy.
The European Commission (EC) launched a parallel probe alongside the CMA in March 2022. The EC has today issued its own decision imposing fines for breaches of EU law.
Advertising claims
Amongst other sustainability information, manufacturers are legally required to include details on recyclability in their advertising materials, so customers can take this into account when considering a vehicle’s green credentials before buying.
In this case, the CMA found that all manufacturers illegally agreed that they would not advertise if their vehicles went above the minimum recyclability requirement of 85% (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.
Failing to compete against one another in this way is illegal. It also meant customers buying a car from one of these manufactures were unable to fully compare the green credentials of vehicles when buying, which could have affected their choice. This kind of behaviour may also lower the incentive for companies to invest in green initiatives.
Most manufacturers took part in this practice from May 2002 to September 2017, with Jaguar Land Rover joining in September 2008. The agreement was set out in a document called the ‘ELV Charta’ – sometimes referred to as a “gentleman’s agreement” – and sought to “avoid a competitive race” amongst the manufacturers in relation to advertising claims of this kind. This agreement was referenced in emails, internal documents and meeting minutes, and certain manufacturers challenged others when they breached this agreement.
Buyers’ cartel
Vehicle manufactures 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, 8 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.
While companies supplying this recycling service can often make money from ELVs, for example, by retrieving and selling the used parts and raw materials, how profitable it is can vary depending on the price of scrap metal at any given time.
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.
Colluding to agree prices in this manner is illegal. It can impact the incentives for other companies to invest – for example, in better and greener technologies.
Trade association involvement
Two trade associations, ACEA and the SMMT, were involved in both illegal agreements.
The manufacturers used ACEA meetings to facilitate these arrangements, with the association itself chairing meetings and intervening when manufacturers acted outside of the terms.
The SMMT also attended these meetings and likewise became involved by settling a handful of disputes.
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.
Today’s fines show our commitment to taking action when competition law is broken. In accordance with our leniency policy, we’ve given discounts to those who came forward with information and co-operated at an early stage, which helps to get the swiftest outcomes.
We recognise that competing businesses may want to work together to help the environment – in those cases, our door is open to help them do so.”
Settlement and fines
All of the car makers and industry bodies, except for Mercedes-Benz (which has been granted immunity from penalties), have now settled with the CMA – meaning they have admitted to taking part in illegal behaviour and agreed to pay fines totalling £77,688,917.
Following the launch of the CMA’s investigation, 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 for each company/industry body are:
The manufacturers and industry bodies have until 2 June 2025 to pay their fines.
Source www.gov.uk
