In July 2016, the Commissioner for competition, Margrethe Vestager, announced a fine of € 2.93 billion against the “truck cartel”. According to the Commissioner for competition, this is the highest fine ever imposed in a case of cartel in the European Union (EU). A cartel is a formal agreement between two or more producers to regulate supply in order to manipulate prices of the goods they produce or services they render.
The purpose of this paper is to study cartels and their effects on the economy and how the European Commission (EC) copes with it. It is separated into four parts: the first part explains what a cartel is and why it is illegal, the second part discusses in detail the “truck cartel case” managed by the EC, the third part is …show more content…
It blames the groups Daimler, MAN, Scania, DAF, Iveco and Volvo for agreeing for around 14 years, between 1997 and 2011, to delay the introduction of technologies to reduce carbon dioxide emissions and to have agreed on prices. These companies accounted together for about 90% of all medium and heavy trucks produced in Europe and covered the entire European Economic Area (EEA).
Under the Commission’s 2006 Leniency Notice, MAN was fully immune from fine for informing the EC about the cartel and avoided a fine of around € 1.2 billion. As the manufacturers Volvo, Daimler and Iveco cooperated with the investigation, they also benefited from reductions of their fines under the same …show more content…
Lack of competition is bad for consumers because, as the producers do not try to innovate or to offer the best possible prices anymore, they end up paying more for less quality, and bad for the economy of countries because they cause a deadweight loss. This is the reason why the EC has made the fight of cartels one of its priority.
The Truck cartel case is a good example of how the EC take actions against cartel agreements. The fines are based on the number of customers affected and the duration of the agreement. As the cartel existed for around 14 years, from 1997 to 2011, and its extend was 90% of the medium and heavy trucks produced in Europe, the members of the cartel received a record fine of around € 3
The purpose of this paper is to study cartels and their effects on the economy and how the European Commission (EC) copes with it. It is separated into four parts: the first part explains what a cartel is and why it is illegal, the second part discusses in detail the “truck cartel case” managed by the EC, the third part is …show more content…
It blames the groups Daimler, MAN, Scania, DAF, Iveco and Volvo for agreeing for around 14 years, between 1997 and 2011, to delay the introduction of technologies to reduce carbon dioxide emissions and to have agreed on prices. These companies accounted together for about 90% of all medium and heavy trucks produced in Europe and covered the entire European Economic Area (EEA).
Under the Commission’s 2006 Leniency Notice, MAN was fully immune from fine for informing the EC about the cartel and avoided a fine of around € 1.2 billion. As the manufacturers Volvo, Daimler and Iveco cooperated with the investigation, they also benefited from reductions of their fines under the same …show more content…
Lack of competition is bad for consumers because, as the producers do not try to innovate or to offer the best possible prices anymore, they end up paying more for less quality, and bad for the economy of countries because they cause a deadweight loss. This is the reason why the EC has made the fight of cartels one of its priority.
The Truck cartel case is a good example of how the EC take actions against cartel agreements. The fines are based on the number of customers affected and the duration of the agreement. As the cartel existed for around 14 years, from 1997 to 2011, and its extend was 90% of the medium and heavy trucks produced in Europe, the members of the cartel received a record fine of around € 3