The Retailer Winter edition_2020

Market insights and trends

Cartel claims

NICK WOOD PARTNER grant thornton uk llp

COULD YOUR BUSINESS BE OWED MONEY FOR LOSSES CAUSED BY SECRET PRICE-FIXING CARTELS? Competition regulators have been busy investigating secret price-fixing cartels relating to various products and services relevant to the retail industry in the UK. Significant fines are issued by the regulators to the cartelists to punish them for their illegal activity, however these fines are paid into the EU budget and do not compensate those who suffered. Victims of the cartel that have lost money should bring private damages claims to recover the funds due to them. These claims are known as follow-on claims, as they follow on from a decision made by a competition regulator which confirms and proves that a company has infringed anti-competition law by, for example, colluding to fix prices. Potential claimants are therefore not required to prove the price-fixing activities; they are only required to prove that they have suffered loss from the cartel and the quantum of that loss. Any recoveries are further increased by claiming interest on any damages from the start of the cartel. With the evolution of competition law and the increased use of litigation funding meaning that claimants do not have to pay anything to bring a claim, more and more retailers are bringing actions to recover what is due to them. Making a claim for damages caused by one cartel would not prevent a company from making another damages claim in a separate cartel. As cartels can be historic and may last for a number of years, if a company has been affected by more than one cartel, it could save time to search for evidence across multiple claims at one time rather than looking at each one individually. There have recently been a series of European Commission (EC) and Competition & Markets Authority decisions on cartels that are pertinent to the retail industry, as set out in the following paragraphs. The Trucks Cartel The Trucks Cartel took place between 1997 and 2011 and relates to owned, leased and sub-contracted medium or heavy- duty trucks weighing six tonnes or more. The cartelists are Europe’s largest trucks manufacturers and were fined a record €3.8 billion for participating in the cartel. In this decision, the EC decided that the trucks manufacturers had colluded on prices and passed on the costs of new emissions-reducing technology. The cartel’s reach was wide, with the cartelists producing nine out of ten of the medium and heavy trucks used in Europe. Individual claims from supermarkets and other retailers will likely run into tens of millions of pounds. Whether the trucks were purchased new, second-hand, leased or provided by a third-party company, potential claimants are entitled to seek the difference between what they paid and what they should have paid had the cartel not existed. Those businesses that used hauliers also have a claim, as the hauliers are expected to have passed on the overcharge by way of higher haulage rates (although the claim would always be against the cartelists, not the hauliers). The estimated overcharge of 10-26% suffered by customers was not just restricted to trucks purchased directly from the cartelists as the cartel is expected to have raised trucks prices across the whole market.

Canned Vegetables Cartel In the Canned Vegetables Cartel, which took place between 2000 and 2013, an EC decision on 27 September 2019 decided that three canned vegetables suppliers were found to have acted anti-competitively. Two of the cartelists were fined €31.6 million for fixing prices of certain types of canned vegetables to retailers in the European Economic Area, in respect of both own label and private label brands. The third cartelist avoided a fine of circa €250 million in exchange for having revealed the existence of the cartel. This is the second cartel of its type following the issuing of fines to three manufacturers in respect of a canned mushrooms cartel in 2014 and 2016. Potential Metal Packaging Cartel There is also a Metal Packaging cartel that is currently being investigated by the EC in relation to metal packaging used in items such as tin cans for food, paints and chemicals. On 24 April 2018, the EC confirmed it was making unannounced inspections at various sites belonging to companies in the metal packaging industry, following findings in initial investigations undertaken by the German Competition Authority that anti-competitive activity may also have taken place outside of Germany. Although the outcome of these investigations is still being established, early action being taken by potential claimants following the release of a decision is encouraged in order to avoid any limitation issues. The alleged overcharge of interchange fees to entities such as retailers who accept MasterCard and Visa transactions from their customers affected a wide range of industries. It is currently disputed whether the interchange fee – in part or in full - was anti-competitive. There are a significant number of claimants in this matter, including many from the retail sector. Competition cases impacting the retail industry are likely to increase therefore ensuring you stay on top of the activity of the regulators is encouraged. Should you wish to hear anything further regarding these cartels please contact me on the details below. MasterCard and Visa – overcharge of interchange fees

NICK WOOD //Nick.s.wood@uk.gt.com, // 020 7728 2426

34 | winter 2020 | the retailer