Hitting the brakes: Ten car manufacturers reach settlement with the UK regulator over concerted practices

Following an investigation by the UK competition regulator (the CMA), ten vehicle manufacturers and two trade bodies have reached a settlement after admitting to breaching competition law in relation to agreeing to an informal "truce" over their vehicle recycling and related advertising claims. This settlement highlights the growing regulatory scrutiny on competitor interactions and provides a timely reminder for businesses to educate employees on the risks of collaboration with competitors.

For this conduct, the CMA issued fines totalling over ~$160m AUD, while the European Commission imposed separate penalties of over ~$806m AUD for equivalent breaches in the EU.

Avoiding a competitive race

The key aspects of the coordination between the vehicle manufacturers were:

• Agreed limits on recyclability of vehicles: Between 2002 and September 2017, the competing manufacturers agreed that they would not advertise if their vehicles exceeded the minimum recyclability requirement of 85% (even if the actual percentage was higher).
  
  This agreement between the manufacturers was referenced in internal documents, emails and meeting minutes, including one document which expressed the parties' agreement to avoid a "competitive race".

• Agreeing not to pay for vehicle recycling services: Under UK and EU law, vehicle manufacturers must offer their customers a free service for recycling their old vehicles or end of life vehicles, which no longer have market value. The CMA’s investigation revealed that certain manufacturers were involved in what is known as a ‘buyers’ cartel’ in relation to this service between 2004 and 2018.

Eight of the vehicle manufacturers agreed amongst themselves that they would not pay companies for this recycling service. The effect of this agreement was that companies offering the vehicle recycling service could not negotiate a price for this service with the vehicle manufacturers.

Colluding to agree procurement prices with suppliers and agreeing not to compete with competitors is prohibited.

Two trade associations were also involved in the illegal agreements. Trade association meetings were used as a forum to facilitate the collusion, with the association involved chairing discussions and intervening when manufacturers deviated from the agreed terms. Another trade body also participated in the meetings and played a role by helping to resolve disputes among the manufacturers.

Leniency in action

One of the vehicle manufacturers obtained immunity, by notifying the CMA of its participation in the conduct.

In Australia, the ACCC has an immunity framework for cartel conduct, but it notably excludes concerted practices. Instead, concerted practices are addressed under the ACCC Cooperation Policy for Enforcement Matters, which sets out the circumstances in which individuals or companies that assist the ACCC may receive immunity or leniency. Recognition of cooperation can take various forms, including full or partial immunity from enforcement action, submissions to the Court supporting a reduced penalty, or administrative resolution in lieu of formal litigation.

While immunity for concerted practices is available at the ACCC’s discretion, it is just one of several options under the Cooperation Policy. Consequently, companies that self-report potential cartel conduct but are found to have engaged only in a concerted practice are not guaranteed "first in" immunity. This leaves them exposed to potential legal action or investigation despite their cooperation.

Australia is unique in excluding concerted practices from its cartel immunity policy. While other jurisdictions are broadening the scope of conduct eligible for immunity, Australia’s 2024 revision of its immunity policy has retained the exclusion of concerted practices. In contrast, the CMA has proposed changes to its leniency policy for cartel cases, which are currently open for consultation. These changes would expand the definition of cartel activity to include no-poach agreements, pay-for-delay agreements, anti-competitive information sharing, and arrangements involving sustainability-related restrictions between competitors.

If you are considering self-reporting potential cartel conduct or a concerted practice, seek legal advice to ensure your business is fully aware of the implications of the ACCC leniency policies.