By Steven Meyerhoff, director/head of commercial litigation & employment, Backhouse Jones Solicitors
The RHA has won its first legal battle in its fight to secure money for members and other truck operators who paid too much for their trucks due to unlawful price-fixing by the major European truck manufacturers.
The next stage in the legal process will be a hearing probably towards the end of 2020 to decide whether the RHA can proceed with its group claim. As there will come a time when operators can no longer sign up to the RHA’s claim, it is worth reminding readers what the truck cartel was, the current status of the RHA’s claim, and who can join the claim.
The European Commission fined the six major European truck manufacturers (DAF, MAN, Iveco, Daimler/Mercedes, Volvo/Renault, and Scania) over £3.4 billion for cartel activities. The manufacturers – at their own admission except for Scania – were party to a cartel from 1997 to 2011, with senior managers involved at HQ level. The manufacturers engaged in various illegal practices, including:
- Aligning their gross list prices at the start of the cartel;
- Increasing gross and sometimes net list prices;
- Agreeing the cost that operators should be charged for emissions technologies (Euro III, IV, V and VI); and
- Delaying the introduction of emissions technologies.
Given the significance of this case for the industry and the impact of the cartel on operators, the RHA considered it needed to act on behalf of its members and the road haulage sector more generally.
In July 2018 the RHA issued a collective claim before the Competition Appeal Tribunal (the ‘Tribunal’) in London for any person or business that purchased or leased trucks since January 1997, subject to some qualifying criteria (see below).
The cartel was a serious violation of EU competition rules and the European Commission’s decision proves that the truck manufacturers are liable for the violation. With liability established, the RHA will be left to show that the cartel caused operators losses and the amount of those losses.
What are collective proceedings?
Collective proceedings are a form of court procedure that enable a class representative to bring opt-in collective proceedings on behalf of businesses affected by an infringement of competition rules. The RHA as a class representative will be responsible for running all aspects of the case before the Tribunal, including those aspects for which claimants would normally be responsible. The core notion of collective proceedings is that they group together similar claims that raise common issues.
There are four main stages to collective proceedings. The first phase involves applying to the Tribunal for a collective proceedings order (“CPO”). The CPO will authorise the RHA as class representative and certify the class (ie confirm which claims are eligible for inclusion in the collective proceedings). Once the CPO has been made, the second stage of the collective proceedings would be a trial of the common issues and the judgment as regards the common issues will be binding on all claimants that opt into the RHA’s claim. The third stage would be the determination of any individual issues. The fourth stage would involve distribution of compensation to claimants that have opted into the collective proceedings.
The RHA’s application is currently in the first phase (as described above) and it expects a final hearing of its CPO application towards the end of 2020. The first phase of the case has been delayed mainly due to developments in another unrelated collective claim – a £14 billion action on behalf of consumers against Mastercard (Walter Hugh Merricks -v- Mastercard Inc.). In that other case, a decision by which the Tribunal rejected the CPO application of Mr Merricks was overturned by the Court of Appeal in April 2019. However, Mastercard is now appealing the Court of Appeal judgment to the Supreme Court and will have its case heard in May 2020. The judgment of the Supreme Court will clarify the test that the Tribunal needs to apply when considering whether to grant CPOs.
The RHA remains confident that the Tribunal will ultimately allow it to become class representative regardless of the outcome of Mastercard’s appeal to the Supreme Court.
Despite the Tribunal’s decision to delay hearing the main part of the RHA’s CPO application, the Tribunal did hear arguments from the RHA and truck manufacturers relating to the RHA’s funding and insurance for the case.
In its judgment, the Tribunal agreed entirely with the RHA that its funding arrangements and the “carefully worded provisions” of its insurance documents are fit for purpose and do not stand in the way of the RHA being granted a CPO. The Tribunal added that it “seeks to facilitate access to justice for claimants in properly constituted collective proceedings”.
The truck manufacturers had tried to persuade the Tribunal that the RHA’s funding arrangement was contrary to legislation outlawing certain funding practices in the claims management field, that the RHA did not have sufficient funding in place to bring the claim, and that the RHA did not have adequate legal insurance. However, the Tribunal rejected all these arguments and sided squarely with the RHA. The Tribunal even went as far as saying that some of the truck manufacturers’ arguments had an “air of artificiality” about them, while commenting that the RHA’s insurance policy covers both the RHA and all claimants in the class.
The RHA recovered the bulk of the costs incurred in defending the arguments brought by the manufacturers.
Who is eligible to join the RHA’s claim?
Any firm, company, or individual who since January 1997 purchased or leased a truck registered in the UK for road haulage operations (both hire and reward and own-account). Those who purchased or leased trucks registered in EEA Member States other than the UK can join if the company belongs to a group of companies that purchased or leased trucks registered in the UK.
Companies that purchase trucks to re-sell or lease to third parties are not eligible to join the claim.
There are currently in excess of 11,500 operators who have signed up to the claim and a further 1,000 who are in the process of signing up to the claim. It is understood that the claim is the biggest of its type in Europe.
What will it cost an operator to join the RHA claim?
There will be no cost or risk to any business joining the claim. The RHA has secured a significant amount of funding from a specialist litigation funder. If the claim were unsuccessful, the funder will lose its investment. To offset that risk, the litigation funder will take a fee from the compensation awarded if the RHA is successful on behalf of the truck operators. Based on conservative estimates by the RHA, businesses should still receive 91% or more its proportionate share of the compensation.
Usually in litigation, the losing party is ordered to pay the winning party’s costs. As the RHA is bringing this matter on behalf of operators, any such order would generally be made against the RHA. There are more limited circumstances in which an operator as an individual claimant may be ordered to pay costs where issues arising in the litigation apply only to that business. However, the RHA has taken out a significant level of insurance cover to insure against the risk both in relation to itself and in relation to each individual operator who signs up to the claim.
The RHA continues to work tirelessly on behalf of the industry to seek redress for the unlawful actions of the truck manufacturers. It is anticipated that by the end of 2020 or shortly thereafter the RHA will have been authorised by the Tribunal to proceed with the action on behalf of the industry.