UK Car Manufacturers Fined Over $77M for Colluding on Green Advertising
In a significant development for competition law enforcement, ten major car manufacturers, alongside two automotive trade bodies, have been fined more than £77 million ($96 million) by the UK's Competition and Markets Authority (CMA). This hefty penalty follows their admission of involvement in a cartel that sought to manipulate the advertising of their vehicles' green credentials.
The investigation, which was initiated after a tip-off from Mercedes-Benz, revealed that brands including BMW, Ford, Jaguar Land Rover, Peugeot, Citroën, Mitsubishi, Nissan, Renault, Toyota, Vauxhall, and Volkswagen had collectively agreed not to compete in their marketing efforts regarding the recyclability of their vehicles. Remarkably, Mercedes-Benz managed to sidestep financial penalties due to its cooperation with the CMA during the investigation.
According to the CMA, the collaboration among these manufacturers included an agreement to withhold information from customers concerning the proportion of recycled materials utilized in their vehicles. This lack of transparency inhibited consumers from making informed choices when purchasing cars – a basic right in competitive markets.
Lucilia Falsarella Pereira, the CMA's senior director of competition enforcement, stated, "Agreeing with competitors on prices or colluding to restrict competition is illegal, and this can extend to how you advertise your products. Such collusion can limit consumers' ability to make informed choices and decrease the incentive for companies to invest in new initiatives." She emphasized the CMA's commitment to upholding competition law and the importance of maintaining a fair marketplace.
The fine is part of the CMA’s broader strategy to address violations of competition rules, a stance reinforced by the leniency policy that rewards companies that come forward with information. Some manufacturers, like Stellantis and Mitsubishi, requested leniency upon being investigated, which resulted in their fines being reduced after cooperating with the CMA.
The illegal agreements, which were in place from May 2002 to September 2017, sought to prevent a competitive race among manufacturers concerning claims of end-of-life recyclability. Notably, Jaguar Land Rover joined this underhanded pact in September 2008. The documentation outlining these agreements, known as the ELV Charta, was referred to as a 'gentleman's agreement.'
The issue of collusion has also caught the attention of European regulators, as the European Commission initiated a parallel investigation in March 2022. This inquiry resulted in even larger fines totaling €458 million ($383 million) in a cartel involving 15 car manufacturers and the trade body ACEA related to end-of-life vehicle recycling across the European trading bloc.
In response to the fines imposed in the UK, Renault stated that the infringing practices dated back to 2002, ending in 2018 at a time when the recycling sector and environmental communication were still in their infancy. They claimed the practices did not financially harm consumers, illustrating the complex nature of accountability within industry practices.
As the auto industry shifts towards greener solutions, these fines stand as a stark reminder of the importance of adhering to competition laws and the consequences of collusion. The CMA's actions reinforce the need for transparency and honest competition, ensuring that consumers can make informed choices in an increasingly eco-conscious automotive market.
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