TWO COUNCILS are claiming nearly £30m in a huge Scottish class action against some of the world's biggest truck manufacturers over losses incurred after they operated a price-fixing cartel.

It has been confirmed that Glasgow City Council, which is making a claim of up to £22.67m and West Dunbartonshire Council which is suing for £6.74m have been selected as lead cases in 22 across Scotland, including other local authorities. Both councils' claims include interest over a ten year period from 2011.

UK haulage firms are also suing the truck manufacturers accused of operating a cartel to fix truck prices and are watching the Scottish case carefully.

A number of companies that bought or leased trucks between 1997 and 2011 are seeking a payout said to be worth up to £5bn through legal action led by the Road Haulage Association (RHA), which is pursuing a claim on their behalf at the Competition Appeal Tribunal though a collective proceedings order (CPO).

The RHA lodged a claim three years ago seeking more than £6,000 in compensation on each truck purchased between 1997 and 2011, against truck makers DAF, Daimler, Iveco, Volvo, Renault, Scania and MAN.

Details of the Scottish claims came as the councils began fighting truck firms' assertions that their actions were void because they are protected by a five year time limitation on court proceedings.

HeraldScotland:

The Scottish action is similar to the RHA action and also includes Fiat Chrysler and Paccar.

Glasgow City Council claims that during the period of the cartel between 1997 and 2011 it purchased medium and heavy trucks by the manufacturers for sums amounting to around £38 million.

The sum sued for is calculated on the basis that the typical overcharge caused by the operation of the cartel was 26%.

Some of the 22 including West Dunbartonshire Council, have claims in respect of purchases of other vehicles, such as buses.

Manufacturers have been fined €3.8bn (£3.3bn) by the European Commission (EC) in total – a record penalty imposed by the commission for a vehicle cartel.

In July 2016, the European Commission (EC) found that five of Europe’s largest truck manufacturers – MAN, DAF, Iveco, Volvo/Renault and Daimler – had taken part in a cartel between 1997 and 2011 with the aim of fixing prices for large and medium trucks.

MAN, owned by VW, alerted the commission to the cartel and escaped a €1.2bn fine.

The other four received a 10% reduction in fines for settling.

The biggest penalty, of €1bn (£860m), was imposed on Germany’s Daimler. Dutch company DAF was fined €753m (£648m), Volvo/Renault €670m (£576m) and Italy’s Iveco €495m (£426m).

A subsequent decision, in September 2017, concluded that Scania was also involved, and the Swedish manufacturer was fined €880m (£757m).

Margrethe Vestager, the European commissioner for competition, said in September, 2017 when Scania were fined: “The decision marks the end of our investigation into a very long-lasting cartel – 14 years.

HeraldScotland:

“This cartel affected very substantial numbers of road hauliers in Europe, since Scania and the other truck manufacturers in the cartel produce more than nine out of every 10 medium and heavy trucks sold in Europe. Instead of colluding on pricing, the truck manufacturers should have been competing against each other – also on environmental improvements.”

The 14-year collusion began at a meeting at a hotel in Brussels in January 1997, according to the commission, and came to an end in 2011 when it carried out surprise inspections of the firms.

Senior managers colluded at meetings on the fringes of trade fairs and other events, and also discussed price fixing by phone. From 2004, the cartel was run by lower- level managers through the companies’ German subsidiaries and information was exchanged by email.

The truck makers coordinated “gross list” prices and also colluded on passing on to customers the costs of new technologies to meet stricter emission rules.

The commission said its investigation did not reveal any links between this cartel and the use of defeat devices to cheat emissions tests.

Law firms, including Fieldfisher, are handling claims after their clients Glasgow City Council and West Dunbartonshire Council, which had bought trucks, were told by the Court of Session that they were able to proceed with their claim.

“In claims such as these, the liability is already determined, so the claimant only needs to show causation and loss,” Fieldfisher said. “The truck manufacturers have been trying to block further claims by arguing they will be time-barred. However, the Scottish Court of Session rejected a prescription strike-out brought by the defendants.

“Although a decision of the Scottish courts is not binding in England, it will be persuasive."

While Scottish and English limitation rules rely on separate legislation, the ruling meant claims could be made in Scotland up until July 2021 and for England up until July 2022.

But the truck firms are now contesting that decision saying that the councils should have made their claim earlier, given that news of the EC’s investigation into the truck cartel first broke in 2011.

In an appeal launched last week, they say that claims should have been made within five years of having sufficient awareness that they were being misled.

In Scotland the time limit for bringing a claim for damages for breach of contract or negligence is five years from the date the wronged party first became or could have become aware of issues. The legal rules on time bar are found in the Prescription & Limitation (Scotland) Act 1973.

Roddy Dunlop QC for Daimler said that by March, 2011, there was in the public domain information not only that the Office For Fair Trading were investigating price fixing, but that the EU stated they had "reason to believe that is what happened".

He said: "What you don't do is sit back and say time doesn't start till there is a European Commission decision."

The OFT closed a criminal investigation of suspected cartel activity in December, 2011 due to "insufficient evidence" but said it was continuing a price-fixing probe.

When the investigation was launched in September 2010, the UK offices of Daimler’s Mercedes-Benz were visited and an individual was temporarily detained.

The OFT closed its civil investigation into suspected cartel behaviour in June, 2012 "on the grounds of administrative priority" after a "detailed review of the available evidence and discussions with the European Commission"

It said the European Commission was "particularly well placed" to take the investigation forward" and said it had not reached a view over whether there had been a breach of competition law.

Gerry Moynihan QC for the councils argued that the clock would not start ticking on taking action until July 2016, when the the European Commission (EC) made its judgement on the cartel.

"This is not a case of local authorities choosing to sit back," said Mr Moyniham who pointed out that there was nothing the councils could have done to investigate the cartel earlier adding that there was "deliberate concealment".

The Road Haulage Association produced a video in 2017 explaining how UK truck owners can join a group legal action and that there is no cost for joining

Justice Tye last year argued that while the first fines were not announced until 2016, "I am in no doubt that if a Scottish local authority had attempted to inquire into the existence of a cartel whose activities had affected the prices paid for commercial vehicles of an unspecified nature during an unspecified period of time, it would have been met by a refusal by the companies concerned to provide any information, in order to avoid jeopardising their applications for immunity and leniency".

He added: “It is not surprising that, as is common ground, no-one in the United Kingdom raised any proceedings against any of the addressees before the details of the [EC competition commission] decision were announced,” he ruled.

Court papers show that Grant Montgomery, category manager for transport and environment with Scotland Excel, a centre of procurement expertise for Scottish local authorities, first became aware that local authorities in Scotland might have claims against the truck manufacturers in July, 2016, when he readinga report about the fines imposed by the Commission "which appeared to come out of the blue".

He drew the matter to the attention of his line managers and consulted with Renfrewshire Council's legal team.

He went on to send an email headed “for information only – no action required at this time” to contacts in all Scottish local authorities, drawing the commission decision to their attention and suggesting that they discuss it with their legal departments.