A brief overview of the 2013 Mercedes-Benz commercial vehicle dealers’ competition investigation
First published by Admin on January 19, 2018 in the following categories: Investigations and tagged with cartels
In June 2010 The Office of Fair Trading (OFT) launched an investigation into Mercedes-Benz commercial vehicle dealers based on suspicions that the Competition Act 1998 had been breached.
Almost three years later the OFT found that Mercedes-Benz and five of its commercial dealers had in fact breached the Competition Act, and were fined for engaging in illegal cartel activity.
The OFT found that, out of the five dealers, two agreed to include substantial margins when quoting customers as well as another two agreeing not to trade with customers in each other’s area.
By the five commercial dealers limiting the sales of vans and trucks in their areas, they were able to reduce the competition in that area which can prevent consumers being able to access and benefit from competitive prices.
Mercedes-Benz and its five commercial dealers were fined £2.8 million once they were found to have breached the Competition Act.
On top of that, the dealers lost up to 18 months of profit after tax as well.
One company managed to avoid a fine due to assisting the OFT with the investigation and being the first one of the five to apply for leniency.
How did they breach competition law?
They breached competition law by making agreements that are, quite simply, illegal.
They formed a cartel and prevented consumers and businesses in the surrounding area from enjoying the benefits of fair competition. The agreements that the dealers made with each other to not trade in each other’s areas could easily limit and control that specific market in a negative way.
Agreements were also reportedly made between the dealers to directly set specifically large margins to customers as well, which is also prohibited under the Competitions Act.
The traders in this case were described as a cartel. Cartels can have a seriously negative impact on competition, and being involved in one is also a breach of competition law and can carry higher penalties as well.